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Oil price cap lifted; discounts vowed

By TJ Burgonio, Abigail L. Ho
Philippine Daily Inquirer
First Posted 05:28:00 11/17/2009

Filed Under: Oil & Gas - Downstream activities, Consumer Issues, Disasters (general)

MANILA, Philippines?President Gloria Macapagal-Arroyo on Monday lifted the cap on fuel prices as she directed a task force to implement the package of proposals promised by oil players, including discounts and staggered price adjustments, in Luzon.

Ms Arroyo issued Executive Order 845 lifting EO 839 which froze fuel prices in calamity-stricken Luzon at their Oct. 15 levels in the aftermath of two powerful storms.

?The National Disaster Coordinating Council and the Department of Trade and Industry have determined that while the state of calamity subsists, the extreme emergency situation which served as the underlying reason for the issuance of EO 839 no longer exists,? the President said in the order.

The EO was dated Nov. 15 but was released by Malacañang Monday afternoon.

Ms Arroyo announced the lifting of EO 839 effective Monday after convincing the oil players to offer discounts, stagger price increases and pour investments into Luzon at a meeting last Friday in Malacañang.

Issued on Oct. 24, EO 839 was met with strong protests from oil players and the business community which warned of its adverse impact on trade and the economy.

Ms Arroyo said the Department of Energy-Department of Justice Task Force had favorably recommended the lifting of EO 839.

The same task force, she added, also recommended the adoption of a proposal made by the oil players led by Petron Corp. and Seaoil ?for a more targeted and focused calamity assistance program? in selected areas in Benguet, Baguio City, Pangasinan, eastern Laguna, Rizal, Ilocos Norte, Ilocos Sur, Mountain Province, Isabela, Cainta, Marikina City, Malabon and Pasig City.

Acting Justice Secretary Agnes Devanadera Monday announced that the oil firms had committed to give discounts in areas identified as the hardest hit by the recent weather disturbances.

?Without (EO) 839, we?re back to deregulation. It was a consensus among oil industry people,? Devanadera told reporters.

Devanadera said Petron and Seaoil offered the discounts when they appealed for the lifting of the executive order freezing prices.

She said the oil firms also promised there would be no sudden increases in the prices of fuel. ?There will be no sudden increase?. never five pesos.?

Pampanga Rep. Juan Miguel Arroyo, meanwhile, Monday warned oil companies against jacking up their prices in one blow or hoarding supplies or he would recommend the re-imposition of the price freeze.

In a text message to reporters, Arroyo said the practice by oil companies of keeping supplies short ahead of a price adjustment had become ?irritating? as it showed how ruthless they were in maximizing profits.

?This has to be stopped. I am exercising the oversight function of the House energy committee to monitor this exploitative practice,? said Arroyo, the committee chair, who claimed he initiated the proposal to freeze fuel prices in calamity areas which was adopted by his mother, the President.

With the issuance of EO 845, petroleum prices will go back to their pre-EO 839 levels, according to an industry source.

This means diesel prices would increase by P2 a liter, premium and unleaded gasoline by P1.25 a liter, regular gasoline by 85 centavos a liter, and kerosene by P1.50 a liter.

But this would not be an actual price hike, the source said, as these ?increases? would only bring prices back to their pre-EO 839 levels or ?prices on Oct. 24 when EO 839 took effect.?

Oil industry executives had earlier said under-recoveries now stood at P4-P5 a liter. With reports from Norman Bordadora and Gil Cabacungan Jr.

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