(UPDATE) 3 more oil firms announce rollbacks
abs-cbnNEWS.com | 10/26/2009 8:32 PM
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But oil firms warn vs supply shortages
MANILA - Three more oil firms announced on Monday that they will abide by Malacañang's order to revert pump prices to October 15 levels.
Chevron Philippines (formerly Caltex), Seaoil Philippines and Petron Corporation joined Unioil Petroleum Philippines Inc. and Flying V in announcing rollbacks to pump prices in Luzon from the increase last October 19.
President Arroyo signed Executive Order (EO) 839 on October 23 directing oil companies to “retain the level of the retail price of petroleum products prevailing on October 15, 2009, which was one week after the last landfall of typhoon ‘Pepeng.’”
The price freeze was made “to respond immediately to the clamor of the Filipino people to prevent unreasonable increase in the prices of petroleum products during a state of calamity.” The took effect after it was published in a broadsheet Saturday.
Seaoil, in a text message, said it will reduce its prices in Luzon by P1.25 per liter for premium and unleaded; P0.85 per liter for regular gasoline: P1.50 per liter for kerosene and P2.00 per liter for diesel. It said the price rollbacks will take effect 12:01 a.m. Tuesday.
Chevron, in a text message, also said it is reducing its prices to Oct. 15 levels in Luzon in compliance with the provisions of EO 839.
Chevron said it will reduce its diesel prices by P2.00 per liter while unleaded gasoline would be reduced by P1.20 per liter gasoline and kerosene by P1.50 per liter. It said the price reduction would also be effective 12:01 a.m. Tuesday.
Chevron said “the adjustment is being implemented to give our retailers the opportunity to comply with EO 839.”
Petron Corp meanwhile on Monday evening said it will implement a rollback of P1.25 per liter for its Premium gasoline (Value-Added Tax included), P0.85 per liter for regular gasoline, P2.00 per liter for diesel and P1.50 per liter for kerosene effective 6 a.m. Tuesday.
Virginia Ruivivar, Petron Corp. public relations manager, in a text message, said the adjustment will take effect in Luzon only and is in compliance with EO 839.
Flying V, which had already said on Sunday that it will comply with the Palace order, assured on Monday that its pump prices will be within the Oct. 15 suggested retail price levels.
In a text message, the independent oil player said that “the immediate positive effect of the EO is that the planned P2 per liter increase this week will be deferred indefinitely in Luzon.”
However, Flying V warned of a possible increase in areas outside Luzon.
“We shall adjust prices in other areas to reflect the previous week’s MOPS [Mean of Platts Singapore] movement this week,” said Flying V.
Unioil reduced pump prices of petroleum products on Monday by P2 per liter for diesel and P1.25 per liter for gasoline.
“Supply shortages”
Major oil companies, meanwhile, warned the government of supply shortages if they are forced to comply with Malacanang's directive.
Both Pilipinas Shell Petroleum Corp and Petron Corp. executives explained in the meeting with Energy Secretary Angelo Reyes that they cannot sell at a loss and may not be able to supply the country's demand, as oil prices overseas are on the rise.
"We may not be able to supply the country's demand,” said Lubin Nepomuceno, Petron Corp. general manager.
“This has serious implications not only to supply of products in the country but also to the investment climate in the country,” said Ed Chua, Pilipinas Shell country chairman.
Only Pilipinas Shell of the so-called Big 3 has not yet announced rollbacks in their pump prices as of posting after the announcements of Chevron and Petron Monday.
Flying-V added that oil firms will have to recoup losses once the order is lifted possibly resulting in a massive price spike later on.
University of the Philippines economist Benjamin Diokno agreed, adding that the firms may not have the inventory needed to sustain a price freeze.
“Lugi sila, bakit naman sila magbebenta. Ngayon may sapat bang imbentaryo ang mga small players to sell at a loss?” said Diokno.
Reyes, however, defended the Malacañang order. “Compliance to any law or presidential issuance is mandatory.”
Former Socioeconomic Planning Secretary Ralph Recto said: "If Unioil can do it, why can't others do the same? After all, they operate under the same market conditions."
Legal options
Chevron also said that while this was the “first time” that it is undertaking such a move, “this does not prejudice such other legal options and remedies there are for us to explore.”
Another independent oil player on Sunday had balked at the Palace directive and said it is considering its legal options.
“Given the almost P2.00 per liter additional cost in MOPS [Mean of Platts Singapore] which must be reflected this week on top of last week's increase, it's almost impossible for any oil company to comply with [the] 15 October price level,” said Fernando Martinez, Eastern Petroleum Corporation chief executive on Sunday.
Martinez said that it would be interesting to see how any oil company can sustain the price levels at October 15. He said this could be done only if there was a downward movement in international oil prices this coming week and at a level of $12 per barrel.
“We will study our legal options in consultation with the rest of the industry players,” said Martinez.
Transport groups welcomed the Malacañang order.
Efren de Luna of Alliance of Concerned Transport Organizations (ACTO) said they will withdraw their petition for an increase in minimum jeepney fare due to the Palace order. With a report from Alvin Elchico, ABS-CBN News
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