PRICE CONTROL CONCERNS: GOVT TO MEET WITH OIL FIRMS
MANILA, NOVEMBER 6, 2009 (STAR) By Marvin Sy - The Joint Task Force of the Department of Justice and Department of Energy is meeting with representatives of oil firms on Monday to hear their concerns on the effect of the price control on the country’s oil supply.Malacañang has rejected the appeal of oil players to meet with President Arroyo to demand the abolition of Executive Order 839, which directs the industry to keep the prices of petroleum products at Oct. 15 levels while the state of calamity is still raised in Luzon.
Deputy presidential spokesperson Lorelei Fajardo said the joint task force is handling all the issues related to the price freeze as mandated by the Oil Deregulation Law.
Oil firms have protested the directive saying it will cause supply shortage because importation will be limited, and possibly create a black market because there will be individuals who will take advantage of the huge gap in pump prices between Luzon and the rest of the country.
Almost all of the industry players came out with a print advertisement the other day, asking the President for a meeting and a recall of the order.
Some of the service stations of the oil firms have reportedly closed because of the price freeze.
Deputy presidential spokesperson Anthony Golez agreed that consultations regarding the price control freeze should be coursed through the task force.
He also said that Mrs. Arroyo has already made a decision to continue the implementation of the price freeze in Luzon and would not be pressured by the oil industry.
“The President will not be threatened by the clamor. The President has made the decision to effect the executive order and that is going to be done,” Golez said.
Mrs. Arroyo’s economic adviser, Albay Gov. Joey Salceda, supports the recall of the order.
In a statement, Salceda said it is not the masses that benefit from the price freeze, but the wealthy that consume more fuel.
He said based on the 2006 Family Income and Expenditure Survey, only families earning P100,000 per year enjoy the 90 percent savings on transportation and communications, as well as the 82 percent savings on fuel, light, and water caused by a freeze on oil prices.
“The lower 45 percent income class who earn less than P100,000 annually consumes only 18 percent of total expenditures on fuel, light and water and a measly 10 percent of total expenditures of transportation and communications,” Salceda said.
He said the price freeze would result in at least P4.5 billion in unpaid taxes.
“And given the expenditure incidence of the national government budget, this would be borne essentially by poor households by way of lower cash flows that could have been earmarked for conditional cash transfers, health programs and scholarships,” Salceda said.
Instead of a price control, Salceda suggested that the programs implemented during oil and rice price crises be continued and expanded.
These are diesel discounts targeted at the transportation sector, discounted fuel access cards for lower-to-middle income class families, and the income transfers to poor families like the P500 electricity vouchers.
“At the very least, it is desirable that the Joint DOE-DOJ review committee should be expanded to include the NEDA and DSWD to bring a broader perspective to its deliberation of the issue,” Salceda said.
Golez, however, argued that there are more people who are in favor of the price freeze.
“In the same manner that Governor Salceda is against it, a lot of people are for it,” he said.
Meanwhile, Justice Secretray Agnes Devanadera said the task force is considering the removal of price control in areas which have already recovered from the disastrous typhoons.
“I can’t say (that the order would be lifted), but it may come in different forms. It’s possible that there will be lifting of coverage of the order in some areas and would now just cover specific LGUs (local government units),” she told reporters.
She said there will first be an assessment of the situation in Luzon before adjustments to the oil price control will be made.
“Perhaps we will compare the situation before and after the
implementation of the order. We will consult with business sector, oil firms, transport sectors as well as the NDCC (National Disaster Coordinating Council) that determines if there is a need to stay the state of emergency in Luzon. It will be unreasonable if we allow this situation to go on without basis,” she said.
Devanadera said the joint task force met last Friday with business groups, which include the Philippine Chamber of Commerce. It was agreed that the order is temporary.
She said that in implementing the order, the government has sacrificed millions in taxes from sales and importation of fuel.
“Everybody has to sacrifice, including the government.”
The Justice chief and concurrent Solicitor General maintained that the order does not violate the Oil Deregulation Law since Section 14 (e) of the law states that the government, through the Department of Energy and its secretary, has the power to temporarily take over or direct the operation of players in the oil industry in times of national emergencies and calamities.
She said the public has benefited from the order because it stabilized the prices of basic goods by managing transportation cost.—with Edu Punay
Chief News Editor: Sol Jose Vanzi
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