THE Department of Energy (DOE) was not able to release the much-awaited policy on unbundling of fuel prices last month, citing “normal course or paperwork” as reason, an official of the agency said.
“It’s with legal now,” said DOE Undersecretary Felix William Fuentebella in a text message when asked for an update. He said the signed department circular would “probably” be issued “next month”
The DOE was hoping to issue the circular within the first quarter, by end-March in particular. “The commitment set to issue the circular is first quarter,” DOE-Oil Industry Management Bureau (OIMB) Director Rino Abad had said.
The release of the circular should have happened in June
last year. However, the agency had to conduct another round of focus
group discussions with the stakeholders. The draft policy enables the
unbundling of the base prices of
petroleum products, namely, gasoline, automotive and industrial diesel,
kerosene, jet fuel, bunker fuel oil and household and automotive liquefied
petroleum gas.
This is the first time that the government, through the DOE, will require oil companies to make public the breakdown of the costs that go into the pricing of fuel.
However, oil firms are opposed to this. In particular, they do not want to reveal the so-called industry take.
“Among the eight major items in the cost component. Seven have been agreed to in the first consultation and the remaining item is the industry take,” said Abad. In a nutshell, industry take includes an oil firm’s profit margin.
The Independent Philippine Petroleum Companies Association (Ippca) and the Philippine Institute of Petroleum (PIP) said the oil industry is a deregulated industry. Most of the key components of oil price are already public knowledge such as price of crude oil which is published by MOPS (Mean of Platts Singapore), carriage price or vessel, insurance and dollar exchange rate which are also easily determinable.
MOPS refers to the price of finished products such as gasoline and diesel that are sold in pumping stations nationwide.
“But there are some things which are proprietary to each oil company which they cannot divulge, the same being trade secrets. Divulging such would mean losing their advantage,” said Ippca President Jesus Manuel C. Suntay.
Ippca has at least 16 members composed of the country’s leading independent oil players, such as Eastern Petroleum Corp., Unioil Petroleum Philippines Inc., Seaoil Philippines, Flying V, City Oil, Pryce Gases, and LPGMA, among others.
PIP Executive Director Teddy Reyes said almost 90 percent
of pump price cost components are published and
therefore transparent. “As such, information sought by the
draft circular may be derived by the DOE without necessarily requiring players’
disclosure of commercially sensitive information. Too much transparency
will discourage investing in the country,” said Reyes, adding that local
and foreign investors would want a level playing field under a
deregulated
setup where market-driven competition prevails.
The DOE policy would also require the oil companies/bulk suppliers and retail outlets to submit baseline data every end of the year for the unbundling of their base price and to comply as well with the mandatory price display board.
The new policy is pursuant to DOE’s mandate under Republic Act 8479, or the Downstream Oil Industry Deregulation Act of 1998, to monitor both international and domestic price movements of petroleum products.
Consumer advocacy group Laban Konsyumer Inc. has also been pushing for transparency in retail prices of petroleum products as part of end-users’ right to information and to provide them access to fair and reasonable pricing of petroleum products.