DOE inclined to back Petron refinery’s bid to apply for PEZA incentives

Energy Secretary Alfonso Cusi said his department will support the proposal to reclassify the 180,000-a-day-barrel refinery of Petron Corp. in Limay, Bataan as part of the Freeport Area of Bataan.

“We want the PEZA [Philippine Economic Zone Authority] zone to flourish in the country actively. As long as it is positively making a positive impact to our country, we want to promote that,” Cusi said in a virtual conference Monday.

Cusi said the move was a business decision of Petron and that the DOE would not oppose it once the company presented its proposal.

“If they present it to us, we’ll just look at it. I don’t see any problem,” the energy chief said.

Petron is looking for ways to cut back on costs as the COVID-19 slashed oil prices worldwide because of low demand.

Petron said it was plagued by an uneven playing field with oil importers that led the management to decide to shut down the refinery for economic reasons in January.

Cusi said DOE respected the decision of Petron to shut down the refinery given the market environment.

“On the tax issue, we brought that up already with the DOF [Department of Finance]. They are also evaluating. They are looking in to the macro effect to the economy,” Cusi said.

Cusi assured the country’s supply would not be affected despite the refinery shutdown.

“They will import the finished product and use their terminal as storage for clean product instead of crude oil. Petron is also looking to keeping their market share, that will not affect the supply,” he said.

Petron president Ramon Ang earlier said the company would push through with the shutdown of the Bataan facility by January amid the challenging market environment.

“Yes, January for economic shutdown,” Ang said, adding that under the economic shutdown, the refinery with a capacity of 180,000 barrels a day might still reopen once the situation improved.

Ang said Petron, the only remaining refiner in the country, faced arduous taxation not encountered by fuel importers, aside from operating under a volatile business climate.

“We have several tax-related concerns which we have already raised with the government. Under the current regime, refiners are faced with the burden of paying so much more taxes than importers making it more difficult for us to preserve the viability of operating a refinery in the country. Of course, we want to keep our refinery running and hopefully with the government’s support, we will be able to do this more efficiently,” Ang said.

The Petron refinery went on maintenance shutdown in May before moving to an economic shutdown to preserve cash amid the deteriorating refining margins.

Petron eventually reopened the refinery in September but a month later, Ang announced plans to close the refinery amid the uneven playing field compounded by low demand.

Petron reported a net loss of P12.6 billion in the first nine months, a turnaround from a net income of P3.6 billion in the same period in 2019 because of the 40-percent drop in domestic volume and the P13-billion inventory losses in the first four months of the lockdown.