Page 8 - AsianOil Week 28

AsianOil SOUTHEAST ASIA AsianOil
Philippine downstream policy angers industry
POLICY
THE Philippine government’s recent down- stream policy decisions have angered the coun- try’s larger oil marketing companies.
A decree last month that oil companies would need to provide a detailed account of how they set oil product prices drove the industry to seek legal action on the grounds that the move undermined competition and was unlawful. Meanwhile, the country’s largest refiner has denounced a government fuel marking pro- gramme for not covering the entire sector.
Privileged information
Royal Dutch Shell’s local unit, Pilipinas Shell Petroleum, has secured a 20-day temporary restraining order (TRO) preventing the Depart- ment of Energy (DOE) from implementing Department Circular (DC) 2019-05-0008, which would require wholesalers to unbundle their pricing formulas.
Manila wants oil companies to provide detailed reports on pricing components such as import, tax and biofuel costs as well as profit margins.
Taguig City’s Regional Trial Court (RTC) granted Pilipinas Shell the TRO, which instructs the government “to cease and desist” from imple- menting the circular for 20 days from receipt of the order. Philippine Energy Assistant Secretary Leonido Pulido III said the DOE had received a copy of the TRO on July 8. e oil unbundling policy was supposed to take e ect on July 13 a er the DOE re-published the circular and moved its implementation date from June 28.
Petron and industry body Philippine Insti- tute of Petroleum (PIP) have also led petitions against the DOE’s unbundling policy. PIP’s members include Chevron Philippines, Isla LPG, Petron, Pilipinas Shell, PTT Philippines and Total Philippines.
The Independent Philippine Petroleum Companies Association (IPPCA), meanwhile, has asked DOE Secretary Alfonso Cusi to
suspend and eventually withdraw the circular on the grounds that it runs contradictory to the Downstream Oil Industry Deregulation Act.
The act was passed in 1998 and removes government interference from the import, exportsand pricing of oil products. It also requires the government to promote fair trade practices in the retail fuel sector.
Commenting on the circular, Pilipinas Shell said: “A deregulated downstream oil industry paved the way for a truly competitive market, characterised by many players, varying prod- uct o erings, competitive prices, adequate and continuous supply of environmentally-clean and high-quality petroleum products.”
It added that while it understood the govern- ment’s desire to monitor oil price movements, the new regulation still represented a backslide into regulation.
Making ends meet
e government has also come under re from the industry over plans to tackle fuel smuggling via its fuel marking programme.
Petron has shelved its $3.5bn planned expan- sion to the 180,000 barrel per day (bpd) Bataan refinery, saying it was struggling to compete with independent stations that were selling fuel at unreasonably low prices. e company sug- gested these retailers were buying smuggled fuel, which escapes value-added tax (VAT) or excise duties, and that this was possible because they were not required to mark their fuel volumes in the same manner as the major companies. (See: Petron ditches Philippine re nery expansion, page 7)
e decision is a blow for a country with only two re neries, the other being Pilipinas Shell’s 105,000 bpd facility in Batangas.
While domestic oil product demand only climbed by 1.4% in 2018 to 168.8mn barrels, the country’s import soared by 32% in $13.5bn. Without new downstream capacity to expand production of value-added goods, the country’s import bill is set to expand in the future.v
P8
w w w . N E W S B A S E . c o m Week 28 17•July•2019