Local oil firms seek TRO vs. fuel unbundling

By Lenie Lectura - June 24, 2019
https://businessmirror.com.ph/2019/06/24/local-oil-firms-seek-tro-vs-fuel-unbundling/

A GROUP of oil firms is seeking a temporary restraining order (TRO) to stop a Department of Energy (DOE) policy that requires all oil companies to unbundle their fuel cost.

“The Philippine Institute of Petroleum Inc. [PIP] filed a Petition for Declaratory Relief with Application for a TRO and/or Preliminary Injunction to question DOE’s Department Circular DC2019-05-0008,” a statement released over the weekend said.

The PIP is composed of Petron Corp., Pilipinas Shell Petroleum Corp., Chevron Philippines Inc., PTT Philippines, Total Philippines Corp. and Isla LPG Corp.

The petitioners contend the DOE circular contravenes the dynamics of a deregulated oil market.

“The relief sought is necessary to protect the industry and the public, and to foster market-driven competition. As the DOE Circular becomes effective on June 29, 2019, petitioners are, likewise, seeking injunctive relief to stop its implementation until the case is heard and decided on the merits,” it said.

The DOE said it consulted the Philippine Competition Commission (PCC) on this.

“We consulted the Philippine Competition Commission, the agency with primary jurisdiction under the Philippine Competition Act, and not only did they agree that it does not violate the PCA; it, in fact, enhances competition,” DOE Assistant Secretary Leonido Pulido said in a text message.

He said the agency welcomes the petition filed by PIP.

“Living in a healthy democratic society, we welcome comments, constructive criticism, and even legal challenges to the unbundling circular as it provides us with an opportunity to further learn and strengthen future administrative issuances of the department. However, we are quite confident that the unbundling circular is on firm legal ground considering the express provisions of the oil deregulation law authorizing the DOE secretary to require virtually all kinds of information from oil companies,” Pulido added.

Meanwhile, consumer advocacy group Laban Konsyumer Inc. (LKI) commented that the PIP’s move was “disheartening.”

“LKI reiterates that the DOE circular is a good start and good news for consumers,” LKI President Victor Dimagiba said.

LKI has also been pushing for transparency in retail prices of petroleum products as part of end-users’ right to information and to provide them access to fair and reasonable pricing of petroleum products.

DC 2019-05-8, entitled Revised Guidelines for the Monitoring of Prices in the Sale of Petroleum Products by the Downstream Oil Industry in the Philippines states that for every price adjustment of petroleum products, oil companies must comply with the submission of the detailed computation with corresponding explanation and supporting documents on the reasons of the movement.

In particular, oil firms must unbundle their fuel cost with the following details:

· International content, which makes up import cost, freight cost, insurance and foreign-exchange rate;

· Taxes and duties, which include excise tax, value-added tax, duties and other imports;

· Biofuel cost; and

· Oil company take components. Details on port charges, refining cost, storage cost, handling cost, marketing costs, transshipment cost, other cost, oil company profit margin and total oil company price are required to be turned over to the agency.

“Within two months after effectivity of this circular or whenever required by the DOE or by the DOE-Department of Justice [DOJ] Task Force, oil companies shall be required to submit a report to the Oil Industry Management Bureau [OIMB], on a per liter and per product basis for liquid fuel and automotive LPG, and on a per kilogram basis for household LPG, containing the detailed computation with corresponding explanation and supporting documents on the unbundled items comprising the oil company price as of December 1, 2018,” it said.