Biazon calls on Petron to police own ranks

Customs Commissioner Ruffy Biazon is turning the tables on Petron chief Ramon Ang.

The Petron CEO said in an exclusive Inquirer report last week that smuggling of petroleum products accounted for an estimated P30 billion-P40 billion in lost government revenues annually.

Amid calls for his sacking following Ang’s revelation, Biazon said in a text message Thursday it was “not impossible” that smuggled gasoline or diesel was being sold in retail outlets of Petron, which account for 35 percent—the largest share—of the market.

The customs chief urged the country’s biggest oil refiner to do its share in reducing, if not stopping, the distribution of these smuggled products.

“Local oil firms like Petron could help the government’s antismuggling campaign by ensuring that their own retailers are selling products from legitimate sources,” he said, adding these companies “have more control over their own retailers.”

“Determining if retailers are not buying from illegitimate sources is beneficial not only to the government but also to the oil companies themselves since their retailers will be compelled to get their supplies from the mother companies,” Biazon said. “Reducing the demand for illegally sourced supplies is one way to fight oil smuggling.”

In a radio interview on Wednesday night, Biazon urged oil companies to police their own ranks.

He said the Bureau of Customs (BOC) was not mandated to ensure that local distributors of oil products did not do business with smugglers. He said his bureau was tasked to ensure that the right fees and taxes were paid by importing companies.

Biazon said he should not be blamed for losses incurred by Petron, as suggested by Ang.

Uncontrolled

Ang told the Inquirer last week that “retail or service station volumes have remained flat despite the fact that registered vehicles increased from 5.5 million to 7.1 million” between 2007 and 2011.

“On top of lost government revenues and an uncertain investment climate in the oil industry, smugglers are cheating consumers since these products are of uncertain quality,” he said.

Ang called the allegedly uncontrolled oil smuggling “tax evasion in another form.”

He claimed about one in every three liters of gasoline or diesel oil in the country was smuggled, resulting in P30 billion to P40 billion in forgone government revenues each year. The figure roughly represented the shortfall in targeted customs collections under the Aquino administration.

Petron, which accounted for an industry-leading 34.9-percent share of the domestic market in the first half of 2012, saw its profits plunge 73 percent to P2.3 billion last year from P8.5 billion in 2011.

The huge drop in Petron’s profits came despite a 55-percent jump in revenues to P424.8 billion in 2012. The firm attributed the fall in margins to, among others, volatility in crude and oil product prices last year.

Real, not rampant

“As a consequence of that statement, some lawmakers and candidates in the forthcoming elections have issued their own commentaries on the matter, some with specific proposals and others with general comments or allegations that nothing is being done,” he said.

Biazon acknowledged as “real” the problem of oil smuggling, but he disputed an Inquirer report that quoted him as having said that it had become rampant and unabated during the first two-and-a-half years of the Aquino administration.

“It’s a real problem, but I wouldn’t say there’s enough physical evidence to say it’s rampant other than claims based on computations of various data from various sources,” he said.

Biazon also said his agency was “embarking on measures to address the oil smuggling problem,” including collecting taxes on petroleum imports bound for economic zones.

He said the bureau was undergoing an upgrade of its electronic customs clearance program but acknowledged the thin presence of his people on the ground.

“The agency can only record what is formally entered through the customs system. With BOC presence limited only to the ports where we have offices, the bureau faces difficult challenges in plugging leakages in other areas and methods of fuel smuggling,” he added.