Oil firms urged: Give rebates to customers

The Department of Energy (DOE) has asked oil industry players to offer discounts and promotions to their customers amid the continuous fuel price hikes since January, Secretary Alfonso Cusi said Monday.

Oil firms urged: Give rebates to customers
LAID LOW. Members of the Anakpawis party-list lie in front of a gasoline station along Road 10 in Manila on Monday to condemn the impending oil price hike, the ninth straight week oil firms have raised pump prices. Norman Cruz
This is as the country’s oil firms raised pump prices by as much as P1.15 per liter effective Tuesday to reflect the movement of prices in the world market.

This is the ninth weekly consecutive oil price hike due to the tight supply of oil products in the global market.

“Petron will implement the following price increase effective 6 a.m. on Oct 26: P1.15 per liter for gasoline; P0.45 per liter for diesel; and P0.55 per liter for kerosene. These reflect movements in the international oil market,” Petron Corp. said in its advisory.

Earlier, the Department of Finance said any suspension of the imposition of excise taxes on petroleum products may lead to a substantial revenue loss to the government of P131.4 billion for 2022.

Finance Undersecretary Antonette Tionko said this in a memorandum to Finance Secretary Carlos Dominguez III, following the earlier proposal of Cusi to suspend the imposition of excise taxes on fuel in response to the weekly increases of petroleum prices by oil firms.

Cusi referred to Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law provisions on the suspension of excise tax increases.

It would be triggered in case the average Dubai crude oil price, based on the Mean of Platts Singapore for three months before the scheduled excise tax increase, reaches or exceeds $80 per barrel.

Cusi said suspending the excise tax can lower pump prices by around P8 to P10 per liter.

However, Tionko said in the memo to Dominguez: “We confirm that the TRAIN Law cannot be invoked to suspend excise taxes on petroleum.”

Interviewed on Dobol B TV, Cusi said some of the oil industry players already provided a P1 to P3 discount per liter of their products.

“To help the public, we appealed to oil industry players to give discounts, promotions. That is already being done,” Cusi said.

The DOE wants Congress to amend the Oil Deregulation Law after it earlier proposed suspending the oil excise tax, which accumulated to P6 per liter for diesel and P10 for gasoline under the TRAIN Law, in light of the fuel price hikes.

But the DOF pointed out the government would lose P131.4 billion in revenues that could be used to fund pandemic measures due to the proposed suspension of the tax.

Aside from Petron, Seaoil Philippines, PTT Philippines, Phoenix Petroleum Philippines, Cleanfuel, Caltex, PetroGazz and Flying V also adjusted pump prices while others are expected to follow.

Unioil Petroleum Philippines announced over the weekend gasoline would increase by P1.10 to P1.20 per liter while diesel will increase by P0.40 to P0.50 per liter.

Oil prices have gone up by P8.65 per liter for diesel and P7.20 per liter for gasoline for the past eight weeks alone.

On October 19, the oil companies implemented a price increase in domestic oil products of P1.80 per liter for gasoline, P1.40 to P1.50 per liter for diesel and P1.30 per liter for kerosene.

These resulted in the year-to-date adjustments to stand at a total net increase of P19.65 per liter for gasoline, P18 per liter for diesel and P15.49 per liter for kerosene.

The DOE has monitored that improving COVID-19 situation, easing of mobility restrictions and re-opening of borders by many countries fueled the prospects of higher oil demand.

It said re-opening of borders and resumption of interstate travel in Thailand and Malaysia, respectively, added to bullish market sentiment.

Lower gasoline exports from China that are likely to persist through the fourth quarter also continues to tighten the Asian gasoline market.

Cusi also said they need similar powers as provided in RA 11469 or the Bayanihan to Heal as One Act, where the President was granted emergency powers to undertake measures to mitigate the effects of the COVID-19 situation.

But Tionko said by virtue of such provisions in Bayanihan 1, Section 1608 or RA 10863 or the Customs Modernization and Tariff Act was invoked to issue Executive Order 113, which temporarily modified the rates of import duty on crude petroleum oil and refined petroleum products.

“We agree that the only possible way DoE may be granted powers to suspend is through legislative means. The power of taxation is vested in Congress and absent any law (such as in the case of Bayanihan 1), the DoE, the DoF, or any other agency of the government has no power to suspend the imposition of excise taxes,” Tionko said.

Under the TRAIN Law, the final tranche of the excise tax hike on fuel products took effect Jan. 1, 2020. Excise tax for gasoline and kerosene increased by P1 per liter while diesel prices went up by P1.50.

Prices for other oil products also increased by P1, including denatured alcohol and processed gas. The last tranche brought the excise tax hike on most fuel products to a total of P10 per liter since TRAIN Law was passed in 2017.

In the Senate, Senator Francis Pangilinan, noting that farmers, fisherfolk, and other marginalized sectors are bearing the brunt of the oil price hike, called for the suspension of the excise tax on fuel under the TRAIN Law.

Pangilinan supports Vice President Leni Robredo’s call to suspend excise tax on fuel, saying that suspension should already be automatic in the event of extraordinary price hikes.

The vice-presidential candidate stressed that cash assistance was necessary to help the marginalized get through the pandemic.

Since the beginning of 2021, oil prices have increased by about P20 (P18.45 per liter for diesel and P20.85 per liter for gasoline).

According to Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya), a small fisherfolk now only earns P120 per fishing trip as opposed to the usual P300 before the oil price hikes.

Various transport groups have also been calling for a fare hike to cushion rising prices.

Pangilinan is co-author and co-sponsor of the Cash Assistance for Filipino Farmers Act of 2020 that mandates excess funds collected from importation will be converted to cash assistance for farmers.

The bill was passed by both Houses of Congress last September 21, 2021.

In 2018, Pangilinan, along with the Senate Minority, proposed a joint resolution to suspend excise tax on fuel under the TRAIN Law.

Following a surge in the third quarter, the World Bank predicted that world oil prices would remain elevated until 2022, adding to inflationary strains in countries like the Philippines which import all of its oil supplies.

Energy prices are expected to be substantially higher in 2021 than they were in 2020 and are expected to remain at such a level until the first half of 2022.

Meanwhile, amid continuing oil price hikes, the Anakpawis Party-list held on Monday its protest caravan from Quezon City towards Mendiola, Manila to demand the Duterte government suspend the imposition of excise and value added taxes on oil products, and the repeal of Republic Act 8479 Oil Deregulation Law.

The caravan was composed of leaders and members from the Pagkakaisa ng mga Samahan ng mga Tsuper at Operators Nationwide (Piston), Kilusang Mayo Uno, Kadamay, Bayan Metro Manila, Anakbayan, Kilusang Magbubukid ng Pilipinas, Amihan, Unyon ng Manggagawa sa Agrikultura, bikers and agrarian reform advocates.

It was led by Anakpawis Party-list and its National President and former representative Ariel Casilao, and its third nominee Francisco Mariazeta III.

The groups have repeatedly protested against the weekly oil price hike, but they said the Duterte government continued its inaction, with the DOE “passing the ball” to Congress to suspend the imposition of excise taxes on oil products brought about by the TRAIN law.

Topics: Department of Energy , Alfonso Cusi , oil industry , TRAIN Law
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