President Ferdinand Marcos Jr. ordered a shorter trigger period and simpler requirements for the grant of fuel subsidies to public utility vehicle (PUV) drivers to cushion the impact of high prices in the world market, Department of Energy (DOE) Secretary Raphael Lotilla said yesterday.
Lotilla, in a briefing after the sectoral meeting in Malacanang, said the President gave instructions to change the language of the 2024 budget to shorten the trigger period for fuel subsidies from the current three months to one month.
Thus, the government need not wait for three successive months, when the price of the Dubai oil reaches $80 per barrel or higher, to give the fuel subsidy.
“With this simplification or shortening of the period, we will be able to release the subsidies in a shorter period of time,” Lotilla said.
He said a formal request on the changes to the fuel subsidy would be sent to Congress which, at present, is deliberating on next year’s budget.
Once approved, it would be effective next year, he added.
Lotilla said P2.5 billion has been allotted for the fuel subsidy next year, down by P500 million from the current P3 billion budget.
He said the budget is adequate but “if the need is more than, it can always be augmented.”
He assured that the government has enough funds for the fuel subsidy despite the shorter trigger period and that it could add more funds if the need arises.
He also said the release of the fuel subsidy this year took some time because the Department of Transportation (DOTr) had to consolidate the list of beneficiaries from different government agencies.
The PUV drivers include those registered with the Land Transportation Franchising and Regulatory Board (LTFRB) and the tricycle drivers registered with the local government units (LGUs).
Under the current directive of the President, the DOTr would be responsible for the list from the LTFRB, while the Department of the Interior and Local Government will oversee the list form LGUs.
Lotilla said the government also agreed on the implementation of a 20 percent ethanol blend for gasoline which is expected to help lower the pump prices.
He said this is “targeted for approval by the end of 2023” and would be voluntary.
At present, the mandatory requirement is 10 percent ethanol blend for gasoline.
Lotilla said increasing the ethanol blend, especially if using imported ethanol, will translate to a P1 reduction in gasoline prices.
The price of gasoline without ethanol is around P56.89, while the price of the gasoline blend with imported ethanol is around P41.44, he added.
Lotilla said another measure that the President wants the government agencies to work on is the continued electrification of the transport sector, particularly mass transport and light cargo vehicles.
He said Marcos emphasized on having more charging stations for electric vehicles and ensuring that the benefits to the transport sector, particularly the drivers using electric vehicles, will be provided.
The President also emphasized the need to prepare the economy for the eventual manufacture of electric vehicles in the country, and linking this with the local mining sector that will produce the minerals needed for the manufacture of batteries and other components of electric vehicles.
Asked about previous proposals to suspend oil tariffs to mitigate the high prices, Lotilla said the Department of Finance already explained that doing so would also mean “subsidizing the richer segments of the population because their consumption of oil products is much higher than those which are consumed by those in the lower brackets.”
“The better approach is to have well-targeted subsidies, and that’s why we want to simplify the subsidies being given to the public transport sector, particularly the drivers,” he added.
Asked when to expect the oil prices to go down, Lotilla said forecasts show the gap between the supply and demand of oil is expected to narrow towards the end of year and continue until 2024, due to expected additional supplies from Brazil and the United States.
“Hopefully, there will be no black swans out there… between Palestine and Israel that might affect the oil producing countries; there will be no further invasion of Ukraine and so on,” he said.