House bill requires oil firms to reveal price formula

MANILA, Philippines –  Two lawmakers from Mindanao yesterday filed a bill that would compel oil companies to reveal their pricing formula.

Cagayan de Oro Rep. Rufus Rodriguez and Abante Mindanao party-list Rep. Maximo Rodriguez filed House Bill 4416 to compel oil firms to report to the Department of Energy (DOE) a “detailed calculation” of how they came up with the retail prices of gas and diesel per liter as well as “how much they earn per liter.”

The measure would also require oil firms to present to the DOE a “comprehensive report” on their monthly operations including the amount of oil imported per month, cost of importation, revenues and expenses, net income, and “all other pertinent data as may be required by the DOE.”

The Rodriguez brothers’ bill, however, does not provide for penalties for violations of the reportorial requirements.

The other day, Energy Secretary Jose Rene Almendras said that oil companies should lower pump prices within the week after it was discovered that they unduly raised fuel prices by an average of 40 centavos per liter, and also because oil prices in the international market started going down last week.

Immediately after he issued the statement, Pilipinas Shell petroleum Corp., Seaoil Philippines and Eastern Petroleum Corp. announced a rollback of diesel pump prices by 40 centavos per liter and gasoline prices by 25 centavos per liter effective yesterday.

Petron Corp. and Total Philippines, meanwhile, announced yesterday that they will roll back the price of their diesel and kerosene products by 40 centavos per liter but would increase the price of regular gasoline by 25 centavos per liter.

Total implemented its rollback at 6 a.m. yesterday while Petron was expected to implement its price reduction by 12:01 a.m. today.

There would be no adjustment in the prices of premium gasoline products for Petron and Total.

The lawmakers said that the pricing of petroleum “is very unclear,” leaving people to suspect that a big part of prices actually represent net profits.

“Petron Corp. reported a net income of P4.3 billion for 2009 and P1.9 billion for the first quarter of 2010 alone. Pilipinas Shell posted a P7.6 billion profit for the first three quarters of 2009,” they said.

“It is thus apparent that as gas prices go up, the income of these companies also goes up. This just shows that as prices of oil worldwide increase, these companies also raise their profit margin,” they added.

Sen. Ralph Recto said oil firms in the country have been overpricing their fuel products for a long time now so a comprehensive audit of their books should be done right away.

Recto, a former director general of the National Economic and Development Authority (NEDA), said oil companies were using the political conflict in the Middle East to justify their price increases.

Sen. Sergio Osmeña III, however, said the government does not have a lot of options in controlling oil prices in the country because the industry is deregulated.

“Today, all the government can do is exercise moral suasion,” he said. “We do not have a limit on profit margins unlike the electric distribution wheeling fees which are regulated by the ERC (Energy Regulatory Commission),” he said.

Balancing act

Almendras said that with a deregulated oil industry, it is difficult to find a balance between policy direction, maintaining investor interest in doing business in the country, and satisfying public demand for lower prices.

He said, before prices are considered, security of supply should be first secured.

“We have to balance off, I hope everyone understands too. We are not protecting the oil companies. We are doing our mandate to ensure the country’s energy security. We have no oil resource and we need to import from the world oil market and they dictate oil prices,” he said.

“We’re not the easiest country to do business in. That’s why I’m scared of a supply situation. What can we do when the oil companies tell us they want to back out,” he added.

He said that while the pump prices of petroleum products have skyrocketed in the past months, the supply of petroleum in the country has been stable.

“I can stare anybody in the eye, at any time, to the last centavo, and say every decision I have made in the last 11 months have been for the protection of the Filipino people. Perhaps not in terms of price protection, but maybe in terms of supply protection… People cannot isolate and forget about supply,” Almendras said.

To blunt the effects of the successive oil price increase on the transport sector, the government has approved a month-long fuel subsidy for jeepney operators and tricycle operators.

The fuel subsidy cards to be distributed beginning May 2, will each be loaded with P1, 050 for jeepney and P150 for tricycles. The cards are valid only for one month.

Cardholders, however, should keep the card during the next five years that the information in it is still valid.

Almendras said it may again be needed for future assistance from the government and possibly, to avail of discounts and other promotions from oil companies.

Card recipients should wait for five days from the release of the cards before the cards can be used.

At present, some 200,000 cards have already been printed and placed in the possession of banks that are going to issue them. To claim the cards, recipients should present an original franchise certificate, official receipt/certificate of registration, and two valid identification cards.

Tentative distribution centers for the cards are the grandstands in Fort Bonifacio, Luneta and Camp Crame.

In the provinces, the cards will be distributed in the branches of the Land Transportation Office. – With Marvin Sy, Reinir Padua, Donnabelle Gatdula –Jess Diaz (The Philippine Star)