September 15, 2018
Mr. Alfonso G. Cusi
Secretary, Department of Energy
Subject: Draft Circular providing guidelines for the monitoring of prices on the sale of petroleum products by the downstream oil industry in the Philppines
Dear Secretary Cusi ,
Recently and based on news reports, the Department of Energy (DOE) had issued various circulars on the renewable energy standards both for on grid and off grid customers to enhance the use of renewable energy, guidelines on bill deposits of distribution utilities and electric cooperatives for transparency and good governance, as well as the use of the Euro 2 vice Euro 4 fuel as a measure to temper inflation in the prices of petroleum products. Likewise a draft circular had been posted for comments proposing amendments to the EPIRA law as well as for self-generators.
On the other hand , the Department had turned ?cold ? on an equally very important guidelines ensuring the right to know of consumers despite the public announcement of DOE that the above subject draft circular shall be issued at the end of the 1st quarter , moved to the end of the 2nd quarter and had remained a draft as of date .
Sir, on January 19, 2018, your Undersecretary Donato D. Marcos wrote the Chairman , Committee on Energy , House of Representatives and indicated a timeline of March 2018 for finalization and approval by the Secretary of the draft circular.
On April 16, 2018, the Laban Konsyumer Inc. appealed to the Secretary to issue the circular and thus enable consumers enjoy their right to information and access to fair and reasonable pricing of petroleum products. The LKI cited provisions of Republic Act 8479, sections 7, 11, 12, 13, 14, 15, 18 and 19 that clothed the Secretary adequate police powers over the industry. Said letter was acknowleged by your Atty . Rino E. Abad, Director-in- Charge, Oil Industry Management Bureau and stated that the said DC is to be finalized and issued soon after the consultation. Based on past news reports, there were focus group discussions held by the DOE with stakeholders on the draft circular.
On June 12, 2018, the LKI submitted an Affidavit on Retail Prices of Fuel Products to the Philippine Competition Commission (PCC) and the Office for Competition of the Department of Energy (OFC DOJ) and requested to be informed whether the market behavior and retail prices of fuel produts are in order and in compliance with law. The PCC in their letter of July 3, 2018 duly noted the information and may help the PCC in the conduct of its assessment and monitoring of the retail fuel industry. However, the PCC did not consider the affidavit for purposes of conducting a preliminary inquiry until such time that we comply with the applicable PCC Rules of Procedure.
A copy of the draft DC had five (5) Articles on General Provisions, Adjustments due to international price movement, biofuel cost and capital /operational cost recovery, forms and contents of price adjustment notice, unbundling of base price and final provisions providing penalties.
The unbundled base price shall contain product cost, refining cost, import terminal/depot operation cost , transshipment cost , taxes, biofuels cost, haulers fee, unbundled other fixed cost, unbundled variable cost and oil company/bulk suppliers profit .
In the LKI opinion, the DC shall answer issues such as the big discounts that retail outlets offer to the customers, the identical retail prices of service stations in a specific trading area and the reasonableness and fair pricing of the MOPS formula that allows the identical weekly adjustments in prices of the oil industry using the difference of the current week from the previous week prices.
The data below supports the importance of the unbundling of the base prices of the fuel products.
Jan 3, 2018 Sept 6, 2018
Gasoline P41-P52 /L P52-P63/L
Diesel P28-P36/L P42-P53/L
Kerosene P33-P39/L P46-P58/L
We therefore appeal again to the DOE to proceed with the posting of the draft circular for comments by the stakeholders and therafter issue the DC. The universal right to know of Filipino consumers on reasonable and fair pricing of petroleum products deserve a priority action from the Department of Energy. Thank you.
Very truly yours,
Atty. Victorio Mario A. Dimagiba, AB, LLB, LLM
September 15, 2018