The new year may begin with the end of an era in the Philippines’ oil sector, as Petron has confirmed that it will be shutting down in January 2021 its refinery in Limay, Bataan, the country’s once-largest and only remaining facility of its kind.
Petron President and CEO Ramon Ang confirmed this development, citing continued losses due to what he believes is unfair taxation stemming from the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
Ang, who already warned of the closure in October unless government heeded its plea for a level playing field in the country’s oil industry, said Petron’s “tax imbalance” concern was discussed withe the Department of Energy (DOE), Department of Trade and Industry, Bureau of Customs, and Bureau of Internal Revenue among others.
The oil giant was supposed to cease operations before the Christmas holidays, but then Ang decided to let 2020 end first before proceeding.
Petron’s move follows that of Pilipinas Shell, which already closed its Tabangao refinery in Batangas City last August for business sustainability reasons. Global ratings firm Fitch had already warned of increased inflation as a result of the Tabangao facility’s closure.
Ang, however, said that the shutdown wouldn’t be permanent, adding it would resume commercial operations should the economy improve.
The DOE had said that it is closely monitoring developments regarding the Bataan refinery’s closure, while the Department of Finance had insisted that it isn’t a tax issue, arguing that other oil companies globally are also closing their refineries.
Construction of the Bataan refinery began in 1957 to meet the country’s growing demand for fuel. By the time it opened in 1961, what was then-Southeast Asia’s most modern refining facility could refine up to 25,000 barrels of crude oil per day. Since then, the capacity has increased to 180,000 barrels per day.
Photo from Petron website.