Finance Secretary Carlos Dominguez III said the implementation of the fuel marking program will help address the expected rise in fuel smuggling in the wake of the increase in fuel taxes under the Tax Reform for Acceleration and Inclusion Law.
Dominguez was reacting to the previous comments of businessman Ramon Ang who said that petroleum smuggling has been on the rise after TRAIN law took effect in January 2018 and significantly impacted Petron Corp., the country’s largest oil refiner.
“We anticipated the potential increase in smuggling and therefore initiated the fuel marking program under the TRAIN law. Fuel Marking is designed to help address this issue,” Dominguez said in a statement.
“In fact, after the previous announcement that implementation of the Fuel Marking Program would start this quarter, we noted a steady increase in collections among the ports where petroleum products are regularly imported,” he said.
He said this was a strong indicator of increased compliance, and “those who skirted required declarations and payment of taxes in the past are now following the law.”
He cited as a good example the Port of Limay’s collection for June 2019, which was P3.6 billion above target. This was higher than the excess collection in May 2019 by P1.1 billion. The ports of Subic and Cagayan de Oro likewise exceeded their targets.
In an earlier briefing, Ang said Petron was putting on hold its expansion plans amid the challenging environment hurting the business.
He said Petron’s income this year might reach just around P8 billion to P9 billion, half of an earlier net income projection of P18 billion for 2019. Last year, Petron’s earnings reached P7.1 billion.
Some of the challenges facing Petron mentioned by Ang were the volatility in global crude prices and rampant smuggling.
Petron earlier planned to start the expansion of its world-class facility in Limay, Bataan to add 90,000 barrels per day and bring the refinery’s total capacity to 270,000 barrels per day by 2021.
The Bataan refinery supplies 40 percent of the country’s fuel requirements.
Earlier, Dominguez said the implementation of the fuel marking program was expected to boost government revenues by at least P5 billion in 2019.
He said that at least 95 percent of all marking sites would be operational by the end of the year. He said consultations with various stakeholders, including partner agencies such as the Department of Energy and the Department of Environment and Natural Resources, and industry players were considered for the crafting of the regulations regarding the program.