By Myrna M. Velasco
The recent onslaught of typhoons Ondoy and Pepeng literally smashed up many parts of the country – primarily Metro Manila and north Luzon provinces.
For many affected Filipinos, it will take much effort for them to rise back from the rubbles. And for the government – it thrived a perfect opportunity to declare a ‘national emergency’.
Has there been anything ‘iniquitous’ in the process then? Honestly, nothing should have been amiss, except that the government used the ‘national emergency’ dictum to arbitrarily declare sudden control on oil prices via the issuance by President Gloria Macapagal Arroyo of Executive Order 839. The policy basically required the oil companies to rollback their pump prices to October 15 level (read: cheaper prices), but note that this is happening when prices in the world market are trailing uphill climbs.
For the record, the downstream oil industry in the Philippines operates under a deregulated set-up, underpinned by Republic Act 8479 (The Downstream Oil Industry Deregulation Act) – simply implying that price movements must largely be determined by market forces based on pricing determinants as product cost movements in the global market and the peso-dollar exchange rate.
President Arroyo and her executives in the Cabinet justified that the declaration of ‘national emergency’ was anchored on protecting ‘public interest’, especially for those affected by typhoons. Generally defined, public interest would refer to “the welfare of the general public”, in contrast to the selfish interest of a person, group or firm…”
The Palace further pointed out the legal ground for the EO is Section 14 (e) of RA 8479, stated to wit: “In times of national emergency, when the public interest so requires, the DOE may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any person or entity engaged in the industry.”
No consumer is delighted to see pump prices going up – given also their spiraling impact on the cost of other commodities and transport fares. Yet surely, laws and policies are there to put industry players’ behavior in check; and punish them when committing profiteering acts and other violations. What the State can do is just to exercise its powers within the bounds of the law.
Now, instead of the imposed oil price cuts extending real relief to the Filipinos, more disturbing questions have been muddling up the issue and even triggering new worries because the temporary reduction may just entail price shocks to consumers when the oil firms are finally allowed to recover their losses.
In random interviews and statements from affected stakeholders, the following are the summary of issues raised:
1) Why was EO 839 issued with undue haste?
*It was issued by President Arroyo on October 23 and published in one national newspaper the next day (October 24). And surprise, compliance was enforced among the oil companies immediately, even without yet any implementing guidelines. Typically, Presidential mandates like EOs would need guidelines for their implementation and effectivity generally comes 15 days after publication in newspapers of general circulation.
Isn’t such act constitutes grave abuse of authority and discretion?
2) What is the exact definition of ‘national emergency’ since it was only Luzon that was recently hit by typhoons; and the affected areas have been specifically spared by the oil companies from the recent price adjustments?
3) Where will protection of general welfare be coming from if there is threatening supply shortage (or with the shift to oil rationing) because the oil companies cannot afford selling at a loss? Isn’t that more distressing or burdensome to the Filipino consumers? As they say, the most expensive energy is the one that you can’t have.
On the flipside, this thrives as a dangerous invitation for smuggling taking reign in the industry. When that happens, the country is denied of much needed revenues which it badly needs to plug gaping hole in the budget.
4) By changing the rules mid-game and capriciously at that, what does that send as a signal to investors?
5) With the EO dangerously lurching at taking control over private businesses’ operations, isn’t that violative of Constitutional guarantee against deprivation of property without due process of law?
6) The Oil Deregulation Law, in conjunction with the Price Act (Republic Act 7581), emphasized on attaining ‘reasonable prices’ for prime commodities at all times, but that is “without denying legitimate business a fair return on investment” – hasn’t the EO breached such declared policy of the State? And can an EO amend a legislated act?
For a media person covering the energy sector, the sincerity of the government to provide supposed ‘relief’ to the Filipinos could not have been doubted if only the people in the Arroyo Cabinet can justify the basis of the price control pronouncement beyond the sphere of political expediency. Or could the ‘conspiracy theory talk’ of a bigger plot for national emergency declaration be true? Just asking.
Watching the officials of the Departments of Justice (DOJ) and Energy (DOE) bungle in explaining the parameters of the EO was even more frustrating. For instance, they cannot even give definitive answers as to the duration of the EO’s effectivity; the products and areas to be covered; and what penalties await the violators, among others.
One of the most basic questions asked from the DOJ was this:
Is there a law that penalizes oil companies if they refuse to sell because of fear of huge losses?
Atty. Ruben F. Fondevilla (Asst Chief State Counsel, DOJ):
“At the moment, I cannot point out any particular law. We have yet to study that.
But it was clearly stated, in times of national emergency, the government has the power to issue such issuances in order to address the emergency. Of course, the primary purpose is, because of public interest.”
If the legal process can be exploited that easily, any law-abiding citizen must shudder at the thought of ensuing abuses. Who’s going to prison – the oil companies now, and the critical media or private citizens next?
Proposals are also being put forward that if the oil companies would contravene Malacanang’s directive, the government should take over their facilities. Would somebody remind these ludicrous proponents that the government’s handling of vital infrastructures and facilities in the past have always been spotty – they not only served as breeding ground for corruption but also of inefficiencies and worse, it buried the State and the Filipino people in suffocating debts.
If truth be told, price control maneuvering is one of the major reasons why Filipino consumers always have hard time getting used to paying a price of product or service that is based on true cost. This same mentality makes them furious whenever there is any price increase for any commodity. Most of them believe that the government is obligated to provide products and services at the cheapest cost, and whenever possible, it should be for free. As history has proven though, products and services may come cheap for the consumer; but it will turn out expensive for the nation.
As a country, we are poor because we never learned to become mature and responsible consumers. Like beggars, we always expect to depend on dole-outs. ####
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Excerpts from statements of the oil companies on their compliance to EO 839:
Roberto S. Kanapi (Shell Philippines)
“Without prejudice to seeking legal remedies, PSPC will comply with the directive of Executive Order No. 839 for oil industry players to maintain prices of petroleum products prevailing on 15th October 2009… while the intent of the Executive Order is to prevent unreasonable increase in prices of petroleum products during a state of calamity, the consequences of the Executive Order would be supply disruptions and negative impact on the investment climate in our country. We will continue to discuss these issues with the DOE-DOJ Task Force and other relevant government agencies.”
Fernando Martinez (Eastern Petroleum)
“Given the almost P2 per liter additional cost in MOPS (Mean of Platts Singapore) which must be reflected this week on top of last week’s increase, it’s almost impossible for any oil company to comply with October 15 price level. It will be interesting to see how any oil company can sustain that price should they decide to revert unless downward movement in international oil prices happens this coming week at a level of $12 at the least or they have products acquired at P4.00 less than current cost. We will study our legal options in consultation with the rest of the industry players.”
Atty. Raymond Zorrilla, Phoenix Petroleum
“With legal reservation and in spite of continued losses, Phoenix Petroleum Philippines implemented in its Luzon stations a pump price rollback of P2.00 per liter for diesel; P1.25 per liter for gasoline in compliance with EO 839.”
Chito Medina-Cue, Unioil Petroleum
“There is nothing to be afraid of as there is no shortage of supply in the international market for finished petroleum products. To bring in the products, we will just need three days at the most as long as the appropriate government agencies will expedite the processing of documents for the release of the imported fuels.”
And a statement from Raul T. Concepcion, Consumer and Oil Price Watch:
“While the law allows the President the prerogative to institute price control in the time of a calamity, this price control must be implemented only in the areas affected by the typhoons such as Northern Luzon and parts of Metro Manila.”
