CEBU, Philippines – Are Cebuanos subsidizing the losses incurred by the three major oil companies from selling petroleum products at a low price in Manila and Mindanao?
Yesterday, Cebu Governor Gwendolyn Garcia said she would file today a complaint before the Department of Energy-Department of Justice (DOE-DOJ) Task Force to find out if there is any injustice behind the price difference of petroleum products sold in Cebu and other parts of the country.
From the comparative price watch conducted by provincial technical personnel, it was found out that the prevailing price of diesel sold in Manila by Shell, Petron and Chevron is P25.25 per liter compared to P31.56 in Cebu.
The price of unleaded gasoline of the three major oil companies is pegged at P31.75 per liter in Manila compared to P39.44 in Cebu. LPG, likewise, has a unit price of P18.25 in Manila while it is sold in Cebu at P24.03.
The price difference ranged from almost P6 to P8 which can be computed to P400 additional fuel expenses for Cebu drivers who consume at least 70 liters a day, said President Samuel L. Chioson, president of Cebu Chamber of Commerce and Industry.
“Cebu now bears the unfortunate distinction of having the highest fuel price. It has an impact on our target for growth. We will not accept this,” Garcia said, demanding an explanation from the representatives of Shell, Chevron and Petron during a meeting yesterday.
Pilipinas Shell Petroleum Corporation Vice President Roberto S. Kanapi said that prices are always affected by what is happening in the world market since more than 95 percent of petroleum products are imported.
“Prices are set depending on the benchmarks, outcome of exchange rates and difference in the components of distribution costs,” Kanapi said.
Kanapi said that in Manila, there is cheaper distribution cost because of the presence of a 120-kilometer pipe line under the South Expressway which transports the product easily.
Since the fuel products need to be shipped from Manila to Cebu, “definitely prices should be higher because of the distribution cost,” Kanapi said.
But Garcia argued that the distribution cost could not be used as a reason since Cebu is nearer than Mindanao, which posted nearly the same price as that in Manila.
In Cagayan de Oro, the price of diesel is P28 per liter compared to P31.56 in Cebu. The price of unleaded is P34.80 in CDO while P39.44 in Cebu.
Kanapi explained that another probable reason is that there are many small players in Manila and Mindanao, which help lower the fuel price there.
“At the end of the day, the market controls the price. These small players sell their products lower than our cost so we do not have a choice but to match our price with them,” Kanapi said.
Kanapi assured that their pricing strategies have not changed and that the prevailing price in Cebu is at its normal level, saying that they do not have control over small players that can afford to sell their products at a lower price.
“So if that is the case, are we subsidizing your losses in Mindanao and Manila?” Garcia asked.
She argued that if the pricing in Cebu is normal then the losses oil companies are incurring from the abnormal pricing in other areas are being paid by the Cebuanos.
Kanapi and other representatives of the oil companies refused to answer the question and refrained from talking more about their pricing policy.
DOJ Undersecretary Jose Vicente Salazar said that the task force would look into the case.
The complaint that Garcia will file before the task force will be the first in the country. Salazar advised the governor to attach the evidence in the affidavit.
The task force will conduct its own investigation before the matter will be referred to the State Prosecutor’s Office for another investigation.
Salazar lauded the governor for bringing the case to the attention of the task force, which was created to ensure that oil companies will not abuse the Republic Act 8479, or the Downstream Oil Industry Deregulation Act of 1998.
“This first case will test the mechanism being implemented in the deregulation law whether it is effective or prone to abuse by oil companies,” Salazar said.
He said that the investigation will try to find whether Shell, Petron and Chevron are imposing unreasonable prices in their fuel.
“Criminal penalty can be imposed against them from the President down to the last person responsible for the violation,” Salazar said.
Garcia asked the oil companies to review their pricing policy while the business sector demanded for an immediate adjustment in the fuel price. — Jessica Ann R. Pareja/LPM (THE FREEMAN)