ANC DATELINE PHILIPPINES INTERVIEW OF SENATOR WIN GATCHALIAN WITH KARMINA CONSTANTINO ON INCREASING FUEL PRICES

Q: Senator, you've heard the pleas, you know the numbers, you know how the sector is going to doing this, the transport sector in particular. You've heard their pleas. What now?

SEN. WIN: Karmina it seems to me that the situation is quite dire. And I was talking to the transport sector yesterday at UE and some industry players, and they are saying in a common direction that this elevated price of oil will be protracted, meaning that it will last until probably end of the year. But earlier I heard from the CEO of Exxon Mobil that is looking for the next five years. So whether it's at the end of the year or next five years, we are seeing a $120 per barrel, elevated prices in the medium term. So meaning we have to be prepared to shield our transport sector from this elevated pricing. I understand that we cannot raise fares right away because it's a balancing act. Balancing inflation and balancing the consumer capability of bread on paying transport fares. So in the meantime, that we are shielding, the consumer government has to step in and increase subsidies through Pantawid pasada in the next six months.

Q: But how sustainable is that? I mean, we don't know what's going to happen after those six months.

SEN. WIN: Well, for now Karmina, it's still cheaper than suspending excise tax on fuel. If you suspend excise tax on fuel, the government will stand to... the government will lose about 150 billion pesos in the next six months. My proposal is to give at least P3000 a month for our public utility drivers in the next five months. That will cost approximately about 4 billion pesos. So it's still quite cheaper compared to suspending excise tax on fuel.

Q: But what 3000 per month buy them at this point when inflation is a runaway according to some?

SEN. WIN: This is only to cover of course Karmina, this is only to cover the expenses and their take home pay at this level of 80 pesos per liter of gasoline and diesel. They're taking home zero, they're not taking home anything. So the 3000 pesos just to cover their take home pay at 3000 pesos. Of course, we're hoping that it will not go up, it will not go beyond 80 pesos per liter in the next few months. My proposal is to help them take home something for the family. We have to prepare now and I'm not saying that prices will not escalate in the near term, but at least we're shielding our consumers from runaway inflation.

Q: But of course you're talking about those in the transport sector that are still there. You're not already talking.. you're not talking about those who had to leave because of the pandemic and the high fuel prices anymore.

SEN. WIN: Correct, subsidies will encourage our drivers to go back and drive. At least if they are on the road, they will earn something as opposed to just being jobless. So the 3000 is to hit on the drivers and encourage them to go on the streets and continue their work. The other side of them stopping driving is we will be under capacity in terms of our transportation needs. Especially during rush hours. Right now a lot of our commuters are feeling inconvenienced because they're lining up longer, it's taking time for them to find public transportation. So we have to also balance supply and demand in terms of capacities and encouraging them to go on the street is actually one way of finding that supply and demand equilibrium in terms of capacities.

Q: And then again, you have those who think you know that, you know, how else can they fit? They can be paid for the fares considering the high costs of basic commodities nowadays. So it's really this web of problems.

SEN. WIN: Yes, definitely Karmina you're absolutely correct. Everything is intertwined. And we're managing inflation, fighting inflation should be the top priority of the next administration and fighting inflation is always a balancing act. We cannot abruptly increase fares because it will spill over to food and to other things to minimum wage. So it's really a balancing act. But in that balancing act we can also inject intervention such as subsidies, such as the Pantawid pasada and the Pantawid Pasada seems to be a more economical approach, at least in the near term.

Q: Okay, let's get into that because you know suspending the excise tax on oil. Definitely out of the question. When you listen to President Elect Marcos. He said that there are other forms of assistance that can be given to affected sectors. You mentioned Pantawid pasada. What other forms of assistance can be given to alleviate the situation?

SEN. WIN: The other assistance being given is the Libreng Sakay program wherein it's a service contracting. So what the government has been doing in the past two months is they are contracting those who are not paying for the routes because of high operating costs. So what the government did is they contracted buses, they contracted the jeeps so that they will continue to work and they will have income and also again, alleviate the commuting experience of our riding public. So there are two programs right now being launched, the Pantawid pasada and the Libreng Sakay, both of which in short are, both of which are government subsidies to the public transportation that we need to sustain at least until the end of the year. So my forecast here is we will need approximately about 4 billion to about 8 billion to shield the public transportation to this elevated international elevated pricing of oil.

Q: Okay, so far we've been talking about the long term, five to six months. Senator, go ahead answer the phone. Right.

SEN. WIN: No no no, that's okay I'll just turn it off.

Q: All right. So, so far we've been talking about the short term but you've reiterated so many times during this interview that we have to prepare. We don't know what's coming in the near future after six months. What kind of preparation should we do? Is it in terms of legislation? Will it take the form of something else, Senator?

SEN. WIN: Well, definitely the solution is to make our country self-sufficient, meaning we have our own oil, we have our own gas, we generate our own power. That will take time but it should be on the pipeline as well, because we've been seeing this cycle for the last 30 years. And we've experienced supply crunch, we've experienced abrupt increase in prices over the last many, many years. So it's a learning process for us saying that we need to be self-sufficient. We have to have our own energy. We have to have our own generation of power, and we cannot rely on importation, but that's in the long term. Now going back to the short term and the medium term, we just need to prepare. We should fund the Pantawid Pasada and Libreng Sakay program for 2023 and onwards. And if you do hear the experts like the CEO of Exxon Mobil, we have to at least forecast in five years, then we just have to prepare for that. But we have very limited tools, and the tools that we're using now are direct subsidies.

Q: And there's no other way?

SEN. WIN: So far, very limited, so far, very limited unless we can buy cheap oil from the Middle East and cheap gas from the Middle East. And that's another way of bringing down oil prices. We also talked about biofuels right now, ethanol is cheaper. So we are proposing to increase the ethanol blend from 10% to 20%. That will lower down gasoline prices by about four pesos per liter and so we're finding ways to help our riding public ease the increase in prices.

Q: Finding ways that's what your colleague senator Grace Poe is also doing. She said that she will seek the suspension of the excise tax on fuel once Congress convenes in July. What she plans to re-file is a bill seeking an automatic suspension of the excise tax and fuel when the average price exceeds $80 per barrel for three months prior to the scheduled increase. How do you think this is going to fare? By the way she is, she's part of the majority, right?

SEN. WIN: Yes, yes. She chairs the public services committee. The committee that overlooks all the public transportation systems of the economy.

Q: So this early with your differing views, and you both are part of the majority. How do you think this is going to sail if at all at the Senate?

SEN. WIN: But that proposal has a cost and the cost of removing excise tax on fuel will cost the country about 300 billion a year. But I'm not completely closing that option because we can have a variation of that proposal. Not completely removing excise tax, maybe reducing it by a few notches depending on the oil price.

Q: Will this collide with President Elect Marcos idea?

SEN. WIN: Well definitely we have to balance it you know, because one of the sectors that we're not hitting right now are the middle class. Yes, we're helping the riding public. Yes, we're helping the public utility vehicles, but the middle class is taking the hit because they have their own vehicles. They also have their own businesses, and that's where the excise tax suspension will probably alleviate the pain of our middle class. But that's the last option Karmina, I'm not putting that as the priority, because we need revenue, especially at this time that we're recovering from the pandemic and fiscal space is very low. We need to shore up as much revenue as possible. So I'm not throwing that away, but I'm also not putting that in the priority list of those that we can use.

Q: And finally, I got to ask you about the majority with how the majority is shaping up over there at the Senate. What do you tell people who you know are concerned that we may not have an independent Senate, Senator?

SEN. WIN: Well Karmina, independence will come in in terms of policy, in terms of legislation. And even in the past, the Senate has been a collaborative Senate in terms of finding solutions and ways. The Senate will still maintain its independence when it comes to policy, because we are all working for the common good. And making sure that the policy is working for the people and is also part of the responsibility of the Senate. So I don't see any diminishing of independence, especially coming in this new administration.