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August 24,2008

San Miguel eyes PNOC-EC stake

The Philippines' San Miguel group is interested in bidding for a stake in government-controlled oil and gas explorer PNOC-Exploration Corp Reuters quoted a senior official as saying Friday.

"We will try to buy at the right price. It's a jewel," San Miguel president Ramon Ang told reporters.

The government plans to initially sell a 40 percent stake in PNOC-EC before the end of the year to help bridge its budget deficit, which is expected to balloon to 75 billion pesos ($1.6 billion) this year from 12.4 billion pesos last year.

San Miguel has so far been unsuccessful in its bid to enter the power industry since it began diversifying out of its core food and beverage business last year.

It said it also wants to get into other heavy industries like mining and infrastructure.

The conglomerate was unsuccessful in a bid to buy a 60 percent stake in local geothermal firm PNOC-Energy Development Corp last year, and it also failed to acquire the 25-year licence to run the country's power grid which was auctioned off last December.

"We will try again," Ang said when asked if the company had given up on plans to enter the power sector.

The move into heavy industry has been criticised by some analysts, who say San Miguel, which dominates the home market for beer, poultry and processed meats, did not have the expertise to run such businesses.

Ang said San Miguel, through its energy unit San Miguel Energy, might also bid for government contracts to run state-owned power plants once they are placed on the auction bloc "if there is a good deal, and if it is profitable."

The sale of the power contracts is part of the country's power sector privatisation programme aimed at raising $5 billion to cut National Power Corp's debts and rehabilitate ageing power facilities.

Also on Friday, Ang said San Miguel and Japan's Tsusho Corp were close to completing a plan to jointly acquire a 1.6 billion peso grain terminal in northwestern Bataan province. Toyota Tsusho is a trading company partly owned by Toyota Motor Corp.

The Mariveles grains terminal, which began operation in 1996, is a major gateway for bulk grain handling including flour, soy bean and corn.

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