Government policymakers are being urged to save Petron refinery from its shutdown plan, because it is the only remaining strategic asset that could ensure the country’s energy security goals.
Senate Committee on Energy Chairman Sherwin T. Gatchalian advanced this plea, as he noted that “the immediate impact will be the loss of jobs,” if the 180,000 barrels- per-day oil refining facility in Limay, Bataan will close shop.
With the economic turmoil sparked off by the Covid-19 health crisis, the lawmaker sounded off “now is not the right time to shut down businesses,” with him stressing that “this is very crucial. Employment is very important during this pandemic.”
He, thus, noted that the “government should do everything to save the refinery, which is a key industry for developing and industrialized nations.”
Gatchalian emphasized that “refineries create value” primarily at times when crude oil can be imported cheaper; then the refining firm would be able to sell higher value refined petroleum products.
Nevertheless, he is silent on proposal to amend the tax laws governing the oil industry, since the appeal of Petron is for its plight as a refiner to be placed on a level playing field vis-a-vis the finished product importers on the sphere of tax payments -- specifically for value added taxes; excise taxes and other duties being enforced by the State.
Petron Chief Executive Officer Ramon S. Ang previously told reporters that the tax regime in the deregulated downstream oil sector needs tweaking and it is a matter that Congress must give its attention to.
With the pandemic-induced collapse of oil prices at the height of lockdowns in many countries around March to May this year, the cost mismatch suffered by refiners due to the lag in the refining process of imported crude to the time that these are turned into finished products triggered massive losses for Petron; and an aggravating factor to that is the varying tax impositions between an oil refiner and the finished product importers.
Ang has been appealing to Congress to sort out amendments to the tax laws, as he opined that a policy remedy cannot just be easily done at the level of the Executive Branch.
If a legislative measure could not be passed on this, the Petron chief executive reiterated that the only recourse left would be to cease refinery operations very soon.
In Gatchalian’s view, “a temporary closure will not lead to negative price outcomes for consumers due to oversupply of oil in the global market.”
He, however, specified that “a permanent closure will have energy security implications as the country will be more dependent on imports for petroleum products.”