Moratorium on new retail outlets of Big 3 sought

The Trade Union Congress of the Philippines (TUCP) sought yesterday a moratorium on new retail outlets of the Big 3 oil companies to lessen their 85-percent control of the local petroleum industry.

According to TUCP secretary-general and former senator Ernesto Herrera, the Department of Energy (DOE) must stop issuing permits for new outlets of Petron Corp., Pilipinas Shell Petroleum Corp., and Chevron Philippines Inc. “to deliberately diminish their stranglehold on the local market for petroleum products.”

Herrera said the oil giants have allegedly raked in P42 million in combined net profits every day in 2007.

“The DOE should issue permits for new service stations only to the smaller independent oil firms. This is one sure way to purposely lessen the Big 3’s domination of the local market, truly promote free and fair competition and safeguard consumers from potential pricing abuses,” he said.

He warned that if the three firms would continue dominating the local markets, “consumers would remain extremely vulnerable to potential price manipulation and other unfair trade practices moving forward.”

Fifteen percent of the local oil market is shared by smaller independent firms like Total Philippines Corp., Oilink International Corp., Seaoil Philippines Inc., Filoil Gas Co. Inc., Unioil Petroleum Philippines Inc., Eastern Petroleum Corp. and Filpride Resources Inc.

Citing the Big 3’s 2007 gross revenues, Herrera said that Petron controls 40 percent of the market (P212.293 billion in revenues) while Pilipinas Shell dominates 30 percent (P164.703 billion) and Chevron holds 15 percent (P77.888 billion).

He added that small independent companies registered P82.27-billion revenues last year for their 15-percent share of the market.

The TUCP statement showed that Chevron is the “least regulated” by the government because it does not operate a refinery in the country, unlike Shell and Petron.

“Chevron merely operates an import terminal for refined petroleum products, which are then sold through company-owned or franchised service stations,” the statement read.

The TUCP revealed that Chevron booked a net income of P2.851 billion in 2007, up by P106 million or 3.9 percent compared to the P2.745 billion it earned in 2006.

Shell, on the other hand, registered a net profit of P6.355 billion in 2007, up by 54.1 percent from P4.123 billion in 2006 while Petron reported a net profit of P6.113 billion in 2007, up by 2.8 percent from P5.944 billion in 2006.

“All told, the Big 3 raked in P15.319 billion in aggregate net profits in 2007 alone. Based on their preliminary returns in the first semester, the Big 3 could easily post around P50 million in daily profits this year,” the statement said. – Sheila Crisostomo