The Arroyo government Wednesday upped the ante in its dispute with private oil companies regarding petroleum prices and forecasts of tight supply, with the state-controlled Philippine National Oil Company-Exploration Corporation (PNOC-EC) declaring it is ready to supply the country’s fuel needs if necessary.

“If there will be a problem of supply as voiced out by the oil companies, PNOC-EC is ready to supply oil,” company chairman and former Rep. Jacinto Paras said.

Paras disclosed that the plan is to take over the private oil firms’ depots for PNOC-EC’s own shipments and to supply directly the gasoline stations operated by private oil companies.

“Under the (Oil Deregulation) Law, whenever there is a shortage or danger that oil will not be supplied, government shall take over those facilities. In their depots we will place our imports; we will use their facilities and ship directly to the stations,” he said.

Paras noted that they have contacts with oil producers in Asia andthe Middle East, and the only thing they need to execute their plan is President Gloria Macapagal Arroyo’s blessings.

“We can supply within 10 days upon order, just right prior to any supply of oil is reduced. The only thing that is hindering (us) is a good signal from Malacañang,” Paras emphasized.

The business community for its part said the plan to take over oil facilities as articulated by government officials is “very scary” and an extremely dangerous proposition.

Should the government fail to handle the explosive issue judiciously, foreign businesses cautioned this early that it is not far-fetched that such will result in near-term investor exodus.

“That’s a very dangerous precedent.  It is sending very bad signals to the international investing community,” a source said.

PNOC-EC claimed it is already supplying oil to Bangladesh and is about to strike a deal with China, although it did not specify where it is sourcing supply.

Should the President allow the firm to supply oil, PNOC-EC said it would want to re-exist as an oil firm competing with other industry players that would survive the financial squeeze brought about by the imposition of Executive Order 839 which froze oil prices to October 15, 2009 levels.

Long before the imposition of the price freeze, the PNOC-EC has already announced that it wants to engage in the downstream oil industry by putting up retail stations and compete in the market.

Meanwhile, research organization Ibon Foundation said EO 839 could just be a public relations gimmick to cover up the ineptness of the government in addressing human disasters wrought by recent typhoons.

Ibon research head Sonny Africa said EO 389 would not help poor Filipinos and typhoon victims. Instead, he said the poorest income groups that are not consumers of petroleum products at the pump level are the worst hit by the controversy engendered by the edict.

“It is also not clear how prices of the basic goods that they consume and of the products they need for reconstruction and rehabilitation will be lowered as a consequence,” Africa said.

“There is unlikely to be any long-term effect on oil prices even if the oil firms claim that it gives a perception that the country lacks stability and protection for investors,” he explained.

“In times of calamity, the regulation of the oil industry is fully justified including setting price controls,” he said.

Africa pointed out that it appears the EO was issued mainly as a public relations exercise “to divert attention from government’s culpability in the human disasters wrought by the recent typhoon-driven calamities.”

“It also appears to be an attempt to correct government’s image as unduly siding with the big oil firms at the expense of the Filipino public,” he added.

The research chief explained that big oil firms are not being driven to any real financial difficulties or bankruptcy.

He said the oil firms “are just muscle-flexing now to show that they will not tolerate encroachment into their monopoly power over the industry.”

“It is likely that the oil firms will only pad their pump prices once the price controls are lifted to make up for their lost accustomed super profits,” he added.

Africa said the government must instead repeal Republic Act 8479 or the Downstream Oil Deregulation Act to institute responsible government regulation of the oil industry.

As the controversy rages, dozens of gasoline dealers in areas like Baguio City have resorted to rationing to customers to prevent panic buying which could result to the immediate depletion of supply.

For the past three days, construction companies, large-scale businesses and transport groups have been purchasing large volumes of diesel, gasoline and kerosene due to fears of shortage after oil companies said they will no longer import petroleum because of huge losses.

Some gasoline stations have started limiting purchases by motorists, capping them at P700 for public utility vehicles and P300 to private vehicles.

According to the dealers, they do not know when their supply will be delivered considering that their mother companies claim they are suffering from huge losses due to EO 839.

Because of the feared food and fuel shortage, some residents have started buying huge of volume of goods from groceries and supermarkets. (With reports from Ellalyn De Vera and Dexter See)