One-fourth of increase: TRAIN aggravates oil price hikes–IBON

Government is wrong in downplaying the contribution of the Tax Reform for Acceleration and Inclusion (TRAIN) law on recent big-time oil price hikes, research group IBON said.

The price of fuel products combined with the TRAIN increased since year-end 2017 to Php10.20 per liter for diesel, Php11.41 for kerosene, and Php15.14 for gasoline as of last week.

These prices now include excise taxes and value-added tax (VAT), respectively, said IBON.

The price of diesel has increased to Php41.70/liter from Php31.50 at the start of the year, for instance, while the price of kerosene has increased to Php50.40/liter from Php38.99/liter as of year-end 2017.

The price of gasoline is now Php56.47/liter from Php41.33 as of year-end 2017.

The adjustment in the price of oil products has been attributed to the increase in the Mean of Platts Singapore (MOPS) prices and changes in the PH Peso–US Dollar exchange rate.

MOPS for gasoline prices has had a net increase of US$7.91/barrel and a net increase of US$5.92/barrel for diesel during the same period.

The exchange rate of the Philippine Peso to US Dollar did not help lessen oil prices as the peso depreciated against the US dollar by Php2.42 also in the same period.

One of the formulas by the Department of Energy (DOE) assumes a Php1.00/liter change in domestic oil price for every US$3.00/barrel change in MOPS.

IBON however observed that applying this formula does not reflect the steep hike in oil prices.

Moreover, according to IBON’s executive director Sonny Africa, TRAIN’s new and higher taxes aggravate and intensify the impact of these oil price hikes.

The TRAIN law adds new excise taxes on diesel and kerosene and raises excise taxes on gasoline.

TRAIN imposes a new Php2.50 liter excise tax on diesel and Php3.00 per liter on kerosene, while increasing that on gasoline by Php1.65-2.65 to Php7.00.

The final taxes imposed are even higher because the 12% VAT is also applied to them.

Thus, of the net increase in the prices of diesel, kerosene, and gasoline, TRAIN has added Php2.80, Php3.36, and Php1.85/2.97 to the price of every liter, respectively.

This means that TRAIN’s taxes accounted for one-fourth of the increase in the prices of diesel and gasoline.

TRAIN keeps increasing the excise tax on oil products and by 2020 they will have permanently added Php6.72/liter to the price of diesel, Php5.60/liter to the price of kerosene, and as much as Php6.33/liter to the price of gasoline.

“Real wages are stagnant at very low levels and TRAIN’s new taxes and inflationary impact are an unnecessary additional burden on the majority of Filipinos who are low-income earners,” said Africa. # (Image from Philippine Gas Price Watch through IBON)




Group says government policy of deregulation and privatization to blame, calls on Pres. Aquino to step in

Bayan Muna Rep. Neri Colmenares today hit the triple whammy of price hikes on oil, power and water saying that it is the government policy of deregulation, privatization and liberalization is the root cause of this price hikes.

“Take the case of oil firms, they are so fast to jack up oil prices but are so slow to roll back. Why should there be another big time oil price hike when oil companies have a buffer stock that was purchased when the price was lower? Worse oil prices are decreasing in the international market but it is increasing here,” said Senior Deputy Minority Leader Colmenares.

The progressive solon issued the statement as oil companies is again set to implement a big time oil price hike even as oil prices fell in Asian trading hours last week after the International Energy Agency (IEA) predicted that global oil prices will recover only partially over the next five years, analysts said.

News reports say that US benchmark West Texas Intermediate (WTI) for March delivery fell 68 cents to $52.18, while Brent crude for March eased 80 cents to $57.54 in morning trade.

“Besides the rollbacks they implemented then was not even right because some industry insiders are saying that it should be P1-2 more. Given this situation and government is also slow in lowering the prices of basic commodities services and transportation so it is the consumers are always at the losing end. This is the reason why the oil industry should be regulated to prevent this type of price manipulation and added burden to consumers,” said Rep. Colmenares.


“Add to this the impending power rate hike and water rate hikes then consumers are again given another burden. As for the impending power rate hike, we have yet to get the full report of the Energy Regulatory Commission (ERC) on the collusion investigation of generation companies (gencos) which is long overdue but Meralco is again using the same reasoning of simultaneous plant outages as the reason for the increase. Again this would not have happened if government effectively regulates the power industry and if it owns a significant number of power plants to have a say in the market and so that consumers would be held hostage by power players,” he said.


“Meanwhile the looming water rate hike of Maynilad and the potential adjustment of Manila Water’s tariffs as a result of the International Chamber of Commerce (ICC) decision will come on top of another rate hike approved by the MWSS last December.

“Maynilad and Manila Water last month started implementing higher water rates to cover foreign currency differential adjustment (FCDA), which will be reflected on the customers’ bills this month. This would not have happened if the water industry was not privatized by government,” said Rep. Colmenares.

“Also in other businesses, they are the ones who absorb bad business decisions and business risks like the foreign currency differential adjustment (FCDA) and pay their own taxes but these water concessionaires are raking in billions by fooling us. They even pass to consumers losses due to changes in foreign exchange rates. But in this case, the concessionaires borrow from foreign creditors without any qualms knowing that they are insulated from the risk ordinary borrowers take because they’re allowed to pass on their forex losses to their consumers. It is like having their cake and eating it, too. Sa kuryente nga e nagrereklamo tayo sa paniningil sa atin ng systems loss pero dito mismong buwis na nga ng kinita nila ang sinisingil pa sa atin,” “This shows that privatization is wrong and the practice of automatic pass through of forex losses should not be allowed by government”, explained Rep. Colmenares.

“Manila Water and Maynilad must first refund billions of pesos it collected from the public for still unimplemented water projects before it could talk about increase water charges. Among these projects is the P5.4 billion Angat Water Reliability, and the P45.3 billion Laiban dam projects,” added the progressive solon.

“As it is, deregulation, privatization and liberalization have been proven to a bane to consumers and should be reversed. We should act now and Congress should fast track the measures to stop these destructive and lopsided economic measures before it wreaks more havoc on the lives of the Filipino people,” said Rep. Colmenares.


“These impending rate increases could be stopped if Pres. Aquino will abandon his privatization and deregulation policies while at the same time intervene and warn these companies of their liabilities should they be involved in price manipulation or unjust rate increases. The fact that the Aquino administration has allowed prices of basic commodities to remain high despite the decreasing oil price only shows its lack of concern for consumers. In the end, the government is the one to blame for persisting in the discredited privatization and deregulation policies which allows these rate increases to the detriment of the public,” ended the Senior Deputy Minority Leader.###