MANILA, Philippines—Malacañang on Tuesday stood firm on its order freezing fuel prices amid calls by business groups to end the price cap that was imposed in Luzon because of the massive damage caused by Storms “Ondoy” and “Pepeng.”

Gary Olivar, the economic spokesperson of President Gloria Macapagal-Arroyo, said Executive Order No. 839 was justified, “but may be lifted on a time schedule, independent of the state of calamity.”

The President has the discretion to lift “any kind of price freeze or control, in full or in part, in any part of the country at any time,” Olivar said.

Calls for the termination of EO 839, which put a cap on fuel prices based on their Oct. 15 levels in Luzon, have snowballed.

The Joint Foreign Chambers of Commerce, Philippine Chamber of Commerce and Industry, Makati Business Club, and Federation of Philippine Industries have warned that the executive order may result in losses, risks to future oil supplies and a disincentive to future investment.

The foreign chambers of commerce, whose members include major oil firms, argued in their letter that a price cap in Luzon would lead to lower fuel imports, shortages and a black market.

The executive order, a response to public complaints after oil companies raised prices by about 6 percent last week, has been applauded by consumer groups as a much-needed break for residents battered by storms.

Black market

The foreign chambers said measures forcing suppliers to sell below cost would lead them to “cut volume to minimize losses.”

“Buyers then turn to informal sources and a black market emerges,” the chambers said.

The end result is investors will be turned off from doing business in the Philippines, according to the business groups.

The Philippines imports nearly all of its crude oil requirements. In 1998, it passed an oil deregulation law, ending government subsidies and interference with pricing.

Major oil companies operating in the country include Pilipinas Shell Petroleum Corp., a subsidiary of Royal Dutch Shell PLC, as well as Petron Corp. and Chevron Philippines Inc.

‘Don’t pass on burden’

The head of the Metro Naga Chamber of Commerce and Industry (MNCCI) also called for the lifting of EO 839.

“It is too much meddling of the government in the affairs of the business sector,” said MNCCI president Alberto Bercasio.

Bercasio said that if the Big 3 were to cut business hours, it would create an oil crisis.

“The government should ease the situation by directly helping the victims of the calamities, not passing the burden to the business sector,” he said.

Bercasio said there was talk that oil firms would cut business hours of their gasoline stations in the Bicol region to control supply.

“So supply would be lowered and they can still raise oil price afterward because of a localized crisis in supply,” he said.

For the sake of majority

Olivar said the business groups and oil firms should try to understand that the President imposed the price ceiling for the sake of a “greater majority” of the people in Luzon which was still reeling from the devastation wrought by storms.

The “care” with which the order was implemented should prompt foreign investors to understand that “being the President of everyone, she has to make difficult choices between this or that constituency,” Olivar said.

Undersecretary Lorelei Fajardo, deputy spokesperson of Ms Arroyo, said the President may lift EO 839 should the Department of Justice-Department of Energy Task Force recommend it.

Fajardo said the task force was tasked with assessing the order’s adverse impact on the economy and investment climate.

Olivar and Fajardo said it was up to the National Disaster Coordinating Council to assess the situation in Luzon and recommend when to lift the state of calamity.

Lawmakers divided

Lawmakers are divided on whether to heed the call of big business for the lifting of EO 839.

Speaker Prospero Nograles said he was supporting the lifting of price controls as long as the oil firms agreed to open their books.

While the foreign chambers of commerce’s appeal for the lifting of price control was valid, oil firms must prove that “they are not bleeding the public dry,” Nograles said in a statement released from the United States.

Bayan Muna party-list Rep. Satur Ocampo, however, said Malacañang should not give in to the request of the business groups.

“Malacañang should defy their warnings and threats, and remain firm in implementing EO 839. There has been a long-standing need to regulate the prices of oil and petroleum products in the Philippines and it had to take a series of major calamities for the government to impose it,” Ocampo said.

Ocampo, a House deputy minority leader, said Malacañang should maintain its tough stand on oil pricing further by pushing for an overhaul of the oil industry by bringing it back to a regulated market in order to check abuses by private companies.

Mounting concern

In Legazpi City, reports that oil firms were planning to hoard petroleum products caused mounting concern among jeepney and bus drivers and transport leaders in Albay.

“The best thing to do for (the President) is to advocate for the revival of the Oil Price Stabilization Fund (OPSF), the scrapping of the Oil Deregulation Law and ultimately the removal of (Energy Secretary Angelo) Reyes from service,” said Joel Ascutia, chair of the Concerned Drivers and Operators for Reform (Condor-Piston-Bikol). With reports from Gil Cabacungan in Manila; Jonas Cabiles Soltes and Rey M. Nasol, Inquirer Southern Luzon; and Associated Press