SMC emerging as super energy firm

Manila Standard Today Conglomerate San Miguel Corp. is fast-shaping up as a super energy company, with investments steadily growing in power and in the upstream and downstream sectors.San Miguel president and chief operating officer Ramon S. Ang, popularly known among his staff as RSA, has conceded that the company’s new businesses, especially power and oil refining, will shortly account for 70 percent of the conglomerate’s revenues. San Miguel actually is taking over the once-dominant role of Philippine National Oil Co. in the 70s and 80s, when its business holdings virtually monopolized every industry in the energy field. PNOC during the Marcos era was in oil refining and distribution, petroleum tankering and shipping, oil, coal and geothermal exploration, and logistics. San Miguel has now assumed some of the key businesses of PNOC, starting with Petron Corp. (the result of a merger between Bataan Refinery Corp. and Petrophil Corp. in 1985) and coal exploration. Petron, according to Ang, would become the single- biggest revenue source of a diversified San Miguel. San Miguel owns 68 percent of Petron and plans to raise its exposure further. San Miguel’s foray in the energy field, however, is not limited to oil refining and distribution and the upstream sector (coal exploration). The company has gone into the lucrative power business, which another state-owned company, National Power Corp., used to dominate. Unit SMC Global Power Holdings has become the largest power producer in Luzon with a combined capacity of 3,165 megawatts and a market share of over 29 percent to date. “In a year or so, power could overtake our traditional businesses to become one of the largest business segments in San Miguel, second only to Petron,” Ang says. SMC Global Power plans to double its capacity over the next five years after contributing P46 billion to the conglomerate’s total revenues. San Miguel is also into power distribution through a direct 27-percent stake in Manila Electric Co., the largest electricity retailer in the Philippines. In all, San Miguel’s power generation and oil refinery businesses are expected to contribute significantly to the company’s revenues in 2011, estimated at a record P530 billion. Net profit in the first quarter more than doubled to P7.14 billion from P2.9 billion year-on-year, with half of San Miguel’s P126.6-billion sales accounted by Petron. Total company San Miguel will not yet reach the status of a total energy company, unless it becomes successful in the upstream sector. It is currently limited to coal exploration after purchasing in full three mining companies with rich deposits in South Cotabato—Daguma Agro-Minerals Inc., Bonanza Energy Resources Inc. and Sultan Energy Philippines Corp. San Miguel can go into the riskier oil and gas exploration if it wants to elevate itself to the category of a full-fledged energy company. Unfortunately, oil and gas discoveries in the Philippines are rare. Red Bull saga A regional trial court in Benguet province has shelved the criminal case filed against the Philippine importer of Red Bull Energy Drink, after the Justice Department ruled that the case was not criminal in nature. Regional Trial Court Branch 62 in La Trinidad, Benguet granted the Justice motion to withdraw criminal information against officials of Maryland Distributors Inc., the authorized and exclusive importer of Red Bull in the Philippines since May 2009. Judge Danilo Camacho said he issued the ruling in the light of the findings by Justice Department that there was no probable cause in the case filed by Energy Food & Drinks Inc., the terminated Philippine distributor of Red Bull against MDI. Energy Food accused MDI of allegedly tampering with the label of the product, after insisting that it was the authorized importer of Red Bull. MDI, in response, said the stickers on the label spoke the truth. “We are the authorized Philippine importer of Red Bull Supreme Energy Drinks in the Philippines,” the company said. Justice in a resolution said “clearly, the only issue in this case is: who is the authorized distributor of the Red Bull Supreme Energy Drink? This issue is civil in nature and beyond the realm of criminal law.” T.C. Pharmaceutical, the Thai manufacturer of Red Bull, terminated its distribution agreement with Energy Food as early as August 2008 and appointed MDI on May 22, 2009 as the authorized and exclusive importer of Red Bull Energy Drink in the Philippines. E-mail: rayenano@yahoo.com; extrastory2000@yahoo.com