Casiño: Audit team’s study on oil prices, profits are incomplete, biased
PARTYLIST representative Teddy Casiño (Bayan Muna) today said that the supposed Independent Oil Price Review Committee (IOPRC) study that absolves the oil companies of irregularities appears incomplete and biased, using data voluntarily provided by the oil companies themselves.
The lawmaker gave three initial observations:
1) The IOPRC appears not to have factored the bloated prices of oil and petroleum products in the provinces and rural areas, which are usually higher by five to seven pesos compared to prices in the National Capital Region;
2.) The committee did not have access to the supply contracts of the oil companies and thus could not account for the embedded profits made between the mother company and their local subsidiary. Shell, for example, buys oil from subsidiaries abroad so the reported landed cost in the Philippines already include profits from transfer pricing, which are not reported by the local subsidiary. Without seeing the supply contracts, it would be naive to conclude that the profits of the oil companies decreased dramatically under deregulation;
3.) The committee apparently did not conduct an actual audit of depot inventory. Without an inventory valuation, the windfall profits from selling lower priced inventories were not considered in the study.
4) The IOPRC was dependent on data voluntarily provided by the oil companies. It did not have the power to subpoena sensitive documents.
“Based on these initial observations it is obvious that the IOPRC’s study may have been incomplete and prone to bias. This may be the reason why they came up with the unbelievable conclusion that the oil cartel is not engaged in overpricing and profiteering,” he stressed.
“In any case, we want these issues cleared when the committee presents its findings to Congress, hopefully soon,” said Casiño.