Draft rules to make oil pricing transparent out

By Lenie Lectura - May 28, 2018
https://businessmirror.com.ph/draft-rules-to-make-oil-pricing-transparent-out/

AS continuing price surges have shifted public anger mostly to the TRAIN law that mandated higher fuel excise taxes, the government moved to require a more transparent, unbundled system for informing people of the breakdown of petroleum product prices.

The Department of Energy (DOE) has released the draft rules on petroleum price monitoring, meant to guide the consumers in making informed decisions in the management of their fuel oil requirements. The agency wants oil companies or bulk suppliers to submit

a report on the computation and the cor responding explanation of the unbundled items comprising the pr ice of all petroleum products.

On May 8 the DOE said in a news release the new policy is targeted “to be issued by the end of June this year,” and will enable “the unbundling of the base prices of petroleum products—gasoline, automotive and industrial fuel, kerosene, jet fuel, bunker fuel oil and household and automotive liquefied petroleum gas.”

The released draft rules said,“Oil companies shall strictly comply with the submission of the formal notice of price adjustments on a per-liter basis, containing the computation and the corresponding explanation of the unbundled cost items of all products.”

The report should indicate the product cost; refining cost; import terminal/depot operation cost; transshipment cost; taxes; biofuels cost; hauler’s fee; unbundled other fixed cost; unbundled other variable cost; and oil company/bulk suppliers’ profit. At present, there is no breakdown of the base price of petroleum products sold at various service stations.

“Identification of the costing for the major components of these petroleum products that may affect the pump prices would provide a higher level of transparency for our consumers, particularly the motorists,” Energy Secretary Alfonso G. Cusi said.

The DOE should also be notified not later than 12 noon of every Monday of the week for any price adjustment (increase, decrease or no adjustment), and prior to any public announcement and implementation.

For LPG, they shall notify the DOE not later than the end of every month for any price adjustment.

The effectivity of price adjustments for liquid fuel shall be implemented beginning every Tuesday of the week, and for LPG, beginning every first day of the month.

The agency has held hearings with industry stakeholders.

DOE is mandated under RA 8479, or the Downstream Oil Industry Deregulation Act of 1998, to monitor both international and domestic price movements of petroleum products.



Retail price variance

Separately, consumer advocacy group Laban Konsyumer Inc. (LKI) said the proposed circular should check the basis of the identical or similar weekly price adjustments of the oil companies, the new players and independents as well as the big variance in retail prices of some trading areas like Baguio City versus La Union and areas in Mindanao, now subject of an inquiry in the House Committee on Energy. The biggest price hike reported in Palawan led to a P70/liter price, militant lawmakers said.

“Over the weekend, oil companies have posted big-time price discounts in service stations in Fairview, Quezon City, as well as in Greenfield Road in Santa Rosa, Laguna. Whatever the business motivation of these dealers are, this sends a message that the oil price hikes are ‘bloated,’ and that the dealers are still making money despite the big discounts on a per liter basis,” it said.