MANILA, Philippines—(UPDATE) After getting the consensus of oil companies to offer discounts and stagger increases in fuel prices, President Gloria Macapagal-Arroyo on Friday decided to lift the freeze on oil prices in Luzon effective Monday.

Arroyo also said that price controls on commodities in Luzon will also be lifted on the same day.

The President met with executives of the oil companies, businessmen and representatives of the transport and labor sectors, among others, in Malacañang to tackle a recommendation by the Department of Justice-Department of Energy Task Force to lift Executive Order 839.

"So, subject to the agreements we made today, and in compliance with the agreements, can we now come to a consensus to lift EO 839?'' she asked the stakeholders.

After seeing most of them nod in agreement, she said: "Please comply with these conditions that we discussed today.''

Arroyo issued EO 839 on October 24 to freeze prices of fuel in Luzon, which was placed under a state of calamity in the aftermath of devastating storms, at their October 15 levels.

Oil companies, backed by big business groups, had fiercely protested the order and demanded its lifting, asserting they were incurring losses because of the huge gap between their cost and the pump price.

The oil executives had gone as far as requesting a dialogue with Arroyo for the lifting of the order, but Malacañang rejected this until Friday. Shell Petroleum Corp. even petitioned a local court to stop the order.

Trade Secretary Peter Favila, for his part, said he has issued a directive lifting price controls on prime commodities effective Monday.

"As we had agreed, there are three conditions I had requested of them (traders). One is to ensure there's adequate supply and reasonable pricing, meaning to say there's no hoarding, and no profiteering, and the third, there's discipline within the market. I have asked them to police their own ranks and help the government monitor the behavior of prices. If that fails, I will not hesitate to reimpose the price control,'' he said.

When Press Secretary Cerge Remonde asked Arroyo when the EO will be lifted, she said: "Monday, the same as Peter.''

The government imposed the price controls on commodities simultaneously with the declaration of the state of calamity in Luzon in early October.

"It's a very welcome development. That means the government is prepared to listen to various sectors,'' Ed Chua, country chairman of Pilipans Shell Petroleum Corp., told reporters after the meeting.

"The solution today is very good, in the sense that we can't expect the oil companies to keep on losing, and at the same time recognizing the problems of consumers, especially drivers and laborers,'' said Donald Dee of the Philippine Chamber of Commerce and Industry.

At the meeting, Energy Secretary Angelo Reyes discussed the proposed "safety nets'' to be undertaken by the oil companies following the lifting of EO 839.

These included the offer of discounts in the price of petroleum products in government-designated areas, more aggressive implementation of corporate social responsibility programs and assurance of more investments.

Arroyo followed this up by saying: "We hope that if the EO is lifted, there will be no drastic increases. If ever the world market requires that there will be more increases, it should be staggered all the time.''

She was referring to "staggered adjustments in the recovery of losses'' on the part of the companies.

Chua of Shell responded: "We fully support the recommendation.''

The other executives echoed his statement.

Chua said he and the other executives of the industry could sit down with Reyes to discuss the "level of support'' that they could give in the coming days.

Arroyo went as far as to say that the fuel discounts "should be sufficient'' to ensure that there will be no increases in transport fare, saying, "At the end of the day, that's the one that will affect the poor.''

Zenaida Maranan, president of the Federation of Jeepney Operators and Drivers, appealed to the oil companies to retain the P28 per liter wholesale price of diesel for the transport sector at least until January 1 next year.

She said that the transport industry could even afford a P1 increase, but would be forced to ask for a fare increase if this is increased to P33.

"Of the 50,000 units that gas up 30 liters a day, you earn P1.5 million a day. As for us, we have nothing to earn if the price of crude is increased,'' she said.

An oil executive responded that the Land Transportation Franchising and Regulatory Board has a formula for an increase.

"We came from a P52 price in diesel. And we started rolling back after the SONA (State of the Nation Address). If I'm not mistaken the current level is at P32-P34. The landed cost of diesel is P31. So in effect we're subsidizing. It's not because we want to earn profits; we only want to cut losses. I don't think any business can sustain that kind of level because of the freeze,'' he said.

Chua said any increase in prices was "dependent on market prices,'' adding that the public should consider the prices in Visayas and Mindanao, and use this as basis for computing any increase.

"It depends because we adjust prices weekly,'' he said.

Chua also suggested that the oil companies could go back to issuing discount coupons for liquefied petroleum products through the Department of Social Welfare and Development.

Maranan also discussed the possibility of the transport sector importing its petroleum needs.

Ms Arroyo instructed Trade Secretary Peter Favila to study the possibility of extending credit line to the sector for this purpose.

"The DOTC should organize a consortium. This will not include air-conditioned buses. We're talking of jeepneys which cater to the poor,'' she said. "Either PNOC (Philippine National Oil Corp.) and PITC (Philippine International Trading Corp.) can undertake long-term supply contracts.''