Petron Corp., the country’s lone refiner, will shut down its 180,000-barrel Bataan refinery “very soon” amid a “difficult” environment brought about by the coronavirus pandemic and an uneven playing field, a top executive said Tuesday morning.
“The refinery business today is very difficult. Around the world, a lot have shut down,” Petron president Ramon Ang said in a virtual briefing.
Ang said Petron was suffering from an uneven playing field compared to oil importers in terms of tax payments, compounded by inventory losses amid low demand at the height of the community lockdown.
“There has to be a level playing field. If Petron will not have a level playing field with the importers, we will shut down for sure. When? Very soon,” Ang said.
“Our competitors, those without refinery, when they deliver diesel and gasoline directly there is no tax, they will just pay the tax once they sell,” he said.
Ang said Petron suffered billions of pesos in losses because of the fluctuation of oil prices in the world market amid the pandemic.
“Nakakaawa lang empleyado kasi lilibo libo yan na mawawalan ng trabaho pero dun pa din tayo patungo,” Ang said.
“The only way to save this is if we go to Congress to make it a level playing field. Other than that, it will shut down,” he said.
Ang admitted that convincing Congress to amend the law would take time.
“We have to amend the law or Malacanang will come out with an executive order," he said.
Ang assured Petron and San Miguel Corp. would continue to honor their obligations to the employees even if the refinery stopped operations.
“We can keep the gas stations and pay the debts forever…We will pay all obligations and we have enough to pay all the obligations,” he said.
Ang said, however, that without a refinery, the Philippines “will be at the mercy of foreign suppliers”.
The Department of Energy said it had yet to receive a notification from Petron over its alleged plan to permanently close its refinery.
"We at the DOE are looking into the taxation concerns raised in coordination with the Department of Finance. At the same time, we are also evaluating how a closure scenario would impact pricing, as well as the country's energy security," the DOE said.
"We will closely monitor the developments as we affirm to be always with our stakeholders in finding solutions to whatever hurdles the industry is facing. But whatever business measures Petron will arrive at in the course of its discussion with the concerned parties, we at the DOE will respect the management's decision," the agency said.
Finance Secretary Carlos Dominguez III said, however, there was no need to change the current taxation system for fuel refiners and importers.
"We note that in the refinery business, there may be market and timing issues—such as importing crude at a high price, then after refining the world crude prices might be lower, thus refining margins could be lower," he said.
Dominguez said an importer of finished products could sell the products right away, making it less vulnerable to oil price movements. He said it was actually a supply chain issue, instead of a tax issue.
"We don't need to change our tax laws on this. It is happening worldwide. Rinery margins are getting squeezed. Big oil companies have been shutting down their refineries in various parts of the world," Dominguez said.