Monday , October 18 2021

Local oil companies seek ORT versus fuel separation



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A group of oil companies are seeking a temporary restraint
(TRO) to discontinue a Department of Energy (DOE) policy that requires
companies to separate their cost of fuel.

"The Philippine Institute of Petroleum Inc. [PIP] filed an
Request for Declaratory Relief with TRO and / or Preliminary Request
Injunction to Question Circular Doe Department DC2019-05-0008, "a statement
released over the weekend, he said.

The PIP is composed of Petron Corp., Pilipinas Shell
Petroleum Corp, Chevron Philippines Inc., PTT Philippines, Total Philippines
Corp. and LPG Island Corp.

The petitioners allege that the DOE circular is contrary to the
dynamics of a deregulated oil market.

"The relief sought is needed to protect industry and
promote market-driven competition. Like the DOE circular
will enter into force on June 29, 2019, the petitioners are, likewise,
a precautionary measure to prevent its implementation until the case is heard and
decided on the merits, "he said.

The DOE said it has consulted the Philippine competition
Commission (CCP) on this subject.

"We consulted the Philippine Competition Commission, the
agency with primary jurisdiction under the Philippine Competition Law, and not
only they agreed that this does not violate the PCA; this actually increases
The DOE's assistant secretary, Leonido Pulido, said in a text message.

He said the agency accepts the petition filed by PIP.

"Living in a healthy democratic society,
comments, constructive criticism and even legal challenges to the separation
because it provides us with an opportunity to learn and strengthen
future administrative issues of the department. However, we are quite
confident that the separation circular is on legal ground, considering the
express provisions of the oil deregulation law authorizing the DOE secretary to
require virtually all kinds of information from oil companies, "added Pulido.

Meanwhile, consumer advocacy group Laban Konsyumer Inc.
(LKI) commented that the PIP movement was "disheartening."

"LKI reiterates that the DOE circular is a good start and
good news for consumers, "said LKI president Victor Dimagiba.

LKI also pushes for transparency in retail prices
as part of the right of end-users to
access to fair and reasonable prices of petroleum products.

DC 2019-05-8, entitled Revised Guidelines for Monitoring
of Prices in the Sale of Petroleum Derivatives by the Oil Industry
the Philippines asserts that, for each price adjustment of petroleum products,
oil companies must comply with the presentation of the detailed calculation with
explanatory memorandum and supporting documents on the reasons for
movement.

In particular, oil companies must separate their
following details:

  • International content, which makes up the
    cost, freight cost, insurance and exchange rate;
  • Taxes and fees, which include excise duty,
    value added tax, taxes and other imports;
  • Biofuel cost; and
  • Petroleum company takes components. Door details
    charges, refining cost, storage cost, handling cost, marketing costs,
    cost of transhipment, other costs, oil company profit margin and total oil company
    the price must be delivered to the agency.

"Within two months after the effectiveness of this circular or whenever required by the DOE or by the DOE-Department of Justice [DOJ] Task Force, oil companies should report to the Office of Petroleum Industry Administration [OIMB]on a per liter per liter basis and for LPG fuel for cars and on a per kilogram basis for the domestic LPG, containing the detailed calculation with the corresponding explanation and supporting documents on the disaggregated items that make up the price of the oil company in December 1st. 2018, "he said.

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