Energy Secretary Angelo Reyes has invited National Economic Development Authority (NEDA) chief Ralph Recto to a conference with local oil players next week to “reconcile any differences in perception as to what prices are ‘reasonable’” when it comes to petroleum products like gasoline and diesel.
Reyes made the move in reaction to the claim made by Recto in the media that pump prices of gasoline are “overpriced” by P8 per liter and that diesel should not sell for more than P32 per liter.
“I understand that NEDA Director General Recto has made pronouncements on the recent pump price of oil products and said that these are unreasonably high,” Reyes said.
The head of the Department of Energy (DoE) had just come from a conference on nuclear energy organized by the International Atomic Energy Agency in Beijing and who was on his way to the 3rd Asian Ministerial Roundtable Conference in Tokyo when he made the invitation to Recto.
“Hence on my return to Manila on Tuesday, April 28, I am inviting Director General Recto and the representatives of the oil companies for a joint conference where he can present his calculations and the oil industry executives can immediately respond. In this way, we can immediately take the appropriate action to best promote the welfare of the Filipino people, consistent with the prevailing law on the deregulation of the oil industry,” Reyes said.
The Oil Deregulation Law of 1998 had removed government’s regulatory power over the pricing of downstream oil products.
Nonetheless, Reyes had been constantly meeting with consumer groups, industry players, the general public and transport organizations to tackle issues on fuel prices.
The University of Asia and the Pacific (UA&P) and the auditing firm Sycip, Gores and Velayo (SGV) has recently conducted an independent study on the prices of local oil products.
The UA&P-SGV team said price data from January 2005 to January 2008 suggests that local pump prices had not gone up as fast as the price of crude abroad.
It said this meant that the margins of oil companies have probably shrunk as borne by statistical correlation of the declining share of the pump price that goes to local oil players.
“If oil companies have been overpricing, it should show up in higher profit rates. But the adjusted return on equity figures for Petron and Shell do not appear to be extraordinary when compared with the benchmark market interest rate,” the UA&P-SGV team said in a report.
Meanwhile, a consumers’ group also yesterday urged the government to transfer the powers of the DoE in regulating oil prices to the Energy Regulatory Commission (ERC).
Raul Concepcion, chairman of the Consumer and Oil Price Watch (COPW), said he is seeking the transfer of the DoE’s power to the ERC after he withdrew his petition to intervene in Civil Case 03-106101.
Concepcion said the withdrawal of his petition stemmed from statement of Reyes that the DoE ha cannot stop local oil firms from hiking their prices due to the Oil Deregulation Law (Republic Act 8479).
“Secretary Reyes stated that since the oil industry was deregulated by virtue of the Downstream Oil Deregulation Law, the DoE cannot dictate oil pricing and that market competition ultimately determines it. Despite the fact that the Deregulation Law provides safeguards to consumers, our course of action is to meet the House and Senate committees on energy and consider the various proposals to transfer the powers of the DoE to the ERC,” he said.
Concepcion said the COPW was taking the steps to allay the fears of the public in light of the increases in the prices of basic commodities and the valid concerns of the transport sector after local oil companies have again started to implement price hikes on a weekly basis.
Concepcion specifically proposed the transfer of the oversight functions of the DoE to the ERC to dictate pump prices based on world market prices and place the strategic petroleum reserve which can be sold to the market when prices bought by the oil companies are higher than market prices.
Early this week, oil companies increased the prices of gasoline by 50 centavos per liter. Just last week, they implemented a 75 centavos hike in the prices of kerosene and diesel and a P1 per liter increase in the prices of gasoline. –PNA