CNN The Source interview of Senator Win Gatchalian with Pinky Webb on oil prices, Senate Committee chairmanship and new taxes

Q: Oil prices, again increased by P4 for diesel and P2 vessels for gasoline. Marami hong points that need to be discussed here. First, I want to talk about the subsidy for the PUV drivers of P6500 in two tranches. They say this is actually only good, yung P6500 sabi nila is only good for eight days. What should THE government do about this?

SEN. WIN: Pinky, I'm a supporter of targeted subsidies. This is more efficient, but we have to make sure that it's dispensed and given in a timely manner. And there's this big problem with giving subsidies in a timely manner in our case. You know, there are a lot of delays in terms of giving out the Pantawid Pasada looking for the drivers, looking for the operators and this is causing a lot of concern with our public utility drivers. So in short, I am in favor of increasing the subsidies, maybe 50% more to about 100% more, so that we will cover the increase in fuel prices in the last few days.

Q: Are you saying that you're in favor or you're supporting a third tranche of ayuda?

SEN. WIN: Yes, I am. I'm looking at that. It's more economical. One tranche will cost you about P4 billion to about P6 billion, as opposed to removing excise tax that will cost us roughly around P200 billion so it's still more economical to give fuel subsidies provided it's given immediately. I know that the first and the second tranche encountered a lot of delays. And the delays are penalizing our drivers because their margins or their earnings are getting squeezed on a daily basis. So we have to give it to them immediately and use technology such as E-wallets to give it to them.

Q: And we're hoping that if indeed there's a third tranche, it will be easier for them, but I just want to go back to their plight. Sir, they're saying that the P6500, doon po sa number of liters that they put in, in a day which would probably be averaging about 20 liters a day. That's only good for eight days. So it covers them for eight days, and this was prior to this increase of P4 last Tuesday. In essence, what happens to the 22 or 23 days left in a month?

SEN. WIN: This is actually one of my biggest concerns, the uncertainty that is surrounding this fuel issue. It seems to me that there is no insight regarding the Ukraine-Russian incident or the Ukraine invasion. Everyone was predicting that hopefully in two months everything will be back to normal but it seems to me that's not going to happen. And what's actually happening right now, is uncertain. Because of that uncertainty, fuel prices are again not going up, passing $120 per barrel. So I plan to conduct a hearing next Tuesday. Look at a scenario wherein this issue will be prolonged, meaning what if the crisis will last in the next six months to 12 months? We have to be ready because we have to make sure that we have enough budget to give subsidies and what will be the super ultimate solution to help our constituents.

Q: Are you still not considering suspending excise taxes and VAT on petroleum products, Senator? It's already $120 per barrel. Again, then let's go back to the TRAIN law after this.

SEN. WIN: Pinky, if this will be prolonged, like I said, this will extend for the next six to 12 months then that's on the table right now. Because the fuel subsidies only help our public utility drivers. It only helps our fishermen, in terms of direct subsidies, but the middle class is also being squeezed out because the middle class, they have their vehicles, they also have businesses that require fuel. So the middle class is also being squeezed out. So that's the essence of looking at suspending excise tax. So it's better to talk about this in the hearing so it will be formal and we will get all the data together. I think the bottom line here is we have to expect for the worst in a prolonged scenario.

Q: Okay, so what you're saying right now, if this seems like the projection is this will continue for another six months, you are looking, and well supporting suspending the imposition of excise tax and VAT?

SEN. WIN: Correct. I'm looking to suspend excise tax, possibly VAT if necessary. But I think excise tax is easier to administer than VAT. But on a matter of principle I'm looking, I'm also open to looking at that if the situation gets prolonged. And if you look at it, if you follow the international news right now, a lot of the policymakers in Europe are seeing that the sanctions might stay until President Putin is there. So that's a very long time. So if you have sanctions in place, rest assured prices of international fuel will be elevated at around $100 per barrel, and that's going to be very tough for a lot of our PUVs and our middle class.

Q: Yeah, but aren't we, isn't the projection right now, if we talk short-term, I'm not sure if you will consider this short-term, that this may last until the end of 2022 at the least.

SEN. WIN: Correct. That's why we have to expect the worst, meaning a prolonged scenario and what will happen also when the sanctions hit. Because when the sanctions hit obviously the other countries will probably source their fuel from where we source it. So we will ease out and prices will shoot up again. I think everyone from what I am seeing and hearing, a lot of our economic managers were expecting a short-term very quick aberration in the oil prices because everything will go back to normal, but it doesn't seem that way. It seems to me that the Ukraine crisis will be prolonged. I don't know when but definitely it will be prolonged for until the end of the year probably.

Q: So you will hold a hearing next week to get more information on this. To me it's a turnaround from my previous interviews with you because you had always been against it. If I'm not mistaken, the suspension.

SEN. WIN: As a matter of principle, I'm against removing it, because it is only advantageous to the ones who own cars and the AB section of our society. It's a last resort. And I say that because this crisis is again being pushed to uncertainty. Typically, even if you look at the TRAIN law, it's supposed to be a short term solution of three months, in fact, but this crisis is pushing six months already and a lot of the analysts are saying that it might even push to about a year, to a year and a half. So we have to prepare for the worst, if ever, this would become a prolonged crisis.

Q: Just to follow up on that. The increase in petroleum products began since January. We are on the 18th, if I'm not mistaken or the 19th increase to date. Are you not acting fast enough you, yourself as a senator or even the government?

SEN. WIN: We're monitoring the situation closely. And the intervention here is the Pantawid Pasada. I'm in favor of targeted programs. It's much more efficient and cost efficient. Like I said, that will cost you about P3 billion up to P6 billion as opposed to removing P200 billion. We also have to manage our fiscal space considering that we bought a lot of vaccines during the pandemic. So it's not easy to just remove excise tax because we are also being squeezed out in terms of fiscal space. So we have to look for the most efficient and cost effective intervention which is the Pantawid pasada. But I admit there are a lot of operational problems with Pantawid Pasada that we are pushing the government to fix. For the last six months, we conducted a hearing to make sure that the Pantawid pasada will be activated and the operational issues will be fixed.

Q: Okay. There is the next point I wanted to take up with you regarding the oil price increases as the P1 increase in minimum fare for Jeeps from P9, it's now P10, which is supposed to be a provisional increase back in 2018 and diesel prices were half the price they are now back then. Ibig sabihin kalahati lang po ang presyo ng diesel noon, P10 na ang kanilang minimum fare, ngayon times 2 na binalik na po sa P10 ito. Is this enough?

SEN. WIN: This is a balancing act. Because when we raise fares, inflation will definitely increase. And if you look at the breakdown of inflation, transportation is one of the causes of that 5% inflation which we experienced. So we have to balance it very carefully because there's also spill over effects when you raise fares. When you raise fares, minimum wage will increase. When we raise the minimum wage, prices of products will also increase. So there's a spillover effect to that. So we have to balance. I sympathize with the drivers if they see the need to increase fares, but we have to balance in order not to push inflation higher.

Q: Sabi po ng Piston, with the granting of the P1 increase in minimum fare, it's almost, well nothing because of the P4 increase in diesel prices last Tuesday. And in fact, Sir, even before the provisional increase was granted, the prices of basic goods well, you have sardines, etc. lahat po yan nag-increase na rin. So what is the solution to this because may I I add, also bus companies, operators and drivers want an increase in their fare as well.

SEN. WIN: It will be a mixed bag of solutions. That's why the increase in fares I can see that it's also necessary, but we have to balance it so that it will not push inflation and have spillover effects. At the same time, I go back to my original proposal, which is to increase subsidies through the Pantawid Pasada program. The Pantawid pasada is already there. Hopefully they fix the operational bottlenecks. We have a database of the drivers already, the database of the operators, it's easy to dispense. So, I proposed it will be increased by 50 percent up to 100 percent if necessary. If the situation warrants the increase to 100 percent.

Q: Sir, I wanted to ask you also about this Russian oil, because the Russian ambassador Pavlov had a meeting with President Elect Bongbong Marcos. And he did say that they are willing, I quote, to extend its helping hand to satisfy the needs in source of energy. Do you think this is a good idea?

SEN. WIN: Well, let's start that discussion. Ultimately, what we have to take care of is our constituency and right now we're feeling the pinch, meaning fuel prices are increasing. Inflation is being pushed up. Basic goods, the prices of basic goods are going up. I suggest we should start that discussion. Making sure that the details are covered. I don't know what the ambassador meant by helping us, extending a helping hand, but I don't see any problem in starting that discussion.

Q: Okay. Right now, you don't see a problem with that.

SEN. WIN: I mean, I don't see yes, I don't see a problem starting a conversation

Q: Preliminary talks.

SEN. WIN: Preliminary conversation, Correct.

Q: Senator, I wanted to ask you though, do we actually buy oil from Russia?

SEN. WIN: No, we don't know. Most of our oil comes from the Middle East, in particular, Saudi Arabia. According to the latest data, almost about 80% comes from the Middle East of which a big share comes from Saudi Arabia.

Q: I see. Energy chief. You are, you were rather, the chairman of the committee on energy. We've had various conversations about this and I would personally say that this is something that you have taken to heart, studied and really looked into. What do you think would be, well, number one, your reaction wala pang Energy chief na appointed by President Elect Bongbong Marcos first, do you have anyone in mind?

SEN. WIN: I have a lot of people in mind. Pinky, but I won't name them right now. But I'll share my thoughts on what kind of a DOE Secretary we need. Three things come to my mind. Number one, he should be a visionary. The energy sector is not a short term sector. It's not a medium term sector. It's a long term sector. Meaning you have to have the vision on where the country should go in terms of energy needs. This gives you a very good example. When you build a power plant it takes some years. It takes five to seven years.

Q: Let's talk about that again. We had that conversation. Bago po makuha ang permit, ilang taon at bago maumpisahan at matapos ang planta ilang taon, Sir?

SEN. WIN: To get to the permit takes about three years to build a power plant takes about four years. So that's about seven years already. So you need that foresight on where the country is going and what type of demand do we need.

Q: I'm sorry to cut you because by the time that energy chief sits, and that term of the president and vice president ends, patapos pa lang ang power plant kung nakuha nila ang approval on the first year.

SEN. WIN: That's why we have a law, an enacted law. It's called the EVOSS law to cut that three to four years of permitting to about one year to 1.5 years. The key here is red tape, we have to eliminate and kill red tape because red tape is the one hampering the energy sector so we need to use that law to the fullest. And then number two, we need someone who is hands on with the sector, meaning making sure that the sector is being heard because it's a very dynamic sector. One thing I learned about being the chairman, a sector changes almost on a monthly basis because of technology, because of trends, because of financing. And we need someone who is hands on, listening on the ground, on what's happening. And then number three, integrity. It's important that the next energy chief is full of integrity and with an unblemished record when it comes to honesty.

Q: And just quickly the biggest challenge for the new Secretary of the Department of Energy?

SEN. WIN: The biggest challenge is making sure that we have enough, two things: making sure that we have enough power in the next 20 years. This pandemic has slowed down economic growth, but our economy is still strong. And I feel that after the pandemic we will go back to about six to 7 percent growth, meaning we will need to expand our supply by about six to 7 percent as well because it's directly correlated. Second is, we need to be self-sufficient. One thing that the Ukraine incident taught us is we're not self sufficient. Konting aberration, konting gulo lang in the Middle East. May ganitong invasion, we get affected here. So let's be self sufficient in terms of our energy needs. Look for our own oil and gas. Use electric vehicles so we don't use petroleum anymore. Expand our renewable energy sources so that we don't need to import coal.

Q: Very quickly nuclear energy sir.

SEN. WIN: Nuclear energy, in my opinion, should be studied very carefully. I won't close my thoughts on that. I'm open to studying that very carefully. But in the case of the Bataan nuclear power plant, I've been to a cousin of the power plant in Slovenia. I personally went there. I talked to the CEO. And the CEO told me that the per kilowatt price that they are selling is about P5 which is not cheap. So there's this common belief that the BNPP will sell cheap electricity. It's not in Slovenia, because that plant is so old that they need to put in a lot of retrofitting, a lot of safety improvements that led to very expensive costs on a per kilowatt hour. So, in short, the BNPP, in my opinion, might be too old already to be economically operated. But I'm open to looking at other forms of nuclear technology such as SMRs, the small modular reactors.

Q: I wanted also to get your thoughts, Sir on the seeming confusion on what is being ordered by the governor of Cebu, Cebu governor Gwen Garcia and this resolution by the IATF adopted by President Rodrigo Duterte. You are a former mayor, which should prevail doon sa dalawa?

SEN. WIN: It's a matter of policy. The national policy should prevail and the local government should recognize the national policy. Because the national policy takes into consideration the entire situation of the country. And, for example, if there's an uptick of cases in some parts of the country and there's traveling around then obviously that uptick will spread all over the country. So the national policy should prevail, and the local ordinances should take into consideration the national policy. That's based on my experience and thinking of the law. However, I just came back from Singapore, and from what I see in Singapore, masks are optional if you're outdoors. It's mandatory indoors. There is no more social distancing. Everything is in full capacity, and tourism is back in Singapore. My take on this is we're already learning how to live with the virus, our constituencies are adjusting. For example, in Valenzuela, our PCR testing is already close to only about 5 percent, highest already of people getting tested. And our cases are already as low as three cases a day. So my point of the matter here is let's already adjust to open up our economy some more. We need to rev up our economy so that revenues will come back. But we will feel the pinch in the next few years if we don't open up our economy, especially tourism because we are very reliant on tourism.

Q: Okay. 19th Congress, of course, it's been known that Senator Migz Zubiri will be the next Senate president. I just wanted to find out from you. Do you see any possible surprises or changes regarding this?

SEN. WIN: Senator Zubiri will be the next Senate President.

Q: Sigurado na po yun. I want to go to, just quickly also, the blue ribbon committee, very important. Sigurado na ho ba ito kay Senator Tolentino because there's also reports that Senator Alan Peter Cayetano wants this. Who will be having the blue ribbon committee?

SEN. WIN: I'm not updated with that Committee, and I leave the discussion to our colleagues being a collegial body but I'm not very sure on who wants to vie for that committee chairmanship.

Q: Okay, let's talk about your committees. You will be heading the Ways and Means Committee and basic education. Yung basic education, you're just inheriting that from kayo po yung sa 18th Congress at kayo rin po sa 19th Congress? Let's talk about the basic education committee. Are we ready for 100% face to face classes come August and what kind of concerns are you possibly seeing regarding this?

SEN. WIN: Based on my observation and my consultation with our teachers and consultation with people on the ground, we're ready to go back to face to face classes. For example, in Valenzuela, based on our observation, our cases are low. Our families are, they know what to do. In cases of, for example, somebody who has symptoms, so we're ready to go back to face to face classes. On the other hand, going back to face to face classes will also increase economic activity. So it's not only fixing learning losses, but also jump-starting our local economy, especially in our LGUs. And I'm very concerned when we go back, we have to remember that our schools were closed for about two years, and we didn't have any National Achievement Test for two years. I'm very concerned Pinky that once we have the test, our grades will not be as good and as what we expect and it's very difficult to catch up. Catching up is the most difficult part. And when student students have problems catching up with tend to drop out and the repercussions of dropping out is enormous for our country.

Q: Okay, so last question as the ways and means chair, how can the government raise funds? Is it a more efficient tax collection? Or do you think right now I'm sure you're already studying this, our new tax laws necessarily?

SEN. WIN: First of all, we have to address the concerns of our businessmen, especially the MSMEs. Corruption is still pervasive. I'm not saying the entire BIR or Customs but corruption victimizing our MSMEs is very pervasive. And that is quite sad, because when you raise taxes, more corruption will happen because the more corrupt officials will find ways to victimize MSMEs. So we have to address that issue first. We have to make sure that the mechanisms are in place to punish and to eliminate corruption at the very minimum level. At the same time, timing is very important. When you talk about raising taxes and inflation is up, prices of fuel are up, I think the talks about raising taxes should not even be there with this type of environment.