, February 28, 2005
 (STAR) By Donnabelle Gatdula  -  Major oil firms Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. have hiked gasoline and diesel prices by 60 centavos and 50 centavos per liter because of competition from small oil players

Petron raised prices yesterday "to reflect increase in crude costs."

On the other hand, Caltex said that due to competitive market forces and the continuing surge of crude product prices in international and regional markets, it adjusted prices of its Vortex Gold and Silver by 60 centavos per liter and diesel and kerosene by 50 centavos last Feb. 26.

However, the three big oil firms have committed to maintain the P1 per liter discount on diesel products for public transport groups.

Meanwhile, Fernando Martinez, chairman of the Independent Philippine Petroleum Companies Association (IPPCA), said the small oil players raised their prices to make up for under-recoveries incurred in January.

"This is a partial recovery of the steep increase of more than $6 per barrel for gasoline products or more than P2 per liter for the February MOPS (Mean of Platts Singapore) average versus January 2005 and more than $4 for diesel or more than P1 per liter," he said.

Martinez warned that the continuing rise in crude prices abroad may trigger pressure on local oil firms to further increase their pump prices.

"With the continuing climb of crude and the world market, we are not ruling out the possibility of another hike on the first days of March," he said.

On the other hand, consumer advocate Raul Concepcion has urged the Department of Energy (DOE) to stop issuing misleading statements on the value added tax for petroleum products.

"VAT is a highly emotional issue and the Department of Energy has added to the confusion by its misleading statement that the government will collect P 57 billion in tax revenue once the VAT exemptions on petroleum and power are lifted," he said.

Concepcion was reacting to this DOE statement: "We only calculate gross output VAT and not the net because we don’t know the input VAT component. The net VAT is calculated by the DOF."

"I am dismayed that such a statement can come from the DOE without first getting its act together with the Department of Finance," he said.

Concepcion said he is one with the House of Representatives and the Senate that full disclosure of pertinent information should be done by the government to facilitate decision making.

"As far back as September 2004, we informed consumers that unless we reflect the true cost of basic services, we will be in fiscal crisis like Argentina sooner than later," he said.

Concepcion appealed to the National Power Corp. (Napocor), Power Sector Assets and Liabilities Management Corp. (PSALM), the National Transmission Corp. (Transco) and the DOE to implement full disclosure on the VAT rate.

"The consumers look upon us for transparency in determining what the additional cost will be to them," he said.

"Knowing what the true costs are, people will accept the additional imposition. We do not want any VAT exemption and we are in favor of a two percent VAT on power to put all sectors in the VAT system."

Concepcion asked the DOE and the oil companies to inform the public about the prices of diesel, gasoline and LPG (liquefied petroleum gas) with VAT or without VAT.

"For the DOE and the oil companies to state the VAT that will be passed on to the consumer at the pump or gas station which we estimate to be 72 centavos per liter for diesel," he said.

Concepcion said there are three things to remember on VAT on power and petroleum products:

• VAT on power will make consumers suffer.

• VAT on diesel, LPG and kerosene will make consumers suffer even more.

• Private power generating companies (Gencos) and independent power producers (IPP’s) must share the burden: They must pay corporate income tax, since they are getting a guaranteed profit approved by the Energy Regulatory Commission.

Reported by: Sol Jose Vanzi

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