More than a third of oil in PHL smuggled in — Finance Dep't

A discrepancy of 39.3 million barrels of oil was revealed by government records on the supply of imported crude and actual demand in 2011, according tot the Department of Finance (DoF), indicating that the shortfall was likely covered by smuggling or illegal shipments of the commodity. In a statement Tuesday, the DoF and its agencies—Bureau of Internal Revenue and Bureau of Customs—said the volume of oil imports on record was lower than the actual demand indicated by data from the Department of Energy. "Current data" from the BOC show that only 67.6 million barrels of oil were imported in the same year, "signifying a discrepancy of 39.3 million barrels that [were] likely made up through smuggling," the department said. Under the Customs Bureau's Run After The Smugglers (RATS) campaign, nine cases have been filed against oil smugglers since the start of the Aquino administration, with "total dutiable value of products amounting to P38.68 billion," said the DoF. 'Corrective measure' The BIR last year issued Revenue Regulation 2-2012, changing the tax administration on petroleum products and require upfront payment of taxes and duties on imported oil. If the oil was to be used within special economic zones—thus, qualified for tax exemptions—tax-exempt parties would have been able to file for refunds under RR 2-2012. Implementation of RR 2-2012, however, was delayed for nearly a year due to a petition filed by Rep. Carmelo Lazatin of Pampanga’s 1st district, which resulted in a temporary restraining order issued on March 16, 2012 by Regional Trial Court Branch 58 judge Philbert Iturralde. Iturralde followed up the TRO by issuing a writ of preliminary injunction against RR 2-2012 on April 4, 2012. It took almost a year for the Court of Appeals to reverse Iturralde's order on February 14, 2013. The CA rueld that "the contested RR was issued as a corrective measure to ensure the collection of correct taxes from whom they are due, as explicitly delineated in the introduction of said rules. "It cannot be overemphasized that any injunction that restrains the collection of taxes, which is the inevitable result of the suspension of the implementation of the assailed RR is a limitation upon the right of the government to its lifeline and wherewithal." The BOC was directed to implement the RR and hold oil importations until payments of VAT and excise tax were maded. Anti-smuggling measures In addition to the cases filed, the BIR is auditing companies identified as probable high-risk smugglers. The Finance Department will also soon implement a system of port accreditation for commodities at high risk of smuggling. Only particular ports will be accredited for importation of sensitive commodities such as oil and steel. The port must submit to the department monthly reports that will be cross-checked with data from the Department of Energy and the Philippine Ports Authority, on a per volume, and per vessel basis. "The port accreditation system will prevent 'port shopping', and hinder unethical importers from literally evading tax collection,"  Finance Secretary Cesar Purisima said. All importers of sensitive commodities will also be asked to submit annual rolling import plans indicating quantity, type, source and location of intended port arrival. Oil companies speak out In an interview with The Philippine Daily Inquirer, Petron Corp. chairman Ramon S. Ang said his company's retail or service station volumes "have remained flat despite the fact that registered vehicles increased from 5.5 million to 7.1 million over the period” from 2007 to 2011. He added that it "doesn't take much" to stop the smuggling. "[Y]ou would only need to closely monitor special economic zones and other ports. I believe another way the government can monitor smuggling activities is to go after retail outlets that are selling fuel at extremely low prices,” Ang told the Inquirer. Fernando Martinez, chairman of the Independent Philippine Petroleum Companies (IPPC) and president of Eastern Petroleum, told the Inquirer that his group has already suggested to the DoF and Customs that smuggling in ecozones could be minimized by charging all imports upon entry and giving rebates to those who use the fuel within the zone. He also challenged Ang's statement that retailers' selling fuel at lower prices indicates selling smuggled fuel. "“What if the retailer is deliberately selling at a loss just to buy market share or meet a sales quota?” he said. “He cannot generalize, we are law-abiding as anyone. If he has evidence, he can sue them. Also, even a big player like Shell is facing charges of smuggling." Petron's consolidated income dropped 73 percent to P2.3 billion in 2012 from P8.5 billion in 2011, despite sales revenues increasing by 55 percent to P424.8 billion and domestic sales volumes by 8 percent to 44.5 million barrels. The company attributed the drop in profit to volatility in global oil prices. — BM/VS, GMA News