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Petron dares govt: Examine our books if overpricing exists

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abs-cbnNEWS.com | 11/08/2009 7:19 PM

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MANILA - After an oil company asked a court to stop a Malacañang order to cap oil prices in calamity-stricken Luzon, the country’s largest oil supplier dared the government to examine its books to determine if it was overpricing its oil products.

Petron Corp., in a statement on Sunday, urged the joint task force of the Department of Energy and Department of Justice to examine its books to see if it is guilty of overpricing and making undue profits from its fuel products.

"We have nothing to hide and we are prepared to open our books to the DOE-DOJ Taskforce so that they can finally determine whether we are indeed profiteering. There are many groups and personalities who continue to ride on the oil price bandwagon causing confusion and undue expectations among the public. We hope that they (DOE-DOJ Taskforce) act on this matter immediately," said Petron President Eric Recto.

President Arroyo signed Executive Order (EO) 839 last Oct. 23. The order aimed to protect consumers against predatory pricing by oil companies while a state of calamity is up in Luzon in the aftermath of a series of destructive storms that hit the country. The order froze oil prices in Luzon to October 15 levels.

Petron, however, denied any practice of overpricing.

"Petron has always adhered to transparency and fairness in the pricing of its petroleum products. We have always maintained that as a publicly-listed company, our quarterly financial and operating records are open and can be scrutinized by anyone. We have 180,000 shareholders who can attest to this," Recto noted.

Oil companies increased prices October 19 but were forced to rollback prices after EO 839 was issued. Energy Secretary Angelo Reyes said that the October 19 increase had "fairly reflected" the increase in international oil prices.

'Always cooperated with government'

Recto said that the oil company has always fully cooperated with the government on issues of oil pricing.

He cited Petron's cooperation in studies and audits made in 2005 and 2008.

He said the 2008 audit of books of oil companies including Petron found no evidence of overpricing and cartelization.

The 2005 audit, on the other hand, only concluded that movements in local prices were mainly due to foreign exchange and international oil price movements, that competition in the market clearly existed, and there was no evidence of cartelization.

"In 2008, Petron reported a net loss of almost P4 billion because of the extreme volatility in oil prices. Again, this proves that at the very least, we are not making undue profits," said Recto.

Petron said it has reported that it expects a loss of P1.5 billion in the fourth quarter of 2009 due to EO 839. It said that its loss could be even higher if international oil prices rise beyond forecast levels.

TRO on EO 839 sought

Pilipinas Shell Petroleum Corp. last Friday asked a Makati Regional Trial Court to issue a temporary restraining order on the oil price freeze.

The country’s oil industry players and various business organizations have criticized the price freeze, citing its harmful impact on the economy.

“EO 839 failed to meet certain conditions prescribed under the Philippine Constitution, including determination of exceptional circumstances warranting the exercise of emergency powers,” Shell vice president for communications Roberto Kanapi said.

Shell also brought up an alleged long-term problem due to EO 839 on the oil industry and the country’s investment climate.

“An equally grave consequence, EO 839 may logically result in supply shortage, rationing of petroleum products, and the development and growth of illegitimate market for oil products in the country,” said Pilipinas Shell in its petition.

Named respondents in the petition were Executive Secretary Eduardo Ermita and Energy Secretary Angelo Reyes.

'Prepare to face complaints'

Malacañang had welcomed Pilipinas Shell’s petition to stop the price freeze on petroleum products, saying it was the oil firm’s right to seek redress for "imagined grievances."

Press Secretary Remonde said that the move of Shell to challenge the legality of EO 839 would resolve a lot of issues being raised by the oil industry against the controversial order.

However, Remonde said that Shell and other oil companies should also be prepared to face the complaints of consumers against their “opportunistic tendencies.”

“That is the right of Shell under the law to seek redress for imagined grievances as it is also the right of the people to complain against what they feel as opportunistic tendencies of the giant companies, as it is the responsibility of the government to protect the interest of the greater number,” Remonde said over Radyo ng Bayan.

Executive Secretary Eduardo Ermita, in an interview, said that the Palace is confident of the legality of EO 839, particularly the basis for its issuance.

'Lifting at President Arroyo’s discretion'

Palace deputy spokesperson on economic affairs Gary Olivar on Sunday however slammed the oil companies' claims.

“What is objectionable is for them to make threats and even question the constitutionality of some parts of the same oil deregulation law that protects them... The oil companies must also help themselves by behaving more constructively if they want it to happen sooner rather than later,” said Olivar in text message Sunday.

Olivar maintained that the price freeze on oil and other commodities earlier covered by a Department of Trade and Industry order “will be lifted only at the president’s discretion upon the advice of the National Disaster Coordinating Council and the DOJ/DOE Task Force, whenever that happens.”

The DOE has scheduled a meeting with oil firms and transport groups on Monday. With reports from Willard Cheng, ABS-CBN News, and The Philippine Star