Fuel prices rose for the 10th consecutive week as global cost of crude remained volatile and was still above $100 per barrel with the ongoing war between Russia and Ukraine.
At the House of Representatives, officials of the Department of Energy (DOE) told the Fuel Crisis Ad Hoc Committee hearing led Reps. Sharon Garin (PL, AAMBIS-Owa) and Juan Miguel Arroyo (Lakas, Pampanga) the country has sufficient of supply even as plans to increase inventory requirements are being discussed.
According to the DOE, as of March 3, the latest average Manila price per liter of gasoline (RON95) was at P65.95, diesel at P56.45 and kerosene at P61.89.
Caltex and Seaoil increased per liter prices by P3.60 of gasoline, P5.85 of diesel and P4.10 of kerosene.
MPTT hiked per liter prices of gasoline by P3.60 and diesel by P5.85.
These are the highest per liter adjustments made by oil companies for the year but still far from the highest increases recorded in the country in more than three decades.
Oil industry stakeholders said in December 1990, gasoline prices moved up by P6.97 per liter while diesel prices went up by P6.42 per liter.
At the hearing, Rino Abad, director of the DOE’s Oil Industry Management Bureau, said there are talks on the possible increase in the the minimum inventory requirements for oil retailers and refiners.
Abad said this needs consultation with oil players as this will also require additional capital expenditure.
The DOE mandates oil companies and bulk suppliers to maintain a minimum inventory equivalent to 15 days for finished products and 7 days for liquefied petroleum gas. For refiners, a minimum inventory of 30 days for both crude oil and finished products is required.
Abad said the Philippines currently consumes around 60 million liters of petroleum products daily with more than 2 billion liters in the country and 944 million liters in transit which will be equivalent to more than 40 days worth of consumption.
DOE Undersecretary Gerardo Erguiza assured of enough supply of petroleum products for the next 40 days even as he echoed Malacanang’s call for Congress to review the provisions of Republic Act 8479 or the Downstream Oil Industry Deregulation Act of 1998 to give the government a free hand in setting price caps.
Deputy speaker Michael Romero said the President’s economic managers need 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.
“Among these measures, the proposed suspension of fuel taxes is doable quickly. The others, like the review of the law that deregulated the oil industry, will take time to finish,” Romero said.
Noel Soriano, president of the Independent Philippine Petroleum Companies Association (IPPCA), said the suspension of fuel excise tax may also result in additional charges for fuel companies and affect the 40 -to 60- day stock inventory of oil companies as excise tax is prepaid. In turn, this will not immediately pull down pump prices as firms will have to first sell stocks covered by the tax.
House committee on ways and means chairman Joey Salceda told IPPCA to resolve the issue, the government may just charge the excise tax to future sales.
“There’s a concern on oil companies especially the smaller ones to import at a cost significantly higher right now. We are computing, based on the large increase, the whole industry… for 60 million liters we have to cough up P12.5 billion to finance cost of capital.
Big players will have no problem but small players may find difficulty in securing loans to import the same quantity,” Soriano said.
IPPCA is seeking for a loan facility and interest rates freeze for emergency importation of fuels as well as the suspension of the Biofuels Law.
Soriano said the cost of coco methyl ester has also gone up and this has translated to an increase in diesel prices by 70 to 80 cents per liter.
House deputy majority leader Bong Suntay said government should also think of a more sustainable way to support public utility vehicles (PUVs) amid the price spikes as the current subsidy of P6,500 is not for a month.
Suntay who is also an official of CleanFuel and former president of IPPCA, said as fuel subsidy is one-time only, support to PUVs may not be sustainable.
Salceda and Garin admonished the DOE for suggesting that Congress delegate to it the authority to suspend fuel excise taxes.
The lawmaker said only Congress, through legislation, has the power to suspend taxes and can never delegate such power to a regulatory body like the DOE.
Erguiza said it is up to the “wisdom” of Congress if such “delegated authority” can be given to the DOE or even the Department of Finance but Salceda said such would turn the DOE or the DOF into a “superpower” because they are the regulators of the energy sector.
“You want the power, the discretion to suspend tax, which taxation is basically only lodged in the powers of Congress. cannot delegate that, that’s unconstitutional, sir. Hopefully your legal department can study that further,” Garin added.
House committee on transportation chairman Edgar Sarmiento told the meeting the highest historical increase in terms of international crude oil price was in June 2008 when global price of crude oil averaged at $145.31 per barrel equivalent to an average price of unleaded premium gasoline at P57.28 per liter and diesel at P56.15 per liter. – With Wendell Vigilia
