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AN
increase of P2 per liter in the price of diesel can
actually help oil companies recoup their claimed P16 per
liter in diesel underrecoveries in two months and help
soften the shock of record-high diesel prices, Raul
Concepcion, chairman of the Consumer and Oil Price Watch
(COPW), said Monday.
The COPW
official said oil companies have to recover the
difference between their pump price and their cost to
produce or underrecovery amounting to P16/liter of their
losses.
“But we
appeal to oil companies to stagger the increases in the
price of diesel at the rate of P2/liter per week until
the P16 underrecovery of the oil companies is fully
recovered,” said Concepcion.
Last
week oil company executives said any further delay in
recouping such underrecoveries could lead to a
diesel-supply shortfall in the country, since the
continuous increase in international oil prices has
resulted in P3.6 billion in diesel underrecoveries.
Edgar
Chua, country chairman of Shell Companies in the
Philippines, has presented data showing under-recoveries
in diesel amounted to P3.6 billion in April, based on
the month’s diesel sales volume of 598.85 million
liters, which was multiplied by about P6/liter
difference between the landed cost and average pump
price of diesel.
Considering that the latest fare increase granted by the
Land Transportation Franchising and Regulatory Board (LTFRB)
on May 21, 2008, was based on the diesel price of P43.44
per liter, Concepcion said.
As of
July 5, said Concepcion, the oil companies’
underrecovery of P16/liter, which could bring the
current diesel price of P54.48/liter to P70.48/liter.
Concepcion also urged the government to support the
consumption of the poor, using its windfall profits from
the value- added tax (VAT) on petroleum products to
subsidize consumption of electricity, LPG and purchases
of basic goods. They need most to be cushioned from the
domino effect of the increase in transport fares and
protect them from worsening poverty.
Concepcion also suggested that the 1.64 million
lifeline-rate electricity users who consume from 50
kilowatt-hour (kWh) to 100-kWh in the
lifeline-electricity program, be exempted from the
12-percent VAT on the purchase of an 11-kilo LPG tank
per month.
Concepcion said the subsidy would entail P125 million
monthly, which he said can be sourced from the royalties
from the Malampaya gas to water project.
Concepcion said the crisis facing the country cannot be
overstated. “This one, though, is unprecedented in its
scale and severity as food supplies are at their lowest
in 30 years while food prices are at their highest ever.
Making the food crisis worse is the rapid rise in the
price of crude oil.”
He
thinks the nation should not lose hope and the country
will overcome this adversity. He urged the government to
come out with a doable economic rehabilitation, rescue
and recovery plan for the people.
“The
government should expand the rice entitlement of the
marginalized poor. Civic organizations, religious
communities and above all, business firms must do their
share to help,” Concepcion said. |
