October 3, 2019 By Lenie Lectura &
Jovee Marie N. dela Cruz
THE Department of Energy (DOE) has
issued show-cause orders to oil companies and LPG (liquefied petroleum
gas) dealers to compel them to explain discrepancies in their latest price
adjustments, as lawmakers pushed for an investigation into possible predatory
pricing.
Oil firms were given until Monday
(October 7) and LPG dealers until this week to reconcile the gaps —the
first time in three years between the private sector’s and the government’s
estimates.
“In view of the apparent difference
in the oil price rollback calculations between the Department of Energy [DOE]
and oil firms, we issued show-cause orders [SCOs] to 13 oil companies yesterday
afternoon [1 October],” the DOE said. “Under the SCOs, recipients
would have until Monday [7 October] to formally respond to the department.”
Regulators have kept close watch of
fuel pricing since the September 14 drone attacks damaged key oil facilities in
Saudi Arabia, knocking out 5 percent of global supply and driving up prices of
world crude.
The Philippines imports nearly all
of its crude oil requirements.
After imposing a whopping P2.35 a
liter price hike days after the Saudi attacks, local oil companies this week reduced
gasoline price by P1.45 per liter, diesel by P0.60 per liter and kerosene by P1
per liter.
LPG prices, meanwhile, increased by
P4.50 per kilogram (kg). Also, auto LPG prices went up by P2.50 per liter.
“Based on DOE’s computation,
however, ‘mas mababa po yung rollback nila for about 22 cents for
gasoline and 6 cents for diesel. LPG increase, mas mataas po yung
in-inform nila kumpara sa dapat iakyat based sa LPG world
market. We’re also asking LPG suppliers and importers to explain in three days,”
said DOE Assistant Secretary Leonido J. Pulido III. Per the DOE’s numbers
crunching, therefore, the public should have benefited from bigger reductions
in prices than what the fuel and LPG players gave them.
The show-cause orders, Pulido said,
would provide these companies the opportunity to explain how they arrived at
their respective oil price rollback calculations. The agency stressed that the
explanations will be thoroughly evaluated.
Similar
computations
Historically, the computations
arrived at by the DOE and the oil companies have been the same.
“We were just surprised.
Historically, our computations would match. This is the first time
over the last three years,” said Pulido.
He refused to name the 13 oil firms,
saying this was necessary in order “to protect the integrity of the process.
Oil firms, for their part, said on
Wednesday they will make public their side as soon as available.
Unbundling
Meanwhile, the DOE, once again,
stressed the importance of the proposed oil price unbundling policy which was
stopped by the courts.
The DOE circular requires oil
companies to unbundle their price adjustments. They should submit a report to
the DOE with a detailed breakdown of their import costs, tariffs, biofuel
costs, oil company take components, and other essential cost components that
contribute to the changes in retail prices.
Energy Secretary Alfonso Cusi said
these enhancements would provide the DOE and other relevant government agencies
with data necessary to formulate proactive and appropriate policy initiatives
for the benefit of consumers and the downstream oil industry.
Furthermore, the data provided will
support the DOE-DOJ (Department of Justice) task force investigations on
reported incidents of anti-competitive behavior.
Oil
firms versus unbundling
Oil firms, however, are against this
because, among others, they would have to reveal their so-called industry take
amid a deregulated environment.
While the DOE is barred from
implementing the circular, Pulido said the agency said they will recommend
amendments to the oil deregulation law. “The government cannot dictate the
prices. DOE-DOJ task force to investigate anti competitive practices.”
The DOE, through the Philippine
National Oil Co. (PNOC), is also pushing for the importation of cheaper fuel.
“We consider this as a mid-term step. It’s part of a longer step. We are
preparing a bill that we intend to introduce to Congress where we will ask for
the legislation of a strategic reserve,” said Pulido.
House
probe
In the House of Representatives, a
lawmaker has asked the Committee on Energy to conduct an inquiry on the sudden
recent increase in fuel prices with an end view of passing legislation to
stabilize fuel prices.
In House Resolution 390, Marikina
Rep. Stella Luz Quimbo sought an investigation on the legality, necessity and
determination of the propriety of these sudden fuel price increases for
purposes of accountability.
She said investigation is also
needed to study the passage, or amendment of pertinent legislation, and the
propriety of DOE pricing policies perceived to be facilitating the tacit
collusion of oil companies for purpose of revising policies and passage of
pertinent legislation.
Citing the minutes of a recent
Senate Committee on Energy hearing, Quimbo said representatives from oil
companies admitted that the country has enough fuel supply and may readily
source refined and crude oil from other countries should tensions in the Middle
East intensify.
“Despite this pronouncement, oil
companies simultaneously announced a price increase of P2.35 per liter on
gasoline, P1.80 per liter on diesel and P1.75 per liter on kerosene for the
week resulting in the highest increase for 2019,” she said.
Quimbo said the spike in fuel prices
took place allegedly as a result of the Saudi Arabia supply crisis.
“The oil price increase took effect
19 days after the drone attacks, despite the mandatory requirement to maintain
a certain level stock, pursuant to DOE Department Circular 200301001,” she
said.
“Given that the requisite stock of
refiners is at least 30 days per Department Circular No. 200301001, the stock
being sold right now should be insulated from the supply problem brought about
by the Saudi Arabia crisis,” Quimbo added.
The lawmaker also said oil companies
are required to report price adjustments to the DOE on the basis of the cited
pricing formula, which uses parameters that do not vary by firm (such as the
Mean of Platts Singapore [MOPS], exchange rates, and tax rates), that are
calculated on a weekly basis, and despite the fact that importation is not
necessarily on a weekly basis.
“The DOE pricing formula and
policies relating to it may be facilitating tacit collusion or parallel
pricing, thereby unnecessarily increasing prices to the detriment of
consumers,” she added.
Section 14 of the Downstream Oil
Industry Deregulation Act of 1998 mandates the DOE to monitor and publish daily
international crude oil prices, as well as follow the movements of domestic oil
prices.
No comments:
Post a Comment