MANILA - The Asian Institute of Management (AIM) Policy Center warned that investors may pull out of the Philippines if the government does not lift the price ceiling on oil by the end of this week.

AIM Policy Center Executive Director Lourdes Sereno said Executive Order 839, which mandates oil companies to bring down prices of petroleum products to the October 15 level, is reminiscent of the Martial Law era. At that time, Sereno said investors did not consider the country's economic environment conducive to business growth.

"Something has to be done this week. The investor community already sent out strong feelers saying if the government still takes this stance, soon enough they will really doubt whether it is serious about its people," she said.

She added that the EO clearly violates the Oil Deregulation Law, which provides that prices should be driven by market forces.

"Let us lessen the reasons they have to pull out. There are already external incentives in other countries, which are far more attractive for them. We have to be able to say that when the government puts rules it follows these rules and doesn't change them mid-way," she said.

Sereno said the repercussions of the EO—including supply constraints, the possible spike in oil prices once the order is lifted, and loss in revenues from taxes collected on oil—would be "too devastating" for Filipinos.

Some gasoline stations in the provinces have started rationing to customers due to a supply shortage allegedly brought about by the price freeze the government slapped on petroleum products in the aftermath of back-to-back typhoons. Other stations have been complaining of low fuel inventories and untimely deliveries.

Zenaida Monsada, head of the oil industry management bureau at the Department of Energy, earlier reported that the country's inventory of petroleum products has already dropped to 8 to 13 days' consumption from the normal 21 days since the government ordered oil firms to cap pump prices.

Monsada noted that some oil companies have halted imports, resulting in dwindling supply at many fuel stations.

"Some of the oil companies are unable to import because they are having difficulty securing loans from banks to pay for the imports. [They] are selling at a loss because international prices continue to rise and here in the Philippines, prices were frozen," she said.

Last month, Petron Corp. said it was expecting to incur a net loss of P1.5 billion in the fourth quarter, partly due to the price freeze.

Petron and the Philippine unit of Royal Dutch Shell, which together have around 70% of the domestic market, are the only companies that operate refineries in the country. The rest import finished petroleum products.

Company officials said the two refiners may be unable to plug any potential shortage if other oil firms stop importing. - With abs-cbnNEWS.com