Well, not right away, at least. Energy Secretary Alfonso Cusi has until November 10, 2016 to see whether Pilipinas Shell Petroleum Corporation, the wholly-owned domestic subsidiary of Dutch multinational oil giant Royal Dutch Shell Plc., will finally comply with its obligation under Republic Act (RA) 8479 or the Oil Deregulation Law to sell at least 10 percent of its common stock via public listing.
Why November 10, 2016? If news reports are accurate, that is the date when Shell is supposed to formally list on the main board of the Philippine Stock Exchange. If and when that happens, it will mark the end of Shell’s 18-year campaign to delay (or more accurately, avoid) the “public float” required by RA 8479–and fittingly, during the term of President Rodrigo Duterte, a strong proponent of the “rule of law.”
Shell’s public listing, if it ever comes to fruition, will also be a feather in Cusi’s cap. For nearly two decades, and a succession of Department of Energy (DOE) secretaries from the Ramos administration all the way to Aquino’s “tuwid na daan” government, no one has managed to compel Shell to conduct its initial public offering (IPO) until now.
On the other hand, if the IPO does not happen this year despite Shell’s press releases, then Cusi will have no choice but to enforce the law and close Shell’s Tabangao, Batangas refinery by year-end.
That Shell may suddenly back out of its plan to publicly list its shares is a distinct possibility given the oil major’s propensity to find myriad excuses to delay its IPO for almost two decades now.
As far back as September 2008, Shell chairman and president Edgar Chua already announced that they would be submitting their IPO to the Energy department after then-Energy Secretary Angelo Reyes ordered the Dutch oil giant to list on the local stock exchange. Not surprisingly, after that brief flexing of muscles, nothing was heard from Reyes again.
Again, during a media forum in June 2014, Chua told reporters that the planned IPO would be pursued “hopefully this year .” That year came and went without Shell being listed at the bourse.
Lately, stock market insiders voiced their apprehension that Shell might again find a convenient excuse to delay its IPO after the Court of Tax Appeals (CTA) en banc reportedly issued a decision last week ordering Shell to pay some P5.7-billion excise and value-added taxes for its catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) imports from 2006 to 2009.
According to industry observers, this CTA decision bolsters the graft and smuggling cases filed last week before the Ombudsman against former president BS Aquino and former Finance secretary Cesar Purisima for allowing Shell to bring unleaded gasoline into the country without paying the right taxes. Incidentally, Shell’s Chua was also charged as a co-respondent of Aquino and Purisima.
The complainants, former Bureau of Customs (BOC) commissioner Napoleon Morales, former district collector Juan Tan of the Port of Batangas and journalist Lourdes Aclan, accused Aquino and Purisima of ignoring Shell’s supposed failure to pay the right amount of taxes for their gasoline shipments, which were supposedly wrongfully declared as non-taxable products.
Shell allegedly managed to evade payment of taxes by falsely declaring its unleaded gasoline imports as CCG, light catalytic cracked gasoline (LCCG) and later as alkylate from 2004 to 2009.
These chemicals are classified as a “blending component” in the manufacture of gasoline, and are not subject to excise taxes collected by the BOC for the Bureau of Internal Revenue (BIR).
The complainants claim that Shell was paying excise taxes for unleaded gasoline on its previous importations of CCG and LCCG from 2001 to 2004. But from 2004 to 2009, Shell all but stopped paying taxes after the company supposedly changed not only the tariff classification of its unleaded gasoline imports to tetrapropylene and subsequently, alkylate, which are not subject to taxes but also the declaration of CCG and LCCG from “exclusive for sale” to the tax-free “blending component.”
“Due to this modification in the declaration, all the shipments of Shell declared as CCG and LCCG from March 2004 to 2009 were released without payment of taxes,” the complainants said.
By the way, it was Tan, then BOC Batangas district collector, who first investigated Shell’s alleged tax evasion after receiving a report from informant Geronimo Pinar. Pinar claimed Shell owed the government around P11 billion for unleaded gasoline it imported from October 2007 to December 2008. Tan eventually assessed the petroleum company some P7.348 billion in back taxes in January 2009 for its alleged fraudulent scheme.
It is no wonder then that Shell wants the informer reward system dismantled.
Only last March, Shell asked the National Bureau of Investigation to probe an alleged tax informer reward scam being run by a syndicate purportedly to fabricate tax cases, claiming the same syndicate wants the petroleum company to be held liable for unpaid excise taxes amounting to P7 billion in a case pending before the CTA.
The recent CTA ruling, however, clearly debunks Shell’s allegations that the tax cases filed against it are syndicated or fabricated, or that the informer reward system is useless. In fact, the CTA decision appears to support the claim of tax officials that Shell’s refinery provides a convenient vehicle for the company to import petroleum products practically duty-free.
Of course, Shell will insist that it did nothing wrong. But then, why haven’t we heard Petron—the country’s largest oil refiner—encountering the same problems with its petroleum imports?