Oil Deregulation Law changes pushed to add ‘penalty provisions’

Published January 27, 2018, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/01/27/oil-deregulation-law-changes-pushed-to-add-penalty-provisions/

Ramon, Isabela – Amendments are being pushed to the Downstream Oil Industry Deregulation Act to inject penalty provisions that could be enforced against erring industry players, primarily on the mandated submission of inventories.

In an interview with reporters on the sidelines of the 8.5-megawatt Maris hydropower project’s commercial inauguration here on Thursday (January 25), Senate Committee on Energy Chairman Sherwin T. Gatchalian indicated that while the Department of Energy (DOE) had been vested with the power to monitor and exercise oversight functions to the deregulated oil sector, there are no penalty prescriptions that could be meted out to culpabilities committed by the oil firms.

“We want to review the Oil Deregulation Law to make sure that it is more proactive. Even though monitoring (by the DOE) is in the law, there’s no penalty,” the lawmaker said.

Gatchalian explained that the DOE currently enforces administrative sanctions, such as “show cause orders,” “but I think to make it a more effective mechanism, you have to put penalties.”

He added that “what we want to do is to add penalty provisions (in the law) – and to be very specific what the oil companies must submit, so the government can monitor inventory levels regularly.  But we cannot do penalties without amending the law.”

Gatchalian further qualified that “what I am thinking is I am looking forward to make it (law) more responsive and dynamic, especially the monitoring – and I call it ‘soft regulation’ of the industry.”

The Senate energy committee, he said, is “studying measures to institutionalize effective mechanisms to monitor the levels of supply of petroleum products.”

Such, he expounded, shall include “the imposition of stricter penalties for late and incorrect inventory submissions of oil companies, as well as for the negligence on the part of government agencies to monitor price movements.”

The senator stressed “I can foresee that we need to penalize oil companies if they don’t submit their inventories on time or if they give incomplete or inaccurate information about their stock levels.”

The submission of detailed data on stocks or inventories had been enforced following the imposition of new excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) Law that had been effective since January 1 this year.

The oil companies pointed out though that they made submissions of data based on the template provided to them by the DOE; and while they submitted on prescribed deadline, it was the lack of coordination at the energy department that had taken things turn amiss.

It was gathered that the oil firms were instructed to submit via a DOE-provided email address, but they were still served with ‘show cause orders’ eventually – only because one official of the DOE left the required documents at home.

Nevertheless, Gatchalian reckoned that “these (oil) companies are still duty-bound to submit their monthly inventories,” while expounding that “the DOE should be on top in ensuring their compliance.”

The lawmaker cited Section 14 of Republic Act 8479 or the Downstream Oil Deregulation Act, which enjoins the energy department “to maintain a periodic schedule of present and future total inventory of petroleum products in the country.”

Conversely, the oil companies are required to lodge monthly report that details their sales and consumption levels; actual and projected importations; and inventory of oil products.

Relative to the TRAIN Act’s implementation, Gatchalian has likewise been prodding DOE “to speed up validation and analysis of the information it received and start investigating whether companies and stations took advantage of the situation through undue profiteering.”

The energy department had given word on the completion of its inventory and analysis of data by month-end, the time when 90 percent of the oil firms would already be selling TRAIN tax-saddled petroleum products at the pumps.