The national government must consider reviving of the Oil Price Stabilization Fund (OPSF) amid the series of oil price hikes in the past months and the uncertainty of oil price stability due to the ongoing war between Russia and Ukraine, a transport group said on Saturday, June 11.
Since January this year, gasoline price has increased by P23.85 per liter while P30.30 per liter for diesel, and P27.65 per liter for kerosene.
Lawyer Vigor Mendoza II, chairman of transport group 1-UTAK, said reviving the OPSF will help the public in dealing with oil price hikes, especially that there were already shortage of public utility vehicles especially in Metro Manila as some of the drivers and operators decided to halt operation over the series of oil price hikes.
Some of the farmers and fishermen were also reported to have resorted to alternative livelihood as they could not cope with the price of oil products that they use in farming and fishing.
Mendoza said the adverse impacts of the oil price hikes necessitate the formulation and implementation of measures that will mitigate the effect of the oil price instability, one of them is the revival of the OPSF which president-elect Ferdinand “Bongbong” Marcos himself supported during the campaign period.
Mendoza said he agreed with Marcos when the latter appeared before a town hall discussions in Marikina with transport groups and other groups during the campaign period.
"I support the position of incoming President Ferdinand “Bongbong” Marcos Jr, to come up once again with something like an Oil Price Stabilization Fund with a little improvement perhaps,” said Mendoza.
“The program will ensure that there's a fund that can be used not only to give fuel subsidy to drivers but also to in modernize the transport sector and to support measures shifting to alternative fuels,” he added.
The proposal
The national government used to set aside fund to cushion the impact of any oil price hike that would already trigger instability in the prices of goods and services. This was done though government subsidy on fuel price adjustments.
But the program was already stopped in the mid 1990s following the enactment of the Oil Deregulation Law and due to some problems that include reports that the government then owed oil companies of billions of pesos.
This is where adjustments should be made in order to make sure that the OPSF-like program would succeed, according to Mendoza.
As part of the revival of OPSF-like revival, Mendoza explained that in times of fuel price drops, a portion of the saved fund due to oil price rollback should be set aside to subsidize fuel prices for the public transport sector.
And when prices go up, he said oil companies should set aside a portion of the increase to this fund by way of a deductible expense and not as part of the gross sales.
Mendoza stressed that this program is one of the long-term approach that the government can consider instead of implementing band aid solutions like giving out fuel subsidy.
He further said that giving out fuel subsidy is dependent on budgetary allocation.
Mendoza also liken the program to the two-tier fuel pricing where transport sector were given special discounts” “The key here is proper management of fund and should be secured from wrongdoings.”
Also, the fund should come from the oil companies by way of a deductible expense to expedite the growth of the fund," he stressed.
Fuel storage facilities
Mendoza also proposed the establishment of strategically-located fuel storage facilities or a more cost-efficient fuel delivery system, like a pipeline.
“This aims to lessen the cost of delivery which is one of the key factors in price hike, "If our fuel storage facilities are closer to the demand, then the cost of delivery will be much cheaper,” said Mendoza.
He also expressed support to the concept of Metro Manila Transport Corporation implemented during the Marcos Administration and was revived during the stint of former Land Transportation Franchising and Regulatory Board (LTFRB) Chairman Tom Lantion where the government procured public utility vehicles and rented by qualified transport groups.
"I think it is a very novel concept that will spur modernization, and at the same time lower the cost of operations by way of savings on interest cost if transport groups would avail loans to buy new vehicles,” said Mendoza.