THE 10th consecutive week of oil price increase, and the biggest yet for the year, will take effect Tuesday, March 8.
Oil firms announced Monday a price increase of P5.85 per liter for diesel, P3.60 per liter for gasoline, and P4.10 per liter for kerosene. The new round of oil price hike will be implemented at 6 a.m. for most oil firms such as Petron, Shell, Seaoil, PTT, Phoenix, Caltex, Total, Unioil, among others. For Cleanfuel, the price hike takes effect at 4:01 pm.
Since the oil industry is deregulated, the DOE has asked Congress to amend the Oil Deregulation Act and the TRAIN law. It also proposed short and long-term measures to help cushion high oil prices.
These include constant coordination with oil companies for promotional programs that extend fuel discounts to the public transport sector; implementation of the Land Transportation Franchising and Regulatory Board of the P2.5-billion “Pantawid Pasada Program,” implementation by the Department of Agriculture of the P500-million fuel discount program for farmers and fisherfolk; strict monitoring activities of the DOE to ensure petroleum products’ supply sufficiency, quality maintenance, as well as consumer welfare protection.
Meanwhile, the long-term plans include a proposal to amend the Oil Deregulation Law, temporary suspension of the excise tax on fuel; establishment of a Strategic Petroleum Reserve infrastructure; unbundling of prices; include Minimum Inventory Requirements in the law; and a strong campaign on energy efficiency and conservation.
Biofuels law
Meanwhile, the Independent Philippine Petroleum Companies Association (IPPCA) proposed the suspension of the biofuels law.
“We would also like to suggest a review or suspension of the biofuels law. Currently, there is a large disparity of local and imported ethanol, P1 per liter disparity for gasoline. The CME [coco methylester], very significant increase, affects diesel prices by increasing to 70-80 cents per liter,” said IPPCA President Noel Soriano.
Republic Act 9367 or the “Biofuels Act of 2006” mandates the blending of one percent (B1) coco-biodiesel or coco methylester (CME) in local diesel. This increased to 2 percent (B2) in 2007. The shift to B5 from B2 was supposed to happen in 2020 but concerns on biodiesel supply has put this on hold.
IPPCA also raised concern on the proposal to suspend excise tax, saying this will have an impact on the oil firms’ inventories.
Oil firms are required to maintain a minimum inventory equivalent to 15 days’ supply for petroleum products, and seven days’ supply for liquefied petroleum gas (LPG). For oil refiners, the minimum crude and petroleum products inventory should last for 30 days.
“The problem is the excise tax is prepaid already. This will cause a delay, oil companies will be forced to sell with excise tax until deplete stocks. There’s a concern, especially the smaller oil companies, to import at a cost significantly higher right now.”
Based on the large increase, the whole industry—with the average use computed at 60 million liters—has to cough up P12.5 billion to finance cost of capital, it noted. “Big players have no problem but small players may find difficulty in securing loans to import the same quantity.”
Soriano told congressmen at Monday’s committee hearing, “If there will be less competition with big players, we will not have enough check and balance. So, second point is loan facility and freeze interest rates for emergency importation of fuels.”
As part of the DOE proposal to Congress, DOE-Oil Management Industry Bureau Director Rino Abad said the Minimum Inventory Requirement (MIR) could be extended to 60 days from 30.
Abad, however, said this is still subject to consultations with industry players since this move would entail additional cost.
“We can discuss this with the oil firms’ capability. We have to consult them because it involves capex (capital expenditure),” he said.
As of February 28, the country’s inventories stood at 2 billion liters. “There is 944 million liters more in transit. So, we have a total of 2.944 billion liters,” said Abad.