Policy change needed for energy crisis solution

As expected, the Energy Summit did not offer any real or lasting solutions to the problems facing the oil and power sectors.

The proposed summit recommendations—revisiting the nuclear power option and more foreign and private investments in the whole energy sector — like the Electric Power Industry Reform Act (EPIRA) and Oil Deregulation Law that preceded it — will only exacerbate already serious problems therein.

Likewise, proposals to lift or suspend the value-added tax (VAT) on oil and power and the scrapping of oil deregulation law are more likely to be junked by a panel of experts the energy department has assembled over the weekend at the Asian Development Bank to finalize the summit’s resolutions.

The Freedom from Debt Coalition (FDC) believes that without changing the paradigm and current policies of the government, the summit’s resolutions will end up as mere palliatives to a chronic crisis.

The Coalition is pushing for the lifting of VAT on oil and power and the cancellation of onerous independent power producer (IPP) contracts to significantly reduce the cost of fuel and power in the country. It is also for the scrapping of the oil deregulation and EPIRA law to restore and strengthen the role of the State and communities in the oil and power industry.

Moreover, FDC is fighting for a paradigm that recognizes the crucial importance of renewable energy, environmentally sustainable technology, community participation and control – a paradigm we believe, is beyond the imagination of the Arroyo government, global capital, international financial institutions (IFIs) and the threat of climate change. The use of fossil fuel such as oil is the biggest factor behind climate change.

Clearly, what manifested during the week-long summit is the ‘solid defense’ put up by the government, IFIs such as the Asian Development Bank (ADB) and International Monetary Fund (IMF)-World Bank, and the oil and utility giants in blocking proposals to overhaul the ‘fundamentals’ – the deregulation and privatization policies which made the costs of oil and power one of the highest in the world.

Prices of oil rose by more than 500 percent since the passage of the Oil Deregulation Law in 1998. Pump prices was up P4 per liter further when Mrs. Gloria Macapagal-Arroyo imposed VAT on petroleum products. Electricity rates, on the other hand, had doubled since EPIRA was enacted in 2001. The IFIs were all behind the crafting as well as the financing of these policy reforms in the oil and power industry. ADB loans in the country’s energy sector for the last 30 years (1978 to 2008), for instance, is already around $2.8 billion.

We know the days of cheap oil are over. But we also know that these days, transnational oil and power companies are enjoying super profits that the so called reforms in power and oil sectors have advanced rather than controlled.

The Arroyo government has decided to align itself with global capital rather than with ordinary and struggling consumers, in an unholy alliance blessed by the IFIs. We are condemned to ever rising oil and power prices, with little or no prospects of immediate relief and lasting long-term solutions to make life more bearable particularly for the least advantaged.

Mar Roxas bats to remove VAT on Oil

Transcript of interview with Senator Mar Roxas on DZBB
On the Palace's nixing of SB 1962, seeking to suspend the VAT on oil

Q: Ang ginawa ng gobyerno ay 1% reduction sa tariff para maibsan ang kahirapan ng mga tao. Mukhang hindi nila gusto ipatupad ang VAT suspension sa oil.

MAR: Kulang-kulang itong 1% pagbaba ng taripa. Ang epekto siguro nito, mga singkwenta sentimos o kulang pa dito sa bawat litro. Kapag tinanggal ang VAT sa produktong petrolyo, sa bawat litro ng diesel, mahigit sa P4 ang mababalik kay Juan de la Cruz. Kaya kulang na kulang itong 1%, at palagay ko hindi ito sapat para matulungan ang ating transport sector.

Q: Marami daw masasakripisyo pag tinanggal yung RVAT, P52 billion daw.

MAR: Palagay ko, ayaw talaga nila kaya dinadahilan nila. Hindi nila nauunawaan na kapag natanggal yung VAT sa produktong petrolyo, hindi naman mawawala sa gobyerno ito. Bakit? Gagastusin din naman ni Juan de la Cruz ito. Sa kanilang paggastos, makokolekta muli yung VAT. Halimbawa, sa isang tangke ng LPG na 11 kilos, kapag walang VAT ito, ang savings ni Misis mga P65. Yung P65 na iyon, gagastusin din sa pagpunta niya sa SM, Robinsons, sa Jollibee. Pag bili niya muli ng ibang mga pangangailangan para sa pang araw-araw na pamumuhay, makokolekta muli ng gobyerno yung VAT dito. Sa bawat consumption ng ating kababayan, makokolekta muli ng gobyerno ito.

Kaya itong 1% tariff cut na ito, pakitang tao lang ito, parang tokenism lang ito. Palagay ko kulang na kulang. Talagang kulang na kulang ito. At yung sinasabi ng gobyerno na walang magagawa ang gobyerno, ay talagang nire-reject ko iyan. May magagawa ang gobyerno.

Kung talagang serious ang gobyerno, kung talagang gustong makatulong, tanggalin ninyo ang VAT sa produktong petrolyo.

Q: Meron naman daw na oil summit, at doon tutugunan o hahanapan ng solusyon ang problemang ito. What do you think of the energy summit?

MAR: Okey lang din iyan, basta hindi mauwi sa daldalan. Ang mga summit-summit na ito, baka pakitang tao lang ito para parang may ginawa pero wala naman. Itong 1% cut sa tariffs ay talagang walang epekto ito.

Naaalala ko, noong nasa DTI ako, nasa P15 ang bawat litro. ngayon nasa P38 na, talagang mahigit sa doble. Noong ipinataw itong VAT na ito, ang presyo, ang singil sa bawat bariles ng langis ay $30 per barrel. Ngayon, $100 per barrel.

Kaya yung solusyon na VAT sa fiscal crisis ay hindi na nararapat sa ngayon. Una, wala nang fiscal crisis. Pangalawa, yung krudo, imbes na $30 per barrel, ngayon $100 per barrel na. Hindi na tama na ipagpapatuloy ang pagpataw ng VAT sa produktong petrolyo.

Q: Is it within the powers of the executive, considering na batas ang nagpapataw ng tax sa produktong petrolyo ngayon? Baka kinakailangang kumilos na ang Senado at ang House of representatives para matanggal na itong probisyon na ito sa batas?

MAR: Tama ka doon, talagang pag-amiyenda sa batas ang kinakailangan dito. At ang hinihingi natin sa ehekutibo ay gamitin niya yung kanyang kamay na bakal, imbes na kontra sa mga journalist, kontra sa mga leftist, sa mga aktibista, imbes na sa chacha, gamitin niya ang kanyang impluweniya sa mga partido sa Kongreso na isulong ito.

Sa Senado, ito'y ni-file na natin at patuloy ang pag-uusap dito. Sa House of Representatives naman, kinakailangan ang pahiwatig ng Malacañang na susuportahan niya ito.

Q: Pwede bang gumawa ng paraan yung executive, na siyang mag-suspend?

MAR: Hindi pwede, amyenda talaga sa batas ito.

Panghuli lang, ano. Dapat hindi ipagdamot ng Malacañang itong VAT na ito. Bakit? Pera natin ito. Hindi nila pera ito. At kung ginagastos lang naman nila ang ating pera sa mga bagay na hindi naman natin nararamdaman, mas mabuti na tayong gumastos ng ating pera. Ibalik ng gobyerno sa ating bulsa ang ating pera, at sa ganoong paraan, tayo ang gagastos sa ating mga pangangailangan, tayo rin ang makakapagtustos sa ating mga pangangailangan.