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BARELY
36 hours after raising the price of diesel by P3 a
liter, major oil players Petron and Shell are slashing
P1.50 from that increase, in response to a call by
President Arroyo to reduce the price of diesel products,
which are overwhelmingly used by the poorer sectors.
The P1.50-per-liter reduction takes
effect Monday morning, but won’t stop efforts to
scrutinize further the oil companies’ pricing policies,
as well as protests against both the government and the
oil industry.
Oil companies over the weekend had
increased the price of diesel by P3 per liter, gasoline
by P1/liter and kerosene by P1.50/liter, sparking calls
for protests by activist groups.
Chevron (Philippines) Inc., Eastern
Petroleum Corp., Flying V, Petron Corp., Pilipinas Shell
Petroleum Corp., Seaoil Philippines Inc., Total
(Philippines) Corp. and Unioil Petroleum Philippines
Inc. said on Sunday, though, that they cut down the
price of diesel products in response to Mrs. Arroyo’s
appeal.
Oil-company executives have been
summoned to an early Monday morning closed-door meeting
by Energy Secretary Angelo Reyes, who was reported as
seeking over the weekend an explanation from oil-company
executives for the P3/liter increase in the price of
diesel products.
Reyes had been under pressure the past
month to make good his earlier promise to Congress to
conduct a thorough review of the operations and pricing
practices of oil companies in light of relentless hikes
that have cut deeply into the pocketbooks of consumers
and business sectors alike.
On Sunday, a Cebu lawmaker cited data
that Shell and Petron, the country’s two oil refiners,
netted P70 billion in combined net profits since the
passage of the Downstream Oil Industry Deregulation Law
in 1998.
Cebu Rep. Eduardo Gullas said Shell
posted P33.59 billion in cumulative net profits from
1998 to the first quarter 2008. Petron cleared P35.18
billion in profits over the same period, he said. Gullas
cited the regulatory filings of the two oil firms as the
source of his figures.
In getting Petron and Shell to roll back
their diesel prices by P1.50 per liter effective Sunday
midnight, Palace officials hope the move will be
followed by other industry players.
Press Secretary Jesus Dureza said on
Sunday that Malacañang secured the commitment of the oil
companies shortly after Executive Secretary Eduardo
Ermita, acting on the President’s instructions, relayed
the appeal for a price rollback to oil—this, just hours
after the P3-oil price hike took effect on Saturday
noon.
Dureza said Ermita, in coordination with
Energy Secretary Reyes, had phone conversations with
Petron chairman Nicasio Alcantara and with Edgar Chua,
Shell Companies in the Philippines country chairman, who
both responded promptly.
“We would assume that when the two big
players make a decision, everybody will follow….It was
an immediate positive response to an appeal coming from
the Palace….We expressed our thanks to the oil companies
for responding positively. This will go a long way in
cushioning the impact on the ordinary people,” he said.
Petron public affairs manager Virginia
Ruivivar said in a phone-patch interview with Palace
reporters that Petron “understood” why the President
made appeal, which is to provide some form of relief to
the public in view of the “ rather hefty increase,”
referring to the P3 price hike.
She took exception to the perception
that the P3 price hike might not have been warranted,
considering that two major oil players acceded quickly
to a presidential appeal for a P1.50-per-liter diesel
rollback.
“We are not capricious in that when we
want to have a price increase, we will just increase
it. It’s really a function of the price of oil in the
international market. If we are responding to this
appeal, we are doing it in consideration of the
objectives of government also,” Ruivivar said.
She said that while the P3 increase was
based on world market prices—Petron is looking at P4
underrecovery for the year—Petron took into
consideration the plight of commuters and
public-transport groups.
“We’ve been incorporating these concerns
in our pricing decisions before so it’s not a leap to
make this decision. Also, it’s a question of…absorbing
some pain at this point, and then trying to find ways in
the future to make up for it,” she said.
Ruivivar added that it is also “a
question of moderating the adjustment so in time, we
will probably find a way to fully recover our costs
because we cannot operate at a loss.”
Asked about falling crude-oil prices,
currently by $16 per barrel, the Petron official said
“it’s too early at this point to be able to judge if
there will really be a reduction” in local pump prices,
since the average world oil price for July is $9 higher
than in June.
Meanwhile, in citing data on the net
profits of Petron and Shell in the deregulated regime,
Cebu Rep. Gullas said, “The Downstream Oil Industry
Deregulation Law has definitely been a boon to the two
oil refiners and other [industry] players. There is also
no question that as a result of soaring world oil
prices, industry players are enjoying enormous pricing
power that has enabled them to pump up their profits.”
Since the start of the year, oil firms
have increased diesel and kerosene prices 20 times, by a
total of around P22 to P24 per liter. They have also
raised gasoline prices 19 times, by a total of about P19
per liter.
Gullas stressed the need for the
Department of Energy (DOE) to use its powers under the
oil-deregulation law to thwart possible pricing abuses
by the oil companies.
He cited the provisions of Republic Act
8479 that the DOE may use to check price manipulation
and similar abuses:
• Section 14 (d), mandating the DOE,
through the the DOE-Department of Justice Task Force, to
act upon any unreasonable increases in the prices of
petroleum products;
• Section 15 (b), empowering the
secretary of Energy to order any person and require the
latter to file reports or respond to specific questions,
under oath, on any matter the Secretary may want
regarding the oil industry; and
• Section 15 (g), compelling the DOE to
make public regularly any information it obtains that is
in the public interest.
Shell previously reported a net profit
of P3.1 billion from January to March this year. Petron
posted a net profit of P658 million in the same period.
From 2005 to 2007, Shell’s annual net
profit averaged P5.41 billion, and Petron, P6.03
billion.
The third of the so-called Big Three oil
firms, Caltex Philippines Inc. [now Chevron Phils. Inc.]
has since closed down its 72,000-barrel of oil per day
refinery in San Pascual, Batangas.
Chevron now merely operates a finished
petroleum product import terminal in Batangas with the
capacity to store 2.7 million barrels.
The figures on Chevron’s financial
performance were not readily available, said Gullas’s
office. Chevron is no longer subject to the same
rigorous disclosure and financial reporting rules that
apply to Shell and Petron. Chevron nonetheless last
reported a net profit of P2.75 billion in 2006.
Petron controls 39 percent of the local
market for petroleum products. Shell has a 31-percent
market share, and Chevron, 15 percent. New oil players
corner the remaining 15 percent.
Meanwhile, militant group Bagong
Alyansang Makabayan (Bayan) said protests against the
oil companies’ abuse and government’s tax policies will
continue, even as President Arroyo took a hard-line
stance on lifting the value-added tax (VAT) on oil.
Renato Reyes Jr., Bayan secretary
general, earlier said the protests will continue
starting July 18 as part of the buildup to the upcoming
State of the Nation Address on July 28. “The extreme
callousness of this regime is a cause of indignation. It
has continued to uphold the VAT on oil and the
oil-deregulation law despite pleas from marginalized
sectors and even the Catholic Church,” Reyes said.
Reyes said they refused to accept to
“deceptive argument” that only the rich will benefit
from the scrapping of the VAT on oil.
“Our studies show that the removal of
the VAT on oil will benefit more than 400,000 jeepney
drivers, more than 500,000 tricycle drivers, as well as
8.6 million households using LPG. These are real
benefits for millions of families nationwide.”
He pointed out that removing the VAT on
oil translates into far greater benefits for more poor
people than the so-called targeted subsidies. “These
subsidies are short-term, unsustainable, and
nontransparent. The most direct way to help the poor
consumers is to reduce the prices of oil by removing the
VAT.” M. Gonzalez, with P.A. Isla |
