|
SINCE
the continuous increase in international oil prices has
resulted in P3.6 billion in diesel underrecoveries, as
claimed by the local oil industry, in April, any further
delay in recouping such underrecoveries could lead to a
diesel-supply shortfall in the country, oil-company
executives said Wednesday.
Edgar
Chua, country chairman of Shell Companies in the
Philippines, has presented data showing under-recoveries
in diesel amounted to P3.6 billion in April, based on
the month’s diesel sales volume of 598.85 million
liters, which was multiplied by about P6 per liter
(difference between the landed cost and average pump
price of diesel).
“Unless
we see the adjustments in local pricing attuned with
international pricing, shortage of supply may soon be
more of a pronounced reality,” Fernando Martinez,
chairman and chief executive of Eastern Petroleum Corp.,
said in response to Chua’s presentation, adding that his
warning takes into consideration the higher cost of
importation.
Chua
noted that even with increasing prices, sales volume
seems to increase.
With
diesel importation no longer providing good margins,
Chua said smugglers have stopped smuggling and,
therefore, the sales have been captured by the
legitimate oil player, who report their sales to the
Department of Energy.
Chua
said the landed cost of diesel in May and June amounted
to P52.89/liter and P57.04/liter, respectively, while
the pump price of diesel amounted to P43.78/liter and
P50.03/liter, respectively.
Chua
said the difference between the pump price and landed
cost is the underrecovery; and using the aforementioned
figures, there is an underrecovery of P9.11/liter and
P7.01/liter in May and June, respectively.
Amid an
expected decline in sales or consumption, Chua noted
that they actually see an increase in sales volume of
the legitimate players.
Apart
from the withdrawal of smugglers from selling diesel,
Chua added that the doubling of working capital also
adds pressure to the pricing of products.
For
instance, when the price of crude averaged $60/barrel
last year, Chua said they imported 2 million barrels
that cost them about $120 million.
“But
with the price now at $120/barrel to $140/barrel, the
same volume will now cost us more. So we now have to put
in more money to bring in the same quantity of products
that we are selling, which is causing a credit squeeze
along with increasing interest rates,” said Chua. |
