Recto wants to examine oil firms’ books

Newly appointed Socio-economic Planning Secretary Ralph Recto, the principal author of the controversial value added tax (VAT) law – which has been blamed for high oil prices in the country – wants to examine the financial statements of oil firms to determine if their pump prices are justified.

Recto said he would like to see the profitability of oil firms and how much they could sacrifice for the consumers given the present environment of skyrocketing oil prices. He said that if the financial statements would show that oil companies are raking in enough profits, he would appeal to them to roll back prices or put off future increases.

“If for example the profit of an oil firm stood at P2.5 billion in the first half of last year, and it earned the same amount in the first half of this year, then  maybe they should set aside their recovery efforts,” Recto told reporters yesterday.

However, Recto conceded that as NEDA chief, he cannot do anything about rising crude prices but to just appeal to the oil firms to roll back prices when global crude prices are also going down.

“Moral suasion is a significant thing,” Recto simply said.

On Tuesday, President Arroyo also ordered the Department of Energy (DOE) to conduct an “intensive audit” of the books of the country’s oil and power companies, particularly on their cost recovery.

While the DOE has already conducted an audit of the books of the oil companies in the past, Malacañang officials said the President wants the department to be more diligent and thorough in its audit.

The DOE hired the services of accounting firm SGV and the University of Asia and the Pacific to audit the books of the oil companies but no irregularities were found.

Mrs. Arroyo said the DOE could tap the services of the Commission on Audit if needed.

Press Secretary Jesus Dureza said that what the President wants was for these companies to reflect any movement in the prices of oil in the world market on their pump prices.

“The whole point is that the President wants that if there is going to be a reduction in the price of fuel in the international market, immediately this must be passed on to the consumer,” Dureza has said.