State-owned Philippine National Oil Co. (PNOC) is looking at the possible use of private oil companies’ unused available fuel storage space for the procurement of subsidized fuel products intended to be sold to target beneficiaries at a lower price.
The announcement on the planned interim strategic petroleum reserve (SPR) was made by Jesus Posadas, PNOC president and chief executive officer at a hearing of the Senate committee on energy yesterday, coinciding with the expected announcement of a new round of price hikes.
Petron, Caltex and Seaoil increased per liter prices by P7.10 of gasoline, P13.15 of diesel and P10.50 of kerosene. PTT and Clean Fuel adjusted prices upward by P7.10 of gasoline per liter and P13.15 of diesel per liter.
Oil players were asked to stagger the fuel price increase which was expected to be the highest on record.
“We brought it up last Friday, we asked for a staggered increase. We even requested … industry players to sacrifice and take a cut in industry pay,” said Secretary Alfonso Cusi of the Department of Energy (DOE), in another event.
Cusi said oil firms were not receptive as they had to acquire the products at a higher price .
According to data from the DOE as of March 8, the latest average Manila price per liter of gasoline (RON95) stood at P69.55, diesel at P62.30 and kerosene at P66.15.
As of March 8, year-to-date adjustments of petroleum products summed up to a total net increase of P13.25 per liter for gasoline, P17.50 per liter for diesel and P11.40 per liter for kerosene.
Posadas told the Senate the terms of reference on the competitive bidding among oil players is being drafted to pave the way for the implementation of a a co-storage and co-distribution deal for the discounted fuel, initially on diesel products.
“To initiate SPR, we plan to have the immediate step of implementing a targeted relief project where we intend to lease storage capacities from oil industry players and help them carry out a distribution activity to provide discounted fuel to affected sectors including public transport, farmers and fisherfolk,” Posadas said.
Posadas said under the deregulated oil price regime, players are unable and unwilling to carry stock over and above the minimum inventory requirement due to the attendant cost.
Citing the suggestion of the Department of Finance, Posadas said PNOC or its subsidiary, PNOC-Exploration Corp. may first borrow from the Development Bank of the Philippines or Land Bank of the Philippines to jumpstart the plan.
To replace the fuel stock after its release to the beneficiaries and pay back the loan to the financing institutions, PNOC is proposing that the fund for the next series of Pantawid Pasada subsidy of P6,500 per beneficiary be diverted for this proposal.
Posadas added in case oil prices decline and subsidized fuel will no longer be needed during the course of the project, the stocks will be sold to the National Power Corp., Armed Forced of the Philippines, the Department of Interior and Local Government and the National Police Commission
PNOC said if the plan will be pursued, the first purchase of subsidized diesel products worth P2.5 billion can be within next month.
In establishing a legal basis, PNOC said DOE Act of 1992 and the Oil Deregulation Act, government is mandated to ensure supply.
For the long-term SPR plan, Posadas said the process of engaging a consultant is ongoing.
In the same hearing, Fernando Martinez, Eastern Petroleum chairman and representative of the Independent Philippine Petroleum Companies Association (IPPCA), said they support the suspension of fuel excise tax but the government must provide a mechanism for reimbursements on shipments with excise taxes that have been paid to encourage fuel importers not to delay any shipments.
Martinez said at least P15 billion additional working capital is needed to import petroleum products and smaller fuel players may need additional funding to import their supply to prevent bigger players from having monopolistic hold on local supply.
He said increasing the minimum inventory requirement of fuel players is not feasible as it will require additional capital as well as land space.
IPPCA supports a national SPR on condition the government will fund and own the fuel stocks .
At the House of Representatives, more and more lawmakers have urged Malacañang to call for an special session in the face the unabated fuel price hikes.
Bayan Muna party-list Rep. Ferdinand Gaite said House Bill No. 10488, which seeks to reduce the excise tax on oil products, has to be acted upon immediately, noting that it has been pending in the plenary for passage on second reading since last November 22.
Deputy speaker Michael Romero earlier urged the Executive to call for a special session to allow Congress to act on the measure and appealed to the President’s economic managers to endorse the proposal to suspend excise taxes on diesel, gasoline, cooking gas, and other oil products to give the public some immediate relief since it would cut fuel prices by P6 per liter for diesel, P10 for gasoline and P33 per 11-kilogram cylinder for cooking gas.
Magsasaka Rep. Argel Cabatbat said only the suspension of fuel excise tax can give immediate relief to the public since even the government’s P500- million fuel subsidy will not make a dent, noting that there are 162,000 farmers and fishermen who are qualified recipients in the registry system for basic sectors in agriculture who are entitled to a maximum of P3,000 discount cards each.
Quezon City Rep. Alfred Vargas filed a resolution calling for a “whole-of-government, whole-of-nation” approach in dealing with the impact of rising fuel and food prices on vulnerable sectors, urging the national government agencies to meet with representatives from civil society, sectoral groups, and the private sector to formulate an “integrated policy solution” to what he called an “impending national and global crisis.”
The chair of the House committee on social services said “fragmented policy solutions” could lead to “a disconnect and mis-coordination” among national government agencies, local government units and other government bodies.
