Shell warns of fuel shortage,
job losses if its imports are seized
Posted at 01/15/2010 5:11 PM | Updated as of 01/17/2010 4:05 PM
MANILA, Philippines - Pilipinas Shell Petroleum Corporation on Friday warned that the threatened seizure of P43 billion worth of its raw materials and product imports by the Bureau of Customs (BOC) would force it to shut down its Batangas refinery, resulting in fuel shortage.
Shell said the closure will result in job losses and massive disruption in power supply, land, sea and air transportation and other critical industries.
"The domestic storage facilities of Shell's competitors are limited and in the event that Shell is unable to service its 27.7% market share, this void cannot be filled by its competitors who do not have enough supply to fill this massive shortage," Shell supply planning and scheduling manager Garry Galvez said in a statement.
Galvez said that the planned seizure of Shell's imported raw materials and products will prevent it from producing and selling petroleum products like jet or aviation fuel, kerosene, liquefied petroleum gas, diesel, variants of unleaded gasoline, variants of fuel oil used for marine vessels, power plants and other general industries.
He added that this will force Shell to close its Batangas refinery, leaving 823 workers jobless and resulting in P11 billion monthly losses for the company.
"With no products to sell, the seizure can also eventually close down Shell's 959 retail dealer stations. Shell's retail stations service road transport vehicles and account for about 34% of the market as of June 2009. These stations employ nearly 17,000 daily wage earners who also stand to lose their jobs as a result of the seizure."
The BOC vowed to seize, under Section 1508 of the Tariff and Customs Code, all future shipments of Shell amounting to $923 million arriving from February to May 2010, to answer for alleged deficiency tax assessments covering its importations of Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG) from 2004 to 2009.
Shell is disputing the tax assessments before the Court of Tax Appeals (CTA), saying its CCG and LCCG imports are merely raw materials for the production of unleaded gasoline. It said BOC's tax assessments have no basis since excise taxes are supposed to be levied only on finished products for consumption and sale in the domestic market.
Shell legal counsel and former Ombudsman Simeon Marcelo complained that the BOC's demand constitutes double taxation since Shell already paid billions of pesos on Shell's finished products withdrawn from its refinery that were produced using the imported CCG and LCCG.
"The threatened seizure is unjust, premature and oppressive. BOC is threatening to seize Shell's shipments even if the supposed liability has yet to be determined with finality. There is still a pending case before the CTA on this issue. What makes this worse is that the BOC threatens to seize all of Shell's shipments, even those that are not CCG or LCCG," said Marcelo.
Marcelo added that Shell is asking the CTA to bar the BOC from implementing the seizure as this will result in grave injury, not only to the company, but, more importantly, to its stakeholders and the general public.
Apart from having a 27.7% market share on average in the retail fuels market, Shell said it also supplies 33% of the demand of power plants, including those of the National Power Corporation; around 17.2% of the fuel requirement of the aviation industry; 24.6% of the marine transport market; and 70.2% of the demand for bitumen by contractors engaged in road works.
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The TRUTH will set you FREE.Shell said the closure will result in job losses and massive disruption in power supply, land, sea and air transportation and other critical industries.
"The domestic storage facilities of Shell's competitors are limited and in the event that Shell is unable to service its 27.7% market share, this void cannot be filled by its competitors who do not have enough supply to fill this massive shortage," Shell supply planning and scheduling manager Garry Galvez said in a statement.Galvez said that the planned seizure of Shell's imported raw materials and products will prevent it from producing and selling petroleum products like jet or aviation fuel, kerosene, liquefied petroleum gas, diesel, variants of unleaded gasoline, variants of fuel oil used for marine vessels, power plants and other general industries.
He added that this will force Shell to close its Batangas refinery, leaving 823 workers jobless and resulting in P11 billion monthly losses for the company.
"With no products to sell, the seizure can also eventually close down Shell's 959 retail dealer stations. Shell's retail stations service road transport vehicles and account for about 34% of the market as of June 2009. These stations employ nearly 17,000 daily wage earners who also stand to lose their jobs as a result of the seizure."
The BOC vowed to seize, under Section 1508 of the Tariff and Customs Code, all future shipments of Shell amounting to $923 million arriving from February to May 2010, to answer for alleged deficiency tax assessments covering its importations of Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG) from 2004 to 2009.
Shell is disputing the tax assessments before the Court of Tax Appeals (CTA), saying its CCG and LCCG imports are merely raw materials for the production of unleaded gasoline. It said BOC's tax assessments have no basis since excise taxes are supposed to be levied only on finished products for consumption and sale in the domestic market.
Shell legal counsel and former Ombudsman Simeon Marcelo complained that the BOC's demand constitutes double taxation since Shell already paid billions of pesos on Shell's finished products withdrawn from its refinery that were produced using the imported CCG and LCCG.
"The threatened seizure is unjust, premature and oppressive. BOC is threatening to seize Shell's shipments even if the supposed liability has yet to be determined with finality. There is still a pending case before the CTA on this issue. What makes this worse is that the BOC threatens to seize all of Shell's shipments, even those that are not CCG or LCCG," said Marcelo.
Marcelo added that Shell is asking the CTA to bar the BOC from implementing the seizure as this will result in grave injury, not only to the company, but, more importantly, to its stakeholders and the general public.
Apart from having a 27.7% market share on average in the retail fuels market, Shell said it also supplies 33% of the demand of power plants, including those of the National Power Corporation; around 17.2% of the fuel requirement of the aviation industry; 24.6% of the marine transport market; and 70.2% of the demand for bitumen by contractors engaged in road works.
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