Petron urges government to examine its books

MANILA, Philippines - Petron Corp., the country’s largest oil refining and marketing company, yesterday urged the government to examine its books to put an end to speculation that it is overpricing.

Petron president Eric Recto has challenged the task force composed of the Department of Energy (DOE) and the Department of Justice (DOJ) to examine its books to determine whether the company is making undue profits by overpricing its petroleum products.

“Petron has always adhered to transparency and fairness in the pricing of its petroleum products. We have always maintained that as a publicly-listed company, our quarterly financial and operating records are open and can be scrutinized by anyone. We have 180,000 shareholders who can attest to this,” Recto said.

Recto said Petron is not hiding anything.

“We have nothing to hide and we are prepared to open our books to the DOE-DOJ task force so that they can finally determine whether we are indeed profiteering. There are many groups and personalities who continue to ride on the oil price bandwagon causing confusion and undue expectations among the public. We hope that they (DOE-DOJ task force) act on this matter immediately,” Recto said.

Recto also reiterated that the company has always fully cooperated with the government and has participated in various dialogues with NEDA, the Congress, and the DOE on the issue of oil pricing.

In the first half of 2008, when international oil prices hit all-time highs, Petron fully cooperated with the DOE when it conducted an independent audit to ascertain whether local prices were reasonable or not.  

The DOE has directed auditing firm SGV and the University of Asia and the Pacific to audit their books.

The study found no evidence of overpricing and cartelization and revealed that Petron’s return on equity from 2005 to 2007 was much lower than the interest rates on Treasury bills and Treasury bonds.  

This simply means that government financial instruments offered better returns than oil refining and marketing operations. 

Recto said the study also found that local pump prices did not go up as fast as the international prices of crude and finished products during that period.

Another study conducted in 2005 by a six-man Independent Review Committee (IRC) concluded that movements in local prices were mainly due to forex and international oil price movements, competition in the market clearly existed and there was no evidence of cartelization.

“In 2008, Petron reported a net loss of almost P4 billion because of the extreme volatility in oil prices.  Again, this proves that at the very least, we are not making undue profits,” Recto concluded.

The oil firm earlier said it is expecting a loss of P1.5 billion in the fourth quarter of 2009 due to the implementation of EO 839, which has frozen retail prices of petroleum products in Luzon at October 15 levels for an indefinite period of time.  

Recto noted that this loss could be even higher if international oil prices rise beyond forecast levels.