Oil Smuggling Cost Philippines $731 Million Annually
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The Philippines is losing as much as 30 billion pesos ($731 million) a year in potential tax revenues as a result of oil smuggling activities, claimed a Shell representative over the weekend, with close to 30-35 percent of oil products sold in the Filipino market believed to have been illegally brought into the country.
The Philippines is losing as much as 30 billion pesos ($731 million) a year in potential tax revenues as a result of oil smuggling activities, claimed a Shell representative over the weekend, with close to 30-35 percent of oil products sold in the Filipino market believed to have been illegally brought into the country.
On Sunday, Pilipinas Shell Petroleum Corp.’s Vice-President for Communications Roberto Kanapi told reporters that direct smuggling was occurring regularly in Subic Bay Freeport and the Phividec Industrial Estate in Misamis Oriental – where small oil tankers and fishing boats would load oil products from a larger mother ship stationed somewhere in international waters before bringing them onshore.
Technical smuggling was also rampant, Kanapi said, in which misdeclaration and undervaluation by port authorities could see unverified amounts of fuel being brought into the country.
Kanapi cited a recent report by the Philippine Institute of Petroleum in order to back his claims. In the report, the authors suggested that the level of fuel sales in the country was not following the trend of higher vehicle registration and economic growth, thus signifying the possibility of smuggling.
“Smuggling could only go up because VAT [value-added tax] is a factor of price,” said Kanapi, as cited by Manila Standard Today.
[quote]“There are small things we (the oil industry) can do to help… As an industry, we can help the government in the testing facilities,” he added, according to The Philippine Star.[/quote]Related: Nigerian Oil Thieves Steal 150,000 Barrels Of Oil Daily
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Several industry officials have already urged the government to retract its Oil Deregulation Law (ODL) in order to crack down on oil smuggling in the country. The Philippine government passed the ODL in 1998 to promote free market competition among oil companies in the country, as well as liberalization among downstream oil industries; but this has caused an undesirable effect.
Large oil firms operating in the Philippines, as such, have called on the government to impose taxes on fuel products entering the country through the free port and economic zones.
Petron chairman Ramon Ang, who runs the largest oil refining and marketing company in the Philippines, said: “the figures from these studies [on oil smuggling] that government loses about P30 billion to P35 billion in taxes, they have basis for that.”
The ODL is to blame for “opening the floodgates” of oil smuggling in the country, Ang added.
