Business

Petron mulls shutdown of Batangas refinery

Petron mulls shutdown of Batangas refinery

MANILA, Philippines — Petron Corp., the country’s biggest oil refiner, may shut down its refinery in Bataan if its appeal to the government for a level playing field in the industry will fall on deaf ears, according to its president and CEO Ramon Ang.

“For Petron Refinery, I will close that down if talks with the government will not succeed,” Ang told reporters yesterday.

If Petron shuts down its refinery, it would follow in the footsteps of Caltex Philippines, which closed its Batangas refinery in 2003, and Pilipinas Shell just last month.

Ang said that under the current tax regime, it is more viable to just import crude oil because importers are taxed only once, when their products exit their terminals or depots.

On the other hand, refiners are slapped excise taxes upon arrival of their crude and raw materials and on the finished product.

Under the Tax Reform for Acceleration and Inclusion or TRAIN law, an additional excise tax of P2.50 per liter was imposed for diesel in 2018, rising to P4.50 per liter in 2019 and P6 per liter in 2020.

TRAIN also raised excise tax for unleaded gasoline to P7 per liter in 2018 from P4.35 per liter, P9 per liter in 2019 and P10 per liter in 2020.

“We are in talks with the government, the Bureau of Customs, the Bureau of Internal Revenue, etc. We are paying taxes upon arrival of crude and we are paying so many taxes upon arrival. We are in discussion with Customs and BIR to give us a level playing field. Importers pay taxes when the products exit their compounds. In our case, we pay taxes on raw materials, crude oil, chemicals and advanced tax etc upon arrival,” Ang said.

He said Petron should also be granted the same privilege given every importer in this country.

“If we will be asked to pay taxes upon arrival, everybody else should pay taxes upon arrival,” he said.

Petron’s refinery in Limay, Bataan, which supplies 40 percent of the country’s fuel requirements, is the biggest and pioneering refinery in the Philippines.

Considered as a bellwether of sorts in the oil industry, the refinery started in 1961 with a capacity of just 25,000 barrels per day. Today, Petron’s capacity is at 180,000 barrels per day.

Aside from the tax issue, Petron is also facing a difficult business environment because of the impact of the COVID-19 pandemic on global oil prices and demand.

Petron reported a consolidated net loss of P14.2 billion in the first six months of the year as against the P2.6 billion net income it booked in the same period in 2019.

Ang said diversified conglomerate Petron and the other subsidiaries of San Miguel Corp., from power to beer, would also post lower income.

“I’m looking at lower income, but we are managing our business every day so we will survive and overcome this crisis,” Ang said.