Olongapo SubicBay BatangGapo Newscenter

Tuesday, May 12, 2009

Oil smuggling robs government of P93B in revenues

THE GOVERNMENT lost over P90 billion in revenues in the past three years due to oil smuggling, the association of downstream oil players yesterday said.

Sally C. Monteiro, executive director of the Philippine Institute of Petroleum (PIP) said the government failed to collect P93.3 billion in revenues — P28.7 billion in 2006, P32 billion in 2007 and P32.6 billion in 2008 — due to oil imports that were not officially accounted for.

"The oil demand declined from 303,000 million barrels per day in 1997 to 264,900 million barrels per day in 2008..." she told a hearing called by the House energy committee investigating the reported smuggling of refined petroleum products through the Subic Bay freeport and Manila port.

She pointed out that oil demand should have risen along with economic growth. Vehicle registrations are also rising.

Every 1% GDP growth, she said, results in a 1.5% increase in oil demand.

The PIP counts Petron Corp., Pilipinas Shell Petroleum Corp., Chevron Philippines Inc.,Total (Philippines) Corp., PTT Philippines Corp. and LiquiGaz (Philippines) as members.

Napoleon L. Morales, Bureau of Customs commissioner, said that common modus operandi of oil smugglers include the loading of oil tankers or fishing boats with oil products from a mother ship stationed in international waters; the misdeclaration of oil products as aromatic hydrocarbons or catalysts to avoid payment of customs duties and taxes, and undervaluation of imported oil to avoid payment of additional taxes.

Oil products are levied value-added and excise taxes and customs duties.

The government is projecting a deficit P199.2 billion or 2.5% of gross domestic product this year as it ramps up spending to counter the impact of an economic slowdown. It has admitted to limitations in revenue collections after Congress approved measures slashing taxes or extending more tax perks.

Mr. Morales said officials of six oil importers, namely, Andan Enterprises, Mawab Resources, Unioil/Oilink, Tri-solid Movers, BSJ Fishing and Orelyn Trading had been apprehended due to undervaluation, misdeclaration, non-filing of entry documents and lack of proof of payment of duties and taxes on oil products.

But he complained that "we have been encountering constraints in intelligence build-up due to lack of sea assets and operational funds."

Mr. Morales said the bureau should be strengthened so as to fully monitor the bunkering and surveying of incoming and outgoing fuel products, fully monitor shipments declared as hydrocarbons or catalysts and take samples for laboratory analysis to prevent misdeclaration.

"It is also important that they [oil importers] are mandated to submit a timely publication of established values of petroleum products to prevent undervaluation. Proper accreditation of bulk and break bulk cargo surveyors is also necessary to ensure accurate reports and accountability," he said.

Mr. Morales also pushed for the strengthening of customs control exit points in freeport economic zones such as Subic and Clark to prevent diversion of petroleum products to the local market.

A consolidated bill amending the country’s Customs Code was approved by the House ways and means committee last Dec. 2 but still needs action by the House appropriations committee.

The bill would allow the bureau to demand from importers the books and records of accounts of customs-bonded warehouses and to seize and sell smuggled products; and revoking judicial intervention in cases of smuggling. — J. F. S Valdez - Business World

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