Oil company boosts non-fuel business

To offset TRAIN impact

CEBU, Philippines — Phoenix Petroleum Philippines Inc., aims to ease the impact of the tax reform on fuel prices by boosting its non-fuel business to offset the thinning profit margin.

Phoenix Petroleum senior vice president for external affairs, business development and security Raymond Zorrilla, the company has already been cautioning the impact of tax reform to its pricing point, "sometimes we absorb the costs."

Apart from add on cost of excise tax, the fuel business is also battered with various challenges, like rising cost of fuel, and host of other operational expenses, but Zorrilla said Phoenix has been able to rein its fuel prices within the competitive level, at the same time hitting good bottomline because of its conscious move recently to venture into non-fuel business such as such providing added services in its gas stations.

While the company, he said supports the government's move for tax reform, he said companies, like fuel firms that are tightly regulated should come up with strategies to stay afloat.

The government on the other hand, admitted that the monthly increases in consumer prices since January were largely due to oil taxes imposed under TRAIN.

TRAIN levied a total of P6 tax on diesel, cooking gas, kerosene and bunker fuel. The levy was spread over three years up to 2020.

This year’s first installment of the tax varies on the product. In the case of diesel, it was P2.50 per liter. On cooking gas, it was P1. The remainder of the P6 would be collected next year and 2020.

On top of the excise tax, the law imposes the 12-percent value added tax based on the new levy. Thus, in January, the total increase in the retail price of diesel was almost P3 per liter.

The rising fuel prices brought about by both internal and external factors, prompted the company to offset its thinning profits from fuel business alone by transforming its gasoline station into a one-stop-shop hub.

A one-stop-shop concept will earn the company additional revenues in commercial leasing and house its newly-acquired Family Mart convenience chain.

Some Phoenix gas stations around the country have already been transformed into one-stop-shop. One will be opened in Cebu in the next couple of months.

Soon, large size Phoenix Gas Stations will have banking facility (like ATM), laundry shop, convenient stores, quick-service restaurants, car wash, among others. (FREEMAN)