The call of some interest groups to revert the downstream oil industry into a regulated set-up is seen as a dangerous step bringing back the nightmares of ‘subsidy scheme’ that had practically fleeced Filipino taxpayers then.

Dr. Jesus P. Estanislao, former Finance Secretary of the Aquino administration, relayed that the oil subsidy under the Oil Price Stabilization Fund (OPSF) was his greatest ‘‘nightmare’’ as this triggered a big hole in the government’s budget that called for overhaul of fiscal policies.

At some point, Estanislao said, the country’s budget deficit soared to as much as 7 to 8.0 percent of the gross domestic product (GDP), such a messy fiscal position to contend with, comparing that to a prudent state which should just be at 2.0-percent of GDP.

“For a government that is already suffering from a huge deficit, and you add on an oil subsidy scheme, then you will really be in trouble,” the former DoF chief opined, taking cue from pronouncements that the State budget deficit may again hit a record P200 billion. He explained that subsidy scheme is almost a naturally-occurring phenomenon borne out of imposing regulation policy in an oil industry, since it requires price tempering strategy when there are spikes in international oil prices.

“Regulation sounds good, but it is terrible in natural practice because government is subjected to a lot of political pressures,” Estanislao said, adding that when you suppress prices, “you will end up subsidizing and subsidizing and subsidizing, so it becomes one big problem of subsidy which puts risk on our consolidated public sector deficit or the infamous CPSF (consolidated public sector fiscal balance).”

Apart from the lawmakers and leftist organizations, industrialist Raul T. Concepcion of the Consumer and Oil Price Watch was among the most vocal on swinging back the deregulated oil industry into regulation.