Philippines’ largest oil refiner Petron has threatened to permanently close its 180,000 bpd processing plant in Bataan if its appeal to the government for a “level playing field” were rejected, CEO Ramon Ang said. According to Ang, the current tax regime makes importing refined products more profitable. Importers are taxed once when their products exit their terminals or depots. On the other hand, refiners have to pay excise taxes upon arrival of their crude and raw materials as well as on the finished product.
The country’s Tax Reform for Acceleration and Inclusion or TRAIN law levies a PHP6 ($0.12) a litre tax on diesel in 2020, rising from PHP4.50 in 2019 and PHP2.50 in 2018. Tax on unleaded gasoline stands at PHP10 ($0.21) a litre this year, raised from PHP9 and PHP7 in 2019 and 2018, respectively. Ang said that Petron should be granted the same privilege given to every importer in the Philippines. Petron is also facing the impact of the COVID-19 pandemic, which squeezes refining margins.
Petron established the Bataan refinery in 1961 with an initial capacity of 25,000 bpd. Now, the refinery has a capacity of 180,000 bpd and supplies 40% of the country’s requirements. Previously, Shell permanently shut its 110,000 bpd refinery in Batangas in August 2020, and Caltex Caltex Philippines closed its Batangas refinery in 2003. If Petron realized its threat, the Philippine would entirely depend on imported fuels. Government data showed that the country imported 310,000 bpd of diesel, gasoline, jet-kerosine, fuel oil, and LPG in 2019, increasing by 15% from 2018.
