GOVT  BLINKS  ON  OIL

MANILA, NOVEMBER 14, 2009
(MALAYA) BY JOCELYN MONTEMAYOR - The government is set to remove the price ceiling on oil products by lifting the state of calamity in all but the areas hardest-hit by typhoons Ondoy and Pepeng in Luzon, Executive Secretary Eduardo Ermita said yesterday.

But the lifting will come only upon the return of President Arroyo from the Asia-Pacific Economic Conference leaders’ meeting in Singapore on November 14 and 15, Press Secretary Cerge Remonde said.

"We will not allow anybody to pressure us," he said.

Oil companies said because Executive Order 839, which froze prices at October 15 levels, has forced them to sell their products at a loss, they have stopped importing to replenish their inventory.

Oil companies warned on Monday that the country’s oil stocks would run out in eight to 13 days.

Justice Secretary Agnes Devanadera said the Department of Justice-Department of Energy Task Force has recommended the lifting of EO 839.

She said the lifting, however, is tied to a commitment of Petron, the country’s biggest refiner and distributors, and of independent player Seaoil that they will provide discounts in hardest-hit areas.

Ermita said the inter-agency National Disaster Coordinating Council is now identifying the areas where the state of calamity will be maintained. These will likely be Baguio City in Northern Luzon, parts of Zambales in Central Luzon and parts of Laguna and Quezon in Southern Luzon.

Since Monday, a number of small gasoline stations have shut down for lack of stocks. Dealers of the Big 3 – Petron. Shell and Chevron – have cut selling hours to stretch out their dwindling stocks.

Oil companies said they are losing P4.50 a liter in the average because of the price freeze. They said they are prepared to absorb the losses they have been incurring since October 23 when EO 839 was issued, but the government must lift the price cap immediately to avert a crippling supply shortage.

Publicly owned Petron, in a disclosure to the Philippine Stock Exchange, said it estimates a net loss of P100 million for October and expects to see the losses reaching over P1 billion for the full fourth quarter if the EO is not lifted till year-end. The loss could go higher if international oil prices rise beyond forecast levels in coming weeks.

A Shell official, in a hearing the other day of its petition before the Makati regional trial court to declare EO 839 unconstitutional, said the company lost P80 million from October 26 to 31 because of the price cap.

"The massive losses continue everyday since we are compelled to sell at prices lower than those dictated under (benchmark) Means of Platts of Singapore," Willy Sarmiento, Shell vice president for finance, said.

Earlier, independent player Flying V said it was forced to cancel an importation scheduled to arrive the first week of November in the face of a P4 to P5 loss per liter.

Flying V president Ramon Villavicencio said another shipment was scheduled for delivery before the end of November.

Villavicencio said bankers have threatened to cut off Flying V’s credit line on worries over its ability to meet its obligations considering the potential losses under a regime of fixed prices.


Chief News Editor: Sol Jose Vanzi

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