Petron seeks level playing field for oil industry

MANILA, Philippines — Petron Corp. is advocating for a level playing field in the oil industry amid the rampant smuggling.

The country’s largest oil refiner and marketer said it would continue to push for a level playing field in the industry where illicit trade – which deprives government of much-needed tax collection and consumers of quality fuel products – is not allowed to thrive.

 It said its operation in Subic shows that deregulation and competition would only truly work if rules on taxation and even product standards are fairly applied to all.

 In the first half of the year, Petron suffered a 72 percent drop in profit to P2.6 billion.

However, its subsidiary Petron Freeport Corp. (PFC) reported double-digit sales and profit growth during the period. The company registered a 14 percent increase in sales volume of 10.5 million liters, while net income grew 20 percent to P48.7 million.

PFC operates service stations inside the Subic Freeport Zone where locators are exempt from national and local taxes, including excise taxes. Fuel intended for freeport zones are tax-free.  

“It is worth noting that while PFC’s Subic stations continue to grow, domestic volume for the rest of parent Petron has been declining,” it said.

The major oil player said Subic Freeport allows locators to engage in healthy competition where players offer prices at almost the same level.

 “However, outside the freeport zone, various reports would show significantly large retail price disparities of as much as P10 to P15 per liter on average, a clear indication that smuggled oil continues to flow in various parts of the country,” Petron said.

In response to oil smuggling concerns in the industry, the Department of Finance (DOF) and the Bureau of Customs (BOC) formally launched the fuel marking program (FMP) earlier this year.

The program—which will be fully rolled out by next year—aims to plug revenue leakages from oil smuggling by placing a molecular marker on imported, manufactured and refined fuel products such as gasoline, diesel and kerosene.

So far, Seaoil Philippines became the first oil firm to comply with the new government initiative in its bulk terminal in Mabini, Batangas.

The second to comply is Unioil Philippines, where its Unioil Terminal Depot in Mariveles, Bataan underwent initial marking activity earlier this week.

In a statement, the Bureau of Customs (BoC) said approximately P53 million liters of gasoil with paid duties and taxes amounting to P405.37 million was dosed with the official fuel marker by the fuel marking team led by the Port of Limay district collector Michael Angelo DC Vargas together with the representatives from fuel marking provider SGS-SICPA and Oilink International Corp. Terminal Depot.