Maharlika eyes oil storage venture with PNOC to boost energy resilience

MANILA, Philippines – The Philippines’ sovereign wealth fund could partner with the state-owned energy company and private firms to build oil storage tanks to bolster the country’s resilience to oil price shocks.

Maharlika Investment Corp. (MIC) chief Rafael Consing Jr. said on Wednesday that a consortium with the Philippine National Oil Co. (PNOC) and the private sector could build a “tank farm” that could boost the country’s energy stockpiling capacity.

The MIC may fund such project to help make the country less sensitive to disruptions in oil supplies, he added.

“We, alongside other members of the private sector, can invest in the tank farm, and then in fact outsource the operations to the private sector because we’re only the capital provider,” he told lawmakers at a congressional hearing on the oil crisis.

Proposals to blunt the economic impact of the fuel price crisis have ranged from cutting consumption and excise taxes, to expanding subsidies and strengthening the country’s energy infrastructure to make it more resilient to shocks.

READ: Maharlika says gov’t takeover of Petron unnecessary but it’s keeping options open

Partners’ role

“The idea is that we can put together a consortium with the PNOC and the private sector, wherein they can contribute their land, their assets,” Consing said, without giving details on how it could be operated. “We don’t know how to operate this.”

“We will leave it with the private sector to run it, but we will catalyze the investment if we get to that,” he added.

The sovereign wealth fund has P68 billion in available funds it could invest, Consing said last week.

READ: PNOC asks Congress for P8-B fuel budget

He said the fund prefers to invest in storage facilities rather than buy fuel for a strategic reserve, as holding oil stocks directly would expose it to “market risk.”

“If we do it that way, we’re not going to take market risk on the price of fuel, but rather we will be receiving our returns on the long-term lease,” Consing said. /dda