Nograles vows tough action against smugglers

MANILA, Philippines - Speaker Prospero Nograles vowed “tough action” yesterday against oil smugglers who he said might have deprived the government of P93 billion in potential taxes, a figure which might even be an under-estimation considering the large scale of the smuggling operations.

“Oil smuggling is clearly an act of economic sabotage that needs to be penalized severely,” he said.

“It is incumbent upon us in Congress to pinpoint existing provisions of relevant laws and make the necessary revisions or reformative amendments, including the imposition of the heaviest penalties to deter smuggling, if indeed the facts presented were true,” he said.

Nograles based his estimate of potential tax losses on the information an oil industry watchdog, the Philippine Institute of Petroleum, gave the House committee on energy chaired by presidential son and Pampanga Rep. Juan Miguel Arroyo.

According to the institute, tax losses in three years alone – 2006 to 2008 – amounted to P93.3 billion.

It said the industry reported that demand had fallen over the three-year period despite the fact that the country experienced unprecedented economic growth that peaked at more than seven percent in 2007.

It did not believe the industry report, saying demand should have increased in step with the expansion of the economy.

It then calculated consumption based on economic growth and concluded that the difference between its assumed demand and the level reported by the industry was due to smuggling.

The Arroyo committee has opened an investigation on oil smuggling based on a resolution filed by Agusan del Sur Rep. Rodolfo Plaza.

Plaza said he has information that the government is losing as much as P16 billion a year in taxes to oil smugglers who, he added, are based mostly at the Subic Freeport.

Customs Commissioner Napoleon Morales has told the energy committee that his agency has filed charges against six oil importers and consignees.

He identified these as Unioil/Oilink, Andan Enterprises, Mawab Resources, Tri-solid Movers, BSJ Fishing, and Orelyn Trading.

Nograles also criticized Petron, Shell and Chevron (formerly Caltex) for resisting a court order requiring them to open their book of accounts to the Commission on Audit and the Bureau of Internal Revenue.

 “They should open their books because the Oil Deregulation Law is very clear in its provision on predatory pricing and other unfair trade practices. If there is no price manipulation, I don’t think the oil companies should contest this court order,” he said.

He noted reports quoting Economic Planning Secretary Ralph Recto as saying that local oil products are overpriced by as much as P8 per liter.

The day after the reports came out, oil companies, which dispute Recto’s figures, reduced pump prices.