MANILA, Philippines — The Department of Energy (DOE) is backing a proposal to include the refinery of Petron Corp. under the Freeport Area of Bataan.
Energy Secretary Alfonso Cusi said the DOE would not oppose the proposal to reclassify Petron’s Bataan refinery under an economic zone.
“It’s their business decision. They can present it to us, we’ll just look at it, I don’t see any problem,” he said.
The reclassification could avert the shutdown of Petron’s refinery in Bataan.
“As long as it is making a positive impact on our country, we want to promote that,” Cusi said.
Petron earlier announced that its refinery in Limay, Bataan would be on economic plant shutdown beginning the second half of January 2021.
The country’s largest oil refiner and marketer previously cited the lack of a level playing field between importers and refiners in terms of taxes.
Ramon Ang, president and CEO of Petron, stressed that the heavy taxes paid by refiners as compared to oil importers make refining a difficult business to be in.
He said refiners pay value-added tax (VAT) and excise tax, among others, when they import crude oil into the country and then pay another round of taxes after processing and selling their products to the local market.
With the fluctuations in global oil prices, Petron has also incurred significant losses.
As of end-October, Petron reported a net loss of P12.6 billion compared to a net income of P3.6 billion in 2019. Consolidated revenues also declined by 43 percent to P216.4 billion.
However, Ang said the closure of refineries is not unique to the country as the global refinery industry has been a tough business, especially with the COVID-19 pandemic.
Cusi said the DOE respects the decision of Petron to close down its refinery, and that this would not affect the country’s oil supply.
“If they see a better way to commercially operate, they should do it,” he said.
Petron’s Bataan refinery is the only remaining refinery in operation in the country.
Caltex Philippines closed its Batangas refinery in 2003, while Pilipinas Shell Petroleum Corp. permanently shut down its refinery operations in Tabangao, Batangas and transformed the facility into a full import terminal last August.