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Press Release No. 99-12
October 14, 1999

Once more, the option for nationalization

Current debates on what do with the downstream oil industry focus more on how to make deregulation work in order to supposedly maximize opportunities brought about by globalization.

The argument for nationalization gets drowned by calls for reforms within a deregulated regime. Those who adhere to nationalization are accused of being parochial at the very least. What is not mentioned is the fact that nationalization is an alternative with basic goals and programs. More importantly, it passes the test of practicality and beneficiality.

Nationalization truly answers the need to uphold the people�s welfare and national economic interests.

Protecting the interests of the people and the national economy cannot be achieved in a deregulated regime, because free competition warrants minimal government intervention and tolerates wanton abuses of industry players. No amount of "safety nets" can protect consumers, for the simple reason that deregulation operates on the hope that competition will be healthy and all industry players will "play fair."

Laying the groundwork for nationalization could be done immediately. The following are presented to show that there more practicable, doable positive steps that can be undertaken toward social protection and development. These policy reforms aim to fulfill the elusive promise of accessibility and affordability of petroleum products.

  • Reversal of the privatization of Petron in order to promote national protection in the oil industry.
  • Centralized procurement of imported crude oil to end transfer pricing and other unscrupulous practices of oil firms, as well as ensure the availability of crude oil in the domestic market.
  • Commodity swaps where two countries would engage in a barter arrangement for the products they need.
  • Establishment of a buffer fund, far different from the old OPSF in the sense that it will be used solely to cushion the impact of price fluctuations and will also serve to subsidize socially sensitive products like diesel and LPG.
  • Elimination of taxes on petroleum products, currently pegged at P1.58 per liter on the average.
  • Undertaking of oil exploration activities and aggressive development of alternative sources of energy.

For the government to initiate the nationalization of the downstream oil industry, political will is very important. It is apparent that the Estrada administration cannot and will not implement nationalization for it operates on a paradigm diametrically opposed to State control.

Indeed, nationalization will only happen if government�s political will reaches the point where it can go against the interest of transnational corporations and the local elite.

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