Published
By Myrna Velasco
While the Department of
Energy (DOE) has warned it would go after oil companies up to the very end of
their retail and refining operations, the agency seems to have the lack of
expertise in policing industry players as part of the implementation of the
Duterte administration’s tax reform package.
In a meeting with oil
companies last Wednesday, the DOE reportedly struggled in determining which
inventories it shall really be policing.
In the meantime, Energy
Undersecretary Donato D. Marcos issued a memorandum yesterday directing oil
companies to submit a “duly notarized inventory report as of 31 December 2017.”
The memo cited that for
effective monitoring by the DOE, “the inventory (of oil firms) shall be per
depot and per product basis.”
The oil firms were also
mandated to “require (their) retailers to post in a conspicuous area, for
transparency notice of new excise tax for implementation under the TRAIN (Tax
Reform Acceleration and Inclusion) in a signage measuring 1 meter by 1 meter in
size.”
Prior to the issuance
of the memo, however, the oil companies indicated that they had to do some sort
of “downstream oil industry for dummies session” with the energy officials who
are still apparently lacking in knowledge as to the nuances of the sector’s
operations.
For one, they noted
that they had to apprise DOE officials of the presence of “dead stock” in
inventories or products that can no longer be made available for sale – which
is a standard experience in oil markets globally.
That part of the
dialogue between the DOE and energy officials turned contentious, according to
industry sources, because the agency is reportedly not accepting their
explanation “that there is such a thing as unpumpable oil” in their stock.
Dead stock oil, which
is often logged in inventories of oil companies, can no longer be pumped out,
because doing so could pose risks of contamination to the other products being
sold at the pumps.
There were also
suggestions for oil firms to modify their SAP system, a data management program
that aids business in their product and services procurements as well as in
their overall business operations.
Nevertheless, the
industry players reportedly objected to that recommendation, because if they
will be audited for unwarranted changes in their system, they could be held
legally liable for it.
Despite the ludicrous
turn of discussions in that meeting, the oil firms in the end still expressed
their willingness to submit their inventories – but primarily informing the DOE
first of which inventories they can still sell without the enforced excise
taxes under the TRAIN Act.
Based on data from the
DOE, the demand escalation for petroleum products in the country has been
growing at the range of 3.0 percent annually.
That makes it worth
monitoring how the higher excise taxes will impact on volume sales within this
year, and if it will really result in the prophetic goal of the DOE of
resolving Metro Manila’s traffic mess if pump prices will be higher.
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