DOE, oil firms to meet on EO

MANILA, Philippines - The Joint Task Force of the Department of Energy and Department of Justice will meet with oil industry players today to assess the two-week impact of Executive Order 839, which freezes fuel prices at Oct. 15 levels.

Heads and representatives of oil firms, transport groups, and the LPG Marketers Association are expected to attend the meeting.

The EO, issued by President Arroyo on Oct. 23, will be enforced while the state of calamity is in effect in Luzon.

Industry players and various business organizations protested against the price freeze saying it will cause supply shortage and develop an illegal oil market in the country.

Pilipinas Shell, one of the so-called Big 3, has filed a petition for a temporary restraining order (TRO) before the Makati Regional Trial Court to immediately stop the implementation of the EO.

Shell argued that the order is illegal.

“Executive Order 839 failed to meet certain conditions prescribed under the Philippine Constitution, including the determination of exceptional circumstances warranting the exercise of emergency powers, among others,” Shell vice president for communications, Roberto S. Kanapi said.

Named respondents in the petition were Executive Secretary Eduardo Ermita and Energy Secretary Angelo Reyes.

Gov’t loses billions

A ranking Finance official, who requested anonymity, said over the weekend that the government might lose billions of pesos in revenues from income and value-added taxes (VAT) if the price control on oil stays.

“The indirect effect is on VAT and on income tax,” the official said, explaining that VAT revenues generated from the petroleum industry depend on domestic pump prices.

Of all the government taxes, it is with VAT that the Bureau of Internal Revenue (BIR) often meets its collection target, making it the government’s cash cow. Collections from other taxes such as income, percentage, and excise often fall below targets.

Latest data from the Department of Finance (DOF) showed that from January to August, revenues from VAT amounted to P110.4 billion, 18.9 percent higher than P92.87 billion collected in the same period last year.

The latest VAT collection also exceeded the P108.57 billion target for the period by 1.70 percent or P1.844 billion.

Meanwhile, corporate income tax collection from January to August is already below target, reaching only P175.78 billion, P18.1 billion short of the P193.89 billion goal for the period. This is also P20.32 billion lower than P196.10 billion collected in the same period last year.

The Finance department is still assessing how much revenues are lost because of the price freeze.

Presidential Adviser on Economic Affairs Albay Rep. Joey Salceda said over the weekend that the government might lose up to P18 billion in potential tax revenues.

Congressional authority

Administration Sen. Joker Arroyo said the Senate and the House of Representatives can pass a joint resolution to give the order congressional authority.

“We will resume the session (today). The House can pass a resolution supporting the EO. The Senate can pass a resolution without further debates. We can do that if Senator (Edgardo) Angara proposes that,” Arroyo said.

He said this would deter oil companies from questioning the legality of the order.

Arroyo said the government did not implement a takeover but merely a price freeze.

Angara earlier said he would file a resolution supporting the order.

“When we resume, we will authorize the government to take over, (the) Congress can authorize the executive. In case of emergency, the President can issue EOs but her hands will be strengthened if there’s congressional authorization,” he said.

Arroyo noted that during the martial law years, former President Ferdinand Marcos fought high oil prices by putting up Petron to compete with the major oil players.

“One of the good things that Marcos did in 1974, when there was an oil crisis, he created an oil company – Petron – which became the competitor of the other companies such as Shell and Caltex. Petron was the only company which became included in the 500 top companies in the world,” he said.

He said opposition Senators Wigberto Tañada, Ninoy Aquino and Jose Diokno supported Marcos in the creation of Petron.

“If it is for the benefit of the country, they support Marcos for it,” he said.

Petron was sold during the Ramos administration when the Oil Deregulation Law was passed.

Sen. Miriam Defensor-Santiago slammed Shell’s legal action against the order saying oil firms should “put a stop to their corporate greed.”

“Anong pinagsasabi ng mga iyan?  They are suing for time. That (EO) is allowed by our Constitution… because national interest is higher than corporate interest,” Santiago said over radio station dzBB.

“On the short term the poor will benefit from this. Only the affluent benefits in the long term,” she added. — with Iris Gonzales, Christina Mendez