Tag Archives: Ramon Ang

Oil deregulation

Duterte backers, other oil firms rake in millions from overpricing amid pandemic

Amid the misery and deaths caused by COVID-19, oil companies, including those controlled by prominent Duterte backers, have been raking in millions of pesos in extra profits from overpricing. This is beyond unconscionable and appalling as the socioeconomic fallout of the pandemic – i.e., record joblessness, hunger and poverty – continues to burden the people.

How oil firms manipulate prices

With the pandemic raging last year, the oil firms imposed a net overpricing of about PHP 4.96 per liter for gasoline and around PHP 2.86 per liter for diesel. The overpricing continued in the first three months of 2021, as the country suffers an even worse surge in COVID-19 cases. For gasoline, the overpricing is estimated at around PHP 0.71 per liter as of end-March this year; for diesel, it is pegged at PHP 0.88 per liter.

These estimates were computed by comparing the supposed adjustments in prices based on the weekly fluctuations in international oil prices and the foreign exchange rate, and the actual adjustments in local pump prices implemented by the oil companies.

Last year, oil prices saw a sharp decline as the global economy came to a standstill with countries enforcing months of lockdowns to contain the spread of the novel coronavirus. Based on the International Monetary Fund’s (IMF) monitoring of primary commodity prices, the price of Dubai crude oil fell from USD 63.73 per barrel in January 2020 to as low as USD 23.38 per barrel in April. It finished the year with a monthly average of USD 49.32 per barrel in December.

Consequently, local pump prices in the Philippines, one of the world’s most oil import-dependent economies, also declined. According to the monitoring of the Department of Energy (DOE), oil companies implemented a net price rollback of PHP 1.97 per liter for gasoline and an even bigger PHP 5.96 per liter reduction in the price of diesel. 

But these price rollbacks are much smaller than what the oil firms should have implemented if they were simply reflecting movements in global prices, as they and the DOE are wont to say. Based on the Mean of Platts Singapore (MOPS), the international benchmark used by the Philippines in pricing petroleum products, and the fluctuations in the peso exchange rate to the US dollar, the price of gasoline should have gone down by about PHP 6.93 per liter. Similarly, the price of diesel should have been rolled back by PHP 8.82 per liter.

Comparing these to the actual adjustments per liter in pump prices that the oil firms implemented and the DOE allowed (i.e., rollbacks of just PHP 1.97 for gasoline and PHP 5.96 for diesel), the overpricing estimates of PHP 4.96 per liter for gasoline and PHP 2.86 per liter for diesel were calculated.

For 2021, even as global oil prices continued to pick up, the price of gasoline should not have gone beyond PHP 5.44 per liter in total increases based on MOPS price movements from January to March; but the oil companies hiked their gasoline prices by a total of PHP 6.15 per liter during the period, resulting to an overpricing of PHP 0.71 per liter.

Similarly, the price of diesel based on MOPS should have not increased by more than PHP 3.72 per liter. However, oil firms have already jacked up their diesel prices by P4.60 per liter, resulting to an overpricing of PHP 0.88 per liter.

Duterte regime, allies gain from overpricing 

Deregulated oil prices under Republic Act 8479 or the “Downstream Oil Industry Deregulation Act of 1998” allows oil firms to adjust pump prices – supposedly as dictated by global market forces (e.g., international prices and exchange rates) – without the benefit of public consultation. Such neoliberal policy in oil price setting has only enabled the oil companies to abuse the consumers with impunity. 

It must be emphasized that the overpricing estimates based on so-called global market forces do not illustrate the magnitude by which foreign oil monopolies such as Shell, Chevron, etc. artificially inflate prices. Such estimates merely show how oil firms under a deregulated regime can easily further manipulate oil prices through implementing adjustments that are above (in case of price hikes) or below (in case of rollbacks) the supposedly justified amounts based on international price benchmarks.

A crisis as grave as the COVID-19 pandemic should have been an opportunity to review and reverse this flawed policy. Unfortunately, it is clear that President Duterte, his political clique, and the neoliberal champions in his economic team will not entertain such policy turnaround to protect the public. 

For one, with its obsession to collect taxes to appease creditors for its debt-driven infrastructure projects, oil overpricing provides additional revenues for the Duterte regime. Based on a rough approximation of petroleum demand in 2020 of about 14.69 million liters per day for gasoline and 24.32 million liters per day for diesel (reflecting the overall decline in demand of 23% in the first half of 2020 due to the pandemic, as reported by the DOE), it can be guesstimated that the total additional profits generated by the oil firms from overpricing gasoline and diesel is about PHP 142.50 million a day. Of this amount, PHP 17.10 million went to government in the form of the 12% value-added tax (VAT).

For another, Duterte’s political backers and their foreign partners with interests in the oil industry benefit hugely from oil overpricing. Due to overpricing, it is estimated that Petron Corp. earned PHP 23.19 million daily in 2020 on top of its regular profits based on market share. The largest oil refining and marketing company in the Philippines, Petron is majority owned by Ramon Ang’s San Miguel Corp. (SMC). Ang is among the tycoons who financed the presidential campaign of Duterte in 2016 and appears to be one of the most favored oligarchs by the administration, cornering big-ticket infrastructure contracts such as the controversial PHP735.6-billion Bulacan aerotropolis.

Dennis Uy, the Davao-based businessman and longtime ally of Duterte, also continues to make a fortune in the oil industry through Phoenix Petroleum, which in terms of market share (7% in 2019) ranks as the fourth largest oil retailer in the Philippines behind the old Big Three of Petron (25%), Shell (18%) and Chevron (8%). Uy and Phoenix Petroleum had a declared campaign contribution of PHP 36 million to Duterte’s presidential campaign in 2016. Based on market share, it is estimated that Phoenix raked in PHP 8.85 million daily in extra profits last year from overpricing.  

Uy has seen his wealth grow tremendously under Duterte, including in the Philippine oil and gas industry where he has been expanding and consolidating his interests. Last year, Uy’s Udenna Corporation bought the 45% stake of Chevron in the Malampaya natural gas field and plans to partner with government through the Philippine National Oil Company (PNOC) to acquire as well the 45% stake of Shell. ###

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Labor & employment

Richest Filipinos and ‘Endo’ kings are Duterte’s friends

(First published by Bulatlat.com) — The Department of Labor and Employment (DOLE) has recently released a list of 20 firms that it said are engaged or suspected to be engaged in labor-only contracting. Some of the country’s largest companies topped the list, including Jollibee (14,960 workers); Dole Philippines (10,521); and PLDT (8,310).

Conspicuously absent in the list are known supporters of the Duterte administration.

One is SM, which is known for its chain of malls that hires thousands of contractual workers. According to Labor Secretary Silvestre Bello III, SM was not included in the list because it promised to regularize a total of 10,000 workers. He said that they are “satisfied” already with the retail giant’s commitment. But still, such promise does not justify the absence in the DOLE list of perhaps the most notorious and known biggest employer of contractual workers in the Philippines.

By its own account, the SM Group has more than 94,500 employees which include various companies under the conglomerate engaged in banking, financing, property, retail, malls, hotel, resorts and entertainment. According to one estimate, nine out of 10 SM employees are contractual workers.

Another is San Miguel Corporation (SMC). The diversified conglomerate (with operations in food and beverages, packaging, fuel and oil, power, and infrastructure) is said to employ around 20,000 workers, of whom only about 1,000 are regular workers.

What could possibly explain the exclusion of these giant conglomerates – two of the biggest not only in the Philippines but also in the Asian region?
The obvious answer is their close ties with President Duterte.

Among the country’s major business groups, SM has been one of the most supportive to the current regime. Its top officials are among the select tycoons that share an intimate dinner or travel abroad with the President to look for business opportunities, and invited to government events to show support to centerpiece Duterte programs like the “Build, Build, Build”. Along with state-run banks, SM Group’s BDO Unibank is financing Duterte’s contentious modernization program for jeepneys.

Its officials have publicly defended the controversial war on drugs and also offered the free showing of government’s anti-drug ads in SM cinemas nationwide. They supported the administration’s warming up of ties with China even as the latter has occupied and militarized Philippine-claimed territories in the South China Sea.

SM was founded by the country’s only trillionaire Henry Sy Sr. who has been the richest Filipino for over a decade now. Sy’s already massive wealth has been rising astronomically under Duterte – from just below US$14 billion in 2016 to US$18 billion in 2017 and further to US$20 billion in 2018. That’s almost a 54 percent increase in just three years.

SM aims to cash in on closer Philippine-China ties under Duterte. China is the world’s largest consumer market and the second biggest economy that could soon topple the US as number one. For Filipino oligarchs, the potential for profits is vast.

On top of the already seven malls it has in China, SM is building a “supermall” in the major port city of Tianjin (said to rival the size of the US’s Pentagon building) as well as residential projects in various key Chinese cities. With closer bilateral ties, Chinese tourists are also flocking the country, benefitting SM’s interests in resorts and entertainment.

An even more vocal apologist of the Duterte administration is SMC, especially its head honcho Ramon S. Ang. The SMC president was among Duterte’s campaign contributors in 2016 giving an undisclosed amount and perhaps other forms of support as Ang wasn’t even listed in the official Statement of Contributions and Expenditures (SOCE). Ang also offered to buy Duterte a private jet (worth as much as US$65 million) that he could use as President while donating Php1 billion to the Chief Executive’s pet campaign, the war on drugs.

Like Sy, Ang’s fortune has also vastly grown in the past three years. From a reported net worth of US$1.21 billion in 2016, his wealth has more than doubled to US$2.5 billion in 2018. Duterte’s infrastructure push apparently also pushed up Ang’s riches, which also include interests in construction.

Like SM, SMC has been capitalizing on Duterte’s programs. SMC is among those most aggressive in expanding in Mindanao particularly in establishing vast plantations and constructing infrastructure. In partnership with Malaysia’s Kuok Group, the conglomerate is developing about 18,495 hectares of forestlands covering four Davao del Norte municipalities for oil palm production. Just last August 2016, SMC also opened a 2,000-hectare industrial estate in Malita, Davao Occidental that also has a 20-meter deep seaport that can accommodate container vessels.

SM and especially SMC are among the leading proponents in Duterte’s “Build, Build, Build” infrastructure development program, including through the controversial unsolicited route. SMC alone accounts for 53 percent (P1.59 trillion) of the cost of all unsolicited proposals (P3 trillion) that have pitched to the Duterte administration. These include the P700-billion New Manila International Airport; the P338.8-billion Manila Bay Integrated Flood Control, Coastal Defense and Expressway Project; and P554-billion expansion of the Metro Manila Skyway and the South Luzon Expressway (SLEX).

SM (together with the Ayala group), on the other hand, has submitted an unsolicited proposal to build a P25-billion 8.6-kilometer elevated toll road that will supposedly help decongest traffic along EDSA. But as SM itself admitted, the main objective of the toll road is to increase access to its Mall of Asia complex. Through its BDO Unibank, SM also aims to profit from the “Build, Build, Build” by lending to project proponents or operators.

One of the major campaign promises that Duterte made was ending “endo” (end of contract scheme or contractualization). But two years into his presidency, that promise has remained largely unfulfilled.

With the biggest employers of contractual workers like SM and SMC as Duterte’s biggest backers, that should not come as a surprise.

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Economy, Fiscal issues, Governance

TRAIN: Si CEO, ang kanyang luxury car at si manang tindera

(Larawan mula sa expatch.org)

Isipin n’yo ito –

Kapag bumili, halimbawa, ang presidente o CEO ng isang malaking kumpanya ng luxury car gaya ng Toyota Alphard 3.5 V6 na ang presyo ay nasa Php3.28 million, makakatipid siya nang hanggang Php337,000.

Si manang tindera sa sari-sari store na kailangang bumyahe sa Divisoria para mamili ng mga paninda ay maaaring magbabayad ng dagdag-pasahe sa dyipni nang hanggang Php4, o hanggang Php8 kung balikan. Magiging mas mahal na rin ang bibilhin nyang mga paninda gaya ng yosi na tataas ang presyo nang Php2.50 bawat kaha at softdrinks na tataas nang Php12 kada litro. Kailangan ni manang tindera ng mas malaking puhunan, habang maaaring liliit naman ang kanyang dati nang maliit na kita.

Si manang tindera at kapwa mahihirap nyang suki ang magbabayad sa matitipid ni CEO sa kanyang luxury car.

Ito sa simpleng salita, ang ibig sabihin ng TRAIN (Tax Reform for Acceleration and Inclusion) para sa mayaman at mahirap.

Nakakalula ang laki ng sahod ng mga CEO ng mga dambuhalang korporasyon sa bansa. Ang average na sahod ng CEO ng Metro Pacific Investments Corp. (MPIC) at Meralco nina Manny V. Pangilinan ay nasa halos Php8 million kada buwan. Ang mga CEO na nasa Ayala ay sumasahod ng halos Php7 million kada buwan. Sina Ramon Ang sa San Miguel Corp. (SMC), sumasahod kada buwan nang halos Php6 million. Si manang tindera? Swerte nang kumita ang kanyang pamilya ng Php2,700 sa isang buwan (batay sa 2015 Family Income and Expenditure Survey o FIES ng gobyerno).

Noong 2016, ang tinubo ng top 1,000 corporations sa bansa na kontrolado nina Pangilinan, Ayala, Ang at iba pang super rich kasama na ang mga dayuhan ay umabot sa Php1.24 trillion, mas malaki pa nang halos 15% sa tinubo nila noong 2015.

Yan lang ang deklarado o alam ng publiko. Magkano pa kaya ang totoo? Kaya walang epekto sa kanila ang anumang taas-presyo sa mga produkto o serbisyo. Sila nga ang may monopolyo sa mga produkto at serbisyo sa bansa at lahat ng taas-presyo ay ipinapasa sa pobreng mamimili. Laruan lang sa super rich ang mga luxury cars, tapos makakatipid pa sila nang daan-daang libo kapag bumili ng mga ito?

Sa kabilang banda, marami sa mga Pilipino ang gaya ni manang tindera na umaasa sa informal economy bilang nagtitingi ng produkto o nagbibigay ng serbisyo gaya ng mga drayber ng traysikel at dyipni, o mga tindera sa karinderya. Wala silang buwanang sahod. At marami sa kanilang kostumer ay mga galing din sa informal economy. Ibig sabihin, hindi sila makikinabang sa mas mataas daw na take home pay dahil sa mas mababang income tax. Pero tiyak na tataas ang kanilang gastos.

Si manong tsuper ng dyipni ay magbabayad ng dagdag na Php2.80 kada litro ngayong taon sa diesel habang si manong traysikel drayber ay may taas-gastos sa gasolina nang Php2.97 kada litro. Si manang may-karinderya ay tataas ang gastos sa LPG nang Php12 kada tangke (11-kg). Batay ito sa pahayag ng DOE.

Paano ang mga magsasaka at mangingisda – na pinakamataas ang poverty incidence sa lahat ng sektor (kapwa nasa 34% sa pinakahuling official data) – na umaasa sa kerosene, na tataas nang Php3.30 kada litro dahil sa TRAIN (pinakamalaki sa lahat ng produktong petrolyo) bilang pang-ilaw, pangluto at sa paghahanapbuhay?

Ngayong taon pa lang yan. Sa susunod na 3 taon, lalo pang tataas ang presyo ng langis dahil sa TRAIN, bukod pa sa halos linggo-linggong oil price hike dahil sa deregulasyon. Binibilang pa lang natin ang direktang impact. Ang pagtaas sa presyo ng langis (at kuryente bunga pa rin ng TRAIN) ay may domino effect sa presyo ng iba pang produkto’t serbisyo.

Lampas 15 million ng mga may-trabaho sa bansa ang walang regular na buwanang sahod o hindi nga sumasahod kahit nagtatrabaho, katumbas halos ng 37% ng kabuuang bilang ng employed noong 2017, kabilang ang gaya nina manang tindera at manong drayber. Paano pa kaya ang mga walang trabaho na nasa 2.4 million batay sa pinababang unemployment rate ng gobyerno?

Pero maraming ordinaryong manggagawa o empleyadong may regular na sahod ay hindi rin naman makikinabang sa TRAIN. Walang madadagdag sa sahod ng mga dati nang sumasahod ng minimum wage o mas mababa pa na bumubuo sa halos kalahati (46%) ng lahat ng manggagawa sa Pilipinas. Pero papasanin nila ang pagtaas ng mga presyo’t bayarin dahil sa TRAIN.

Kakarampot na nga ang minimum wage sa bansa. Bago pa ang impact ng TRAIN, ang minimum wage ay wala na sa kalahati ng tinatayang cost of living (hal. sa NCR, nasa Php1,130 ang cost of living kada pamilya kada araw kumpara sa arawang minimum wage na Php512). Paano kung maging mas mahal pa ang mga bilihin at serbisyo dahil sa dagdag-buwis?

Babawiin din ng taas-presyo dahil sa dagdag-buwis ang sinasabing pagbaba ng personal income tax. Kahit ang mga mataas-taas ang sahod at may pambayad pa, halimbawa, sa Uber o Grab ay hindi ligtas. Nagsabi na ang Grab ng taas-singil sa pasahe nang aabot sa Php13 dahil sa TRAIN. Mas mataas na ang gastos sa gasolina ng mga de-kotseng middle class. Hindi pa pinag-uusapan na inaalis ng TRAIN ang dating tax exemption na hanggang Php100,000 para sa 4 na dependents (hal. anak) ng isang taxpayer (o Php25,000 kada dependent) bukod pa sa personal exemption na Php50,000.

Isang paraan ang progresibong pagbubuwis para tiyakin ang makatarungang pamamahagi ng yaman ng isang lipunan. Pero kung ang mahihirap ang papasan ng buwis para sa maluhong pamumuhay ng mayayaman, hindi lang iyan regressive, pang-aapi na iyan. #

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