By Lenie Lectura & Bernadette D. Nicolas
GOVERNMENT and oil companies have cited progress in curbing smuggling through a fuel marking program as the Department of Finance (DOF) said it has, to date, marked more than a billion liters of fuel.
Finance Secretary Carlos G. Dominguez III told reporters last Friday the government has placed special markers in about 1.1 billion liters of fuel.
Dominguez added they found out one Davao-based company was selling “smuggled” or “adulterated” oil. He said the DOF received a report that the unnamed company was selling a liter of fuel below P5.
By February 3, all gasoline, diesel and kerosene are expected to be marked completely. Simultaneously, personnel from the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) shall also begin field-testing activities, Dominguez said. He added that these agencies may impose penalties, as necessary, against companies proven to have unmarked, adulterated and or/diluted fuel.
The government is eyeing to collect at least P20 billion this year from the fuel marking program.
Compliance
OIL companies have also made a priority to comply with the government’s fuel marking program, which aims to plug revenue leakages from oil smuggling by placing a molecular marker on imported, manufactured and refined fuel products.
According to estimates by the DOF and the Asian Development Bank, the loss of national revenue due to oil smuggling and misdeclaration can reach as high as P40 billion. The government’s fuel marking program establishes a system for identifying fuel that has paid the correct import and excise duties.
Pilipinas Shell Petroleum Corp. said last week it will commission an automated fuel marking injection system at its Tabangao refinery in Batangas City at end-March this year.
“Our goal is to improve the safety of the process through automation. We’re aiming to fully automate the system at our refinery by end-March 2020,” Serge Bernal, vice president for External and Government Relations.
Last year, Pilipinas Shell conducted its fuel marking operations at its Northern Mindanao Import Facility (NMIF) in Cagayan de Oro City and its Tabangao Refinery in Batangas.
Shell, Petron
AS of December 1, both the gasoline and diesel import tanks of NMIF’s 90-million-liter capacity were fully marked.
Following the rollout in Mindanao, Pilipinas Shell started the fuel marking process at its Tabangao refinery last December 11.
The oil firm said it is working “double-time” to install a fully automated injection system in both the NMIF and the refinery.
Petron Corp., the country’s largest oil refining and marketing company, is working with the government to, likewise, install an automated fuel marking injection system at its Bataan refinery.
“We also continue to work with their fuel marking team for the installation of the Automatic Injection System [AIS] in our refinery,” Petron President Ramon S. Ang said.
Petron has implemented the fuel marking program at its refinery and Misamis Oriental import facility last month.
The Petron Bataan Refinery (PBR), which has a 180,000 barrel-per-day maximum capacity, is the largest refinery in the Philippines supplying nearly a third of the country’s fuel demand.
Consistent
ANG, however, reiterated, that the program would work only if all players went by the same rules.
“We are optimistic that the fuel marking program will significantly address fuel smuggling, which has been a constant deterrent to the continued growth of our economy,” Ang added. “Consumers also stand to gain once everyone gets on board as it will ensure that all fuel products in the market will be legitimately sourced.”
Chevron Philippines Inc. said it has also complied with the government program. Its import terminal in San Pascual, Batangas, is also compliant with the fuel marking program.
“We hope that this program will level the playing field among the industry participants and ensure that all oil companies pay the correct taxes and help build the nation,” Chevron Country Chairman Louie Zhang had said last year.
The so-called Big Three are members of the Philippine Institute of Petroleum (PIP), which has consistently expressed support for the fuel marking program provided that it is enforced on a level playing field.
“We support the government’s efforts to curb smuggling which continues to undermine the industry and the government in general,” the PIP said. Other members of PIP include Isla LPG Corp., PTT Philippines Corp. and Total Philippines Corp.
Consumer assurance
THE PIP believes that the program must be implemented across all industry players in order for it to be fully effective.
“The success of this program would mean a significant increase in tax collection and the opportunity to utilize these for much-needed social services and infrastructure,” the PIP said. “Consumers would also be assured of the quality of fuels in the market coming only from reputable sources.” Seaoil Philippines became the first oil firm to comply with the new government initiative in its bulk terminal in Mabini, Batangas. Unioil Philippines followed suit in its depot in Mariveles, Bataan.
Seaoil and Unioil are members of the Independent Philippine Petroleum Companies Association that also supports the fuel marking program. Other Ippca members include Eastern Petroleum Corp., Flying V, City Oil, Pryce Gases, and LPGMA, among others.
Oil companies said they continue to coordinate closely with the DOF, BIR, BOC and the Department of Energy to ensure the successful implementation of the program.
Confiscation, forfeiture
PETROLEUM products that are found to not contain the official marker or those with markers but below the required level shall be presumed to have been withdrawn or imported with the intention to evade the payment of duties and taxes. These petroleum products may be subject to confiscation and forfeiture, as well as filing of the appropriate criminal charges.
For the conduct of random field testing, the BIR shall cover petroleum products from refineries and its attached depots, gasoline stations and other retail outlets, while the BOC will supervise vessels, depots, warehouses, tank trucks or other fuel-transporting vehicles.
In preparation for the field testing aspect of the fuel marking program, the BIR has already issued last week a revenue memorandum circular ordering all revenue district offices to require all gasoline stations to submit a sworn declaration of inventory of diesel, gasoline and kerosene as of December 31 last year.
The joint venture of Switzerland-based Sicpa SA and SGS Philippines secured the fuel marking project.