DOE wants oil firms to carry PUVs subsidies as CSR expense

Published March 1, 2018, 1:48 AM By MYRNA M. VELASCO

https://business.mb.com.ph/2018/03/01/doe-wants-oil-firms-to-carry-puvs-subsidies-as-csr-expense/

The Department of Energy (DOE) is mandating the country’s oil companies to extend subsidies to public utility vehicles (PUVs), as a “cost cushioning mechanism” to the public transport sector following the implementation of higher taxes courtesy of the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The energy department has scheduled on today (March 1) the signing of a memorandum of agreement (MOA) with the oil firms relating to the subsidy provision for PUVs, that may cover jeepneys, tricycles and other mode of marginalized public transport system.

In an announcement to the media, the DOE indicated that it has been requiring the oil companies to treat such subsidy scheme as part of their corporate social responsibility (CSR) programs.

“In view of the current price increases resulting from the implementation of the TRAIN Law, the DOE has solicited the support of oil companies to continue and/or further extend their CSR to the consumers of petroleum products, particularly the transport sector.”

The department added “the fuel discounts program is the oil industry’s demonstration of ‘bayanihan’ to help the commuting public/consumers to cope because of the rise of the local oil prices.”

The DOE emphasized that it was prompted on this deal with the oil companies because of anticipated domino effect that the TRAIN tax hikes will trigger – in view of the pending petition of the public transport sector also for increases in fares.

In the past when the Expanded Value- Added Tax (E-VAT) law was enforced in 2006, it was the government that directly shouldered the subsidy costs to the PUVs – taken from fraction of revenue collections then from the EVAT.

At that time, the cost impact on consumers was even lower at the range of R0.66 to R0.70 per liter, yet the DOE had taken upon itself then to package the subsidy mechanism for the transport sector.

With TRAIN, the collections are higher at R2.50 to R3.00 per liter-range across products, but the government cannot afford to extend subsidy to the marginalized PUV segment.

Under the Aquino administration when global oil prices were hitting record-highs, the government championed the “Pantawid Pasada” program wherein the DOE deployed subsidy cards then with a load value of R1,200 each.

Total worth of subsidies packaged by the government at that time hovered at P120 million with aggregate 100,000 cards issued and extended to qualified and validated beneficiaries.

The energy department strategically enforced reloading of subsidy cards then “based on plate numbers” – starting with plates ending in zero until nine.

The consideration for subsidy during that time was mainly anchored on helping the drivers “shore up their take-home income even when continuing cost spikes manifest at the gas pumps.”