By JED MACAPAGAL and WENDELL VIGILIA
The House committee on ways and means officially started its hearings on the skyrocketing prices of petroleum yesterday, November 8, which coincided with the the announcement oil firms are implementing a rollback today after 10 straight weeks of increases.
At the hearing, Ramon Ang, president and chief executive officer of Petron Corp., told lawmakers he is willing to sell the oil firm to the national government at its current market value payable in five years.
“Anytime I can have it (Petron) loaned to the Philippine government. Buy it back, over five years to pay,” Ang told the panel in Filipino. “I swear. If the government wants to buy it, say it and I’ll sell it right away to you. “Let’s prepare the valuation, no beating around the bush.”
“If you think that’s a jackpot business, let the government buy it at market valuation. I don’t have to profit from the government,” said Ang.
Oil players reduced pump prices of petroleum products, attributed to the effects of the higher than expected rise in crude stocks in the United States, last week.
According to the Department of Energy (DOE), the latest average Manila price per liter of gasoline (RON95) is at P62.70, diesel at P48.25 and kerosene, P57.87.
Petron and Seaoil decreased per liter prices by P1 of gasoline P0.60 of diesel and P0.65 of kerosene.
Meanwhile, Phoenix Petroleum, PTT and Clean Fuel adjusted prices of gasoline by P1 per liter and diesel by P0.60 per liter.
As of November 2, year-to-date adjustments on fuel prices summed up to a net increase of P21.95 per liter for gasoline, P18.10 per liter for diesel and P15.74 per liter for kerosene.
The proposal to buy back Petron came to light under Bayan Muna party-list’s House Bill (HB) No. 244 or the Petron Renationalization Act which requires the PNOC to acquire a majority stake or 51 percent of subscribed stocks of Petron upon the first year of the law’s effectivity.
Petron was privatized in 1994 after the Philippine National Oil Co. (PNOC) and Saudi Arabian Oil Company (Aramco) signed a stock purchase agreement that gave Aramco 40 percent ownership of Petron.
In 1998, the oil industry was deregulated through Republic Act 8479 or the Downstream Oil Industry Deregulation Act of 1998 to stabilize and ensure reasonable oil prices by encouraging competition.
San Miguel Corp. where Ang is president and chief operating officer started managing Petron in 2009 after a deal with the Ashmore Group from London, which used to own majority stakes in the fuel company.
HB 244 mandates the PNOC to reacquire 100 percent full ownership of the company within four years, which means that Petron will have to be delisted from the stock exchange.
Bayan Muna Rep. Ferdinand Gaite welcomed Ang’s offer, expressing hope the current administration or even the next one “would take the offer so that government can have a say in controlling oil prices.”
“HB 244 specifically calls for the full renationalization of Petron in a span of four to five years so that we can have a midterm to long term deterrent to runaway oil price hikes,” he said.
There were also other bills and resolutions passed calling for the suspension or reduction of the excise tax on fuel products as a response to their increasing prices.
A technical working group (TWG) was created to craft a substitute bill seeking to reduce fuel excise taxes imposed under the Tax Reform for Acceleration and Inclusion (TRAIN) Law which is based on Albay Rep. Joey Salceda’s HB No. 10348.
The proposal will completely suspend excise taxes on diesel from P6 per liter and kerosene from P5 per liter) from Dec. 1, 2021 to June 1, 2022, while reducing excise taxes on gasoline by as much as P3 per liter.
Salceda also directed the TWG to differentiate rates between premium and unleaded gasoline, given the use of unleaded gasoline by the public transport sector.
According to the Department of Finance (DOF), Salceda’s proposal will result in foregone revenues of P37.5 billion, which he said can be offset in part by increases in VAT collection due to higher prices.
The DOF also estimated the proposal could increase disposable incomes by 0.22 to 0.48 percent, increase consumption by around 0.2 percent and reduce inflation by around 0.14 percent.
However, Salceda directed the TWG to mandate the DOF and DOE to monitor prices and exercise motu proprio powers to investigate abnormal price activity, revert to TRAIN tax rates should crude oil prices reach below $60 per barrel during the suspension period.
The TWG will also create the Social Impact Stabilization Fund, which will be used and appropriated as cash assistance to the lower 80 percent of households by income, when prices increase to be funded by imposing a P2 per liter premium on petroleum products when prices decline below the 30-year average of prices.
Earlier, House deputy majority leader Jesus Suntay, filed House Resolution 2318, urging the President to suspend the imposition of excise tax on fuel and other petroleum products under the TRAIN Law.
“The needs of the Filipino people must come first, and our most impoverished citizens cannot endure the continued price hikes much longer. I appeal to the President to give the citizens a much needed break,” said Suntay, who is also an official of Clean Fuel and former president of the Independent Philippine Petroleum Companies Association, in a statement.
Reacting to Ang’s statement at the House hearing, Suntay said in a text message the Petron executive made that offer only “because he knows the government at this point does not have the money to repurchase Petron and is not capable of running it efficiently and properly.”
“Petron will lose money if the government takes it over. The government has been privatizing various business undertakings. It does not make sense to reacquire businesses it used to operate and subsequently privatized,” Suntay added.
At the Senate, Sen. Grace Poe has filed Senate Bill 2445 that seeks to suspend the collection of excise taxes on gasoline and diesel if the average price of Dubai crude oil hits $80 per barrel for three consecutive months.
The suspension of the excise tax will immediately bring down the cost by P10 per liter for gasoline and P6 per liter for diesel.
“The rising cost of fuel is certain to have a spillover effect on the cost of other products, especially food which accounts for a big chunk of a household’s expenses. Such will aggravate poverty and hunger among our people. If government cannot substantially provide for its people, then at the very least, it must do all it can to ease their burden,” Poe said.
Meanwhile, Laban Konsyumer Inc. president, Victorio Dimagiba, said the oil deregulation law and the excise taxes on fuel products must first be repealed before the government can study the offer to buy back Petron Corp.
