DOE pushes for Euro gas oil, diesel import to lower fuel price

By Lenie Lectura - October 4, 2018

https://businessmirror.com.ph/doe-pushes-for-euro-gas-oil-diesel-import-to-lower-fuel-price/

THE Department of Energy (DOE) is pushing for the importation of Euro gas oil or diesel in an attempt to not only source cheaper petroleum products but to also determine cost components.

Energy Secretary Alfonso G. Cusi said the planned importation is “one good measure to really help bring down the price of oil.”

Philippine National Oil Co. (PNOC)-Exloration Corp. is conducting a negotiated bid with “mostly foreign with some local partners.”

PNOC-EC’s specification for the fuel is a sulfur content of 50 parts per million (PPM), or the standard for Euro 4.

The company has set the quantity at 50,000 metric tons for the trial shipment. Subsequent shipments of up to four shipments per month and up to one year are to be mutually agreed upon by the seller and the buyer.

Once this is done, Cusi said, it would be easier to determine the cost components of petroleum products, including earnings of oil firms.

The DOE wants to issue a circular requiring oil firms to unbundle the costs of petro fuel. However, oil firms raised concern, saying it may spark anticompetitive behavior.

The draft policy enables the unbundling of the base prices of petroleum products, namely, gasoline, automotive and industrial diesel, kerosene, jet fuel, bunker fuel oil and household and automotive liquefied petroleum gas. This is the first time that the government, through the DOE, will require oil companies to make public the breakdown of the costs that go into the pricing of fuel.

“Unbundling will be expedited once PNOC-EC imports. In the process of unbundling, there is industry take. We can’t get that from the oil firms,” Cusi said, referring to oil firms net profit after deducting all expenses when computing for actual pump prices. “We will know that once PNOC-EC opens the bid proposals.”

Cusi said the planned importation is one of the mitigating measures discussed with the oil firms.

“Suspension of excise taxes, removal of cocomethyl esther, reduction of industry take—they will all discuss these,” said Cusi.