Philippines: Petron Warns of Q4 Loss Over Fuel Price Control
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Friday, 30 October 2009 |
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Petron Corp. warned it could incur up to P1.5 billion in losses in the
fourth quarter due to the price control order issued by Malacañang.
In a disclosure, Petron said it would comply with Executive Order
(EO) No. 839 issued on Oct. 23. The order directs oil industry players
to maintain retail prices of petroleum products at a price level before
tropical storm Pepeng in Luzon on Oct. 15. The government can issue a
price freeze order on basic commodities in times of calamity.
“With this price control, Petron is estimated to incur a net loss of
P1.5 billion in the fourth quarter of 2009 alone as it begins to
‘digest’ higher-priced crude oil inventory in November and December,”
it said.
The firm said it has rolled back the per liter prices of its premium
gasoline by P 1.25, P0.85 for regular gasoline, P2.00 for diesel and
P1.50 for kerosene effective 6 a.m. on Oct. 27.
The company is seeking for a supplement to the EO that would clarify
how long the price controls will take effect, the areas considered
affected, and the list of products covered. It also called on the
government to lower tariffs on oil to compensate for the losses.
Chevron (Caltex) Philippines, Inc. agreed with Petron’s statement
calling for further clarification of the EO, but declined to comment on
other matters raised by the refiner.
Petron said actual pump prices of fuel products in almost the whole of
Luzon are well below suggested retail prices (SRP) due to an ongoing
price war among competitors. “In Metro Manila, for instance,
diesel prices are P5.00/liter lower than the SRP. This market condition
can also be seen in other parts of Luzon,” it said. It further
warned that the order could have a negative impact on future
investments in the capital-intensive oil industry.
In a separate interview, Fernando L. Martinez, chairman of the
Independent Philippine Petroleum Companies Association, said members of
his group have yet to count losses, but many are already taking hits as
a result of the Palace order. “It’s hard to quantify, but a lot
of dealers have taken a hit because they bought products at a higher
price,” he said. Mr. Martinez also agreed with Petron’s call on the
government to share the industry’s burden. Mr. Martinez also warned
that the public will ultimately suffer from the price freeze.
PetrolWorld 291009
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