Gov’t urged to prevent supply disruption in fuel marking policy

By Myrna M. Velasco

The oil companies are appealing to the government to ensure that the supply flow of oil products will not be disrupted under the fuel marking policy as this would hit consumers hard.

Pilipinas Shell President and CEO Cesar G. Romero Pilipinas Shell President and CEO Cesar G. Romero

The fuel marking policy is set to start in the deregulated downstream petroleum sector.

Pilipinas Shell Petroleum Corporation, in particular, raised that at least three major concerns have remained disturbing to the industry – including probabilities that supply will be encumbered in the markings process as the third party contractor will get hold of the facilities and the inventories of the oil companies.

“As the government has described the process, it will be the winning contractor that will be installing it (marker) in our facilities, so discussions there on how do you time it, what engineering standards will be used to ensure that it’s safe on the operations and the supply will not be disrupted because they will be the ones who will be introducing the marker into our facilities, into our operating controls,” Pilipinas Shell President and CEO Cesar G. Romero said.

It was noted that even the oversight over the policy’s enforcement has not been made clear to them until this time – if that will be under the jurisdiction of the Department of Energy (DOE) or the Department of Finance (DOF) being the entity in-charge.

In other countries, fuel marking is administered as part of government’s tax administration scheme – mainly targeting to curb fraud on fuel tax payments or to cease smuggling of unscrupulous players.

For the Philippines, it has been quantified that the state coffers had been losing P30 billion to P50 billion annually due to snowballing smuggling activities in the oil sector – hence, the DOF aggressively pushed for the fuels marking policy.

But since the actual marking itself has to be done by a third party contractor and the rules are not yet carefully established – at least in the view of the industry players, there are still array of concerns being raised on the policy’s enforcement.

Romero noted, “we continue to have discussions with them (relevant government agencies),” as he emphasized that the major concern “remains to be the integrity of the marker – is it endorsed by the OEMs (original equipment manufacturers), is it something that has quality assurance.”

He qualified though that “from our perspective, we wholeheartedly support the government’s intention to curb smuggling and we would want to help them to curb smuggling. Fuel markings had been enacted into a law, so we need to find a way to comply.”

Nevertheless, on the actual deployment of the fuel marker and the requisite testing processes, Romero said it must be clarified first how the mandatory minimum requirement for the testing shall be allocated.

And, when that is carried out, he further queried “what is the code of conduct expectations of the various testers? And on customer promise, what is the recourse mechanism for those that have been suspected for smuggling, because I understand, they could be padlocked, so again what would be the appeal process?”

Other industry players similarly raised the prospective P0.07 per liter increase in the cost of petroleum products that shall be passed on to the consumers relative to the implementation of the fuels marking mandate. (MMV)