Petron offers diesel cheaper by P11 to P17/liter to gov’t » Manila Bulletin Business

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Petron offers diesel cheaper by P11 to P17/liter to gov’t

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By Myrna Velasco

In lieu of the government’s plan to import Euro-4 diesel, leading Philippine oil industry player Petron Corporation is making an offer to sell to government diesel at a price that will be cheaper by P11 to P17 per liter.

(Mark Balmores / MANILA BULLETIN)

(Mark Balmores / MANILA BULLETIN)

In an interview with reporters, Petron President and CEO Ramon S. Ang said the estimated cost discount could be achieved by the company two-pronged: one is on avoided freight cost which may amount to P5 per liter reduction in price. Then, if excise taxes and value added tax will no longer be added to the pass-on cost, that will be an additional cut of P11 to P12 per liter in the pump prices of petroleum products.

“Petron has been exporting diesel and gasoline…and definitely, our price is very competitive when we are exporting to Singapore,” he said.

Ang further stressed “we can sell cheaper to them because our export volume is very big.” The scale of importation that state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC), as sanctioned by the Department of Energy (DOE), can be fully served by Petron, according to him.

Ang explained that in terms of freight costs alone, “they (PNOC-EC and DOE) can already reap big cost discounts from that…so why do they need to import when that will even entail dollar outflow for the government, when in fact, we are exporting.”

‘Buy from us’

The Petron chief executive emphasized that if the government is trying to dangle lower prices by not paying taxes on their product imports, “then it’s better that they will just buy from us…it can just be stated (in relevant documents) that we sold to PNOC and then that shall be backed up by BIR (Bureau of Internal Revenue) certification.”

Ang was referring to the P2.0 billion worth of importation that state-run subsidiary PNOC-EC has announced to the media this week.

He added that the product offer from the yield of Petron’s Limay refinery in Bataan will even be “of higher quality – Euro-5 and Euro-6 specifications compared to the targeted Euro-4 purchase from Singapore.”

Ang emphasized that with the government’s importation plan, there are questions on how it will handle distribution – primarily from the shipment to the targeted end-users, mainly the public utility vehicles (PUVs).

On logistics alone, PNOC-EC will need to deal with that concern at least on two grounds: one is from the vessel to the import terminal and how the product will be distributed or delivered from the terminal to the stations where the consumers shall be filling in their vehicles.

Ang said if government will pursue its diesel importation plan, that will also involve “a lot of risks on peso devaluation – as well as inflationary pressure on the price of oil, plus the corresponding freight costs.” (Myrna M. Velasco)

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