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RP should hike stake in crude refiner to cut local oil costs PDF Print E-mail
GMANews.TV - Wednesday, June 18
MANILA, Philippines - The Philippine government should acquire the Petron stake of a UK-based fund to cut domestic oil prices.
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By buying Ashmore Group’s 40 percent stake, the government would boost its Petron ownership to 80 percent, virtually regaining full control of the Philippines’ largest crude refiner. The state-led company could then secure discounts from oil suppliers which would then be passed on to consumers, a professor said.

“Petron can be the price leader," University of the Philippines Professor Walden Bello said on Tuesday, indicating that company’s prices, which are expected to be lower, could also help set the industry’s fuel costs.

The government owns 40 percent of Petron through the Philippine National Oil Co., a state-led entity. Earlier, Energy Secretary said that it is not interested in selling its stake to the Ashmore Group, which recently bought Saudi Aramco’s Petron shares for $550 million.

In a paper he read during an oil and power forum in Quezon City, Bello said that funds to buy back Petron shares could be made available if the Philippines stops debt payments.

“For the last 25 to 30 years, the country has been a major capital exporter," Bello said, referring to the nation’s continued policy of honoring obligations, even though these may have been fraudulent. “It’s time we rechannel capital into domestic investment."

Bello also called for the removal of the value added tax (VAT) on oil, a sentiment shared by a number of legislators and other non-government groups.

“But the removal of VAT should be checked," Bello said. “Government must have access to costing data."

For every fuel product worth P100, an additional P12 are collected by the government through the Expanded Value Added Tax law. With crude hitting record highs, government’s EVAT projections have exceeded expectations, prompting even House Speaker Prospero C. Nograles, a Malacañang ally, to use the windfall to offset consumers’ power and fuel expenses.

Given current fuel prices, the government is expected to collect an an extra P16.7 billion more for this year since Dubai crude has already hit $115.23 per barrel, according to estimates made by the Congressional Planning and Budget Department. Earlier, under the e-VAT, the government only expected to reap P44 billion for 2008 since it projected that oil would only cost $70 per barrel.

Bello also said that in the United States, it takes four to six weeks before pump prices reflect the true market cost of oil.

But the case is different for the Philippines, Bello claimed.

“We don’t know how [local] prices are determined," said Bello, also the executive director of the Focus on the Global South, a Bangkok-based non-government organization. “We should make oil majors share the burden of high oil prices."

Philippine pump prices have gone up for the fifteenth straight time since March, hiking fuel product costs by approximately P12.50 per liter.

Petron shares closed by P0.10 higher to P6.30 apiece during Tuesday’s trading at the Philippine Stock Exchange. - RJAB, GMANews.TV
 
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