Cusi orders oil firms to sell low quality diesel at cheaper price

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

https://business.mb.com.ph/2018/08/10/cusi-orders-oil-firms-to-sell-low-quality-diesel-at-cheaper-price/

To accommodate the targeted P3.0 billion oil importation of Philippine National Oil Company-Exploration Corporation (PNOC-EC) and in line with the inter-agency approach on taming inflation rates, Energy Secretary Alfonso G. Cusi has ordered the oil companies to go back at selling Euro-2 diesel, a fuel with higher sulfur content or what is widely regarded by environmentalists as “more polluting fuel” and known to have more toxic chemical content that could be an assault to people’s health.

The DOE has issued Memorandum Order “requiring oil companies to provide Euro-2 compliant automotive diesel to help reduce fuel prices.”

Energy Undersecretary Felix William B. Fuentebella indicated that based on their calculation, Euro-2 diesel could be sold cheaper by P0.28 to P0.30 per liter at Philippine petroleum pumps.

“There’s an option to sell Euro-2 fuel, especially to PUVs (public utility vehicles), so we’re providing a market for that option… this is part of the inter-agency approach to address inflation,” he said, adding that the Department of Transportation (DOTr) and the Department of Environment and Natural Resources-Environmental Management Bureau (DENR-EMB) were involved in the consultation process.

Although the department order was issued under the guise of reducing prices, the oil companies noted that the price difference between high-sulfur Euro-2 and cleaner Euro-4 diesel is actually not that much.

And if the oil companies will be required to invest additional equipment at their gas stations just to sell Euro-2 diesel again, any anticipated savings for the drivers will ultimately be eclipsed. But according to Fuentebella, the oil firms can just spare a pump for Euro-2 diesel sale and will not need to inject any additional capital outlay.

For the sake of the environment and public welfare, the DOE and the Department of Environment and Natural Resources (DENR) mandated the sale of Euro-4 fuel in 2016, hence, prompting all oil industry players to invest heavily in upgrading all their equipment and even the refineries so they can comply with the higher quality of fuels prescribed for the Philippine market.

The oil companies similarly disclosed that they were not consulted on the propounded policy change, as of Thursday (August 9) and were just called for a meeting on Friday relative to the new DOE mandate.

One oil company said “nobody uses Euro-2 anymore, everybody is moving to Euro-4 and up. The price difference is also minimal, but the impact is great. Manufacturers and importers of vehicles have all shifted to Euro-4 engines.”

Concerns were similarly raised as to the logic of reverting to higher polluting fuel vis-a-vis the country’s PUV modernization program for the upgrading of the public transport system. “Suddenly, they will regress the standards to import substandard fuels? Wow! Oil players simply cannot just put Euro-2 on a whim when your entire chain is geared for Euro-4,” an industry source stressed.

Cusi noted that the importation of lower cost oil from Russia could help arrest the ‘inflation overheating’ cataclysm ignited by the administration’s tax reform program.