Tories gain in Petro-Canada shift
After months of controversy and uncertainty, it is becoming clear that Petro-Canada, this country's government- owned oil company, will remain under control of the central government in Ottawa.
Conservative Prime Minister Joe Clark, locked in an election struggle with the opposition Liberals, has reversed one of his party's long-stated intentions and said he would not turn Petro-Canada over to the private sector.
Instead, the Conservatives, if re-elected Feb. 18, will convert the corporation, now wholly owned by the government, into a publicly traded company with the stipulation that one- third of its shares -- and effective control -- would stay in Ottawa's hands.
The policy shift follows the defeat of the Conservatives in the House of Commons in mid-December and is designed to counteract broad public opposition to the dismantling of the crown corporation, which has obtained assets of $3.3 billion (Canadian) since its creation in 1975.
Under the new Conservative plan, the government would offer 20 percent of Petro-Canada shares next July 1 to public buyers and distribute 50 percent of its shares free to individuals, with Ottawa retained the rest.
Every Canadian adult would be eligible for five free shares, with an expected market value of $10 a share. Minors would receive the same number of shares free on thie 18th birthday.
The shares to be sold on Canadian stock markets would be available only to Canadian investors or to Canadian-owned companies and institutions. Holdings by any individual or company would be limited to a maximum of 3 percent of outstanding shares. This rule would ensure continuing federal control of the corporation.
Estimating the market value of Petro-Canada's common shares at between $2.5 billion and $3 billion, Mr. Clark figures the shares distributed free to individuals will be worth more than $1 billion. The Conservatives believe the distribution would have long-term benefits for equity investment in Canada, since most of those receiving free shares would be holding equity in a public company for the first time.
Mr. Clark, who now says Petro-Canada should become "the biggest and best energy resource company in Canada," rather than be dismantled, also wants the crown corporation to negotiate energy deals with other governments -- something he rejected in the election that brought his party to power last spring.
In contrast to the public's general suspicion of the many government-owned enterprises in Canada, there is broad approval of Petro-Canada, according to opinion polls. Both the Liberal and New Democratic opposition parties have come out strongly in Petro-Canada's favor, and both have lost what party officials saw as a big advantage now that Mr. Clark has switched his position.
But the company still stirs impetuous devate. Marc Lalonde, a Liberal energy critic before Parliament was dissolved, called the Conservative proposal "totally unacceptable." Giving up 70 percent ownership, he said, would erode Petro-Canada's ability to pursue national energy policy objectives.
Ed Broadbent, leader of the New Democrats, termed Mr. Clark's plan a $1 billion election "bribe." "It's nothing more than a clumsy election device to save Joe Clark's political skin," he said.
Questions are also being raised about the logistics of the share giveaway and sale envisioned by Mr. Clark. The cost of distribution is estimated at more than $100 million.
Other unsolved questions include: Who would underwrite the massive sale? Would it be possible to send annual reports to all shareholders? Would all shareholders have voting rights?