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New oil industry players want oil deregulation law repealed

 

NEW oil industry players have asked Congress to repeal the oil deregulation law in the hope that price control would break the cartel of the Big 3—Caltex, Petron and Shell.

The Independent Philippine Petroleum Companies Association on Tuesday issued the appeal during the hearing Tuesday conducted by the House Committee on Energy.

“We would want that the automatic price control [on petroleum products] be brought back,” Fernando Martinez, the association’s president, told the committee, explaining that the current system is not conducive to their business growth.


He said the small oil firms are having difficulty earning a profit and would probably do better under a regulated industry. “The present setup is not investment friendly,” Martinez said.

He explained that from 1999 to 2003, the association’s gross income fell to 8.24 percent, a decline from the period 1991 to 1998 when small oil companies earned 10.99 percent of the oil price.

Martinez also complained that they are oftentimes pressured not to increase their prices to spare the consumers.

Statistics from the Department of Energy indicate that new oil players earn P.8169 for a liter of gasoline and that the firms lose P2.291 a liter of diesel sold.

The big oil players were silent on the proposal by the new oil players for a return to regulation, saying they would wait for a formal bill to be filed in Congress before making their position known.

But Robert Malabanan, a representative of Shell, acknowledged that the oil deregulation law has been effective in encouraging competition.

He said that the slump being experienced by the new players was probably due to the economic situation in the country and not because the oil deregulation law is flawed.

“Deregulation works, Your Honors; it’s just that we are in hard times now,” Malabanan told the committee.

Malou Espina, Total’s corporate affairs manager, warned that the government could send a wrong signal to investors if it abolishes the oil deregulation law.

“We entered the oil industry because of the deregulation policy. If we change the rules in the middle of the game, we might be sending the wrong signal to the industry players,” she said.

Meantime, Virginia Ruvivar, the corporate communications manager of the semi-state-owned Petron, said the company would likely not object to a return to regulation.

She stressed, however, that the Oil Price Stabilization Fund would have to be reinstalled “so as to guarantee that the costs we incur would be brought back.”

Maricel V. Cruz

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Today’s Front Page February 21, 2020

Today’s Front Page February 21, 2020