DOE seeks to expand coverage of oil subsidy for public transport

Published February 25, 2022, 2:38 PM

by Myrna M. Velasco

With oil prices soaring to as high as $105 per barrel on Russia’s invasion of Ukraine, the Department of Energy (DOE) has submitted formal proposal to President Rodrigo Duterte and Congress to expand the coverage of cost subsidies for the transport sector as well as hike the cash endowment beyond the P2.5 billion already committed by the executive branch.

In its proposal, the DOE said that transport subsidy coverage shall not just be confined to public utility jeepneys (PUJs) and tricycles, but to broaden it to other modes of public transport, such as buses, taxis, the fleets of delivery riders as well as other ride-hailing services; and also the agriculture and fishing sectors.

Within the precept of subsidy expansion proposal, the energy department indicated that the financial allotment shall likewise be significantly increased especially if the oil crisis will last for several months – and that shall be subject to the final calculation of the Executive Branch.

Atty Rino Abad, director of the DOE’s Oil Industry Management Bureau (OIMB) affirmed that they have submitted such proposal to Malacanang and Congress, but they are still waiting for action from the executive and legislative leaderships.

As culled from scenarios plotted by the DOE — three possibilities will happen if the radical spikes in oil prices will be sustained in the weeks or months ahead: first, will be for the government to expand subsidy coverage for the transport sector; second, is to immediately implement excise tax suspension for fuel products; and third, to allow transport fare hikes although that will bear inflationary impact on the costs of basic commodities and services.

At this stage, Abad noted that the department has its hands tied when it comes to the scale of ‘financial help’ it can assure for public transport as well as other critical sectors like those in fishing and agriculture sectors — that aside from the State-sanctioned subsidy, the energy department can only appeal to the oil companies if they can also bestow ‘cost discounts’ to their customers.

As of Friday (February 25) trading in the global market, international benchmark Brent crude settled back at US$101 per barrel; but market watchers are anticipating that “the worst is not over yet” for the oil markets.

In the view of Senate Committee on Energy Sherwin T. Gatchalian, “even if Russia is not a supplier of oil and gas to the Philippines, the global supply disruptions will cause oil prices to escalate in the short to medium term.”

On that account then, he is calling on the national government to immediately “implement the Pantawid Pasada program” or the cost subsidy scheme for public utility drivers; and that the mode of distribution of financial aid to around 377,000 PUV drivers shall be done through electronic wallets.

The lawmaker is similarly prodding the Department of Energy (DOE) to “formulate contingency plans in case of supply disruptions;” and for the agency to “monitor global oil prices closely which may escalate in months to come due to uncertainty.”

Gatchalian further echoed “we may need to suspend excise taxes as the last resort,” as he emphasized that “there is no overnight solution to reduce oil prices in our country.”

He stressed the only way for the country to wane its oil addiction “is to reduce our dependence on imported oil by exploring more domestic sources of oil and gas and transition in electric vehicles in the years to come.”