Oil exchange targets monopolies – Garcia

The proposed National Oil Exchange (NOEC) has a similar aim with that of the Electric Power Industry Reform Act (EPIRA) which is to dismantle monopoly in the market, according to Rep. Enrique T. Garcia Jr.

In an interview, Garcia, author of NOEC or House Bill No. 300, said he hopes that President Arroyo would consider this congressional initiative as one of her priority bills in the 12th Congress.

"Since President Arroyo had pushed for the enactment of EPIRA, I hope she would also view the creation of NOEC as a similar initiative in breaking up monopolies in the market. While the EPIRA dismantles monopoly in the power sector, NOEC also aims to level the playing field and ensure competitiveness in the oil industry by destroying the monopoly and cartel," Garcia said.

In his letter to President Arroyo dated Aug. 27, Garcia requested the Chief Executive to certify as urgent HB 300 "to ensure its early passage for the good of our people and country".

In that letter, the congressman reminded President Arroyo of her statement that the NOEC is one of the three major thrusts of her administration which was welcomed and praised by people who want to alleviate poverty and other socio-economic advertising through the lowest possible prices for finished petroleum products — gasoline, diesel, kerosene, liquefied petroleum gas (LPG), etc.

According to Garcia, the enactment of the NOEC will immediately ensure truly worldwide competition and fair prices in the oil industry in the Philippines through an Oil Exchange that would bid to all oil refineries and traders in the world the country’s total requirements for each and every finished petroleum product.

He pointed out that the bill is faithful to, and consistent with, the constitutional condemnation and prohibition of monopolies, cartels, unfair competition and combinations in restraint of trade because it will immediately break up the 95-percent monopoly of the three oil refineries.

In light of President Arroyo’s suggestion, Garcia said he had "simplified the bill to the bone and cannot be amended further".

He also branded the objections raised by the three oil majors as false and misleading and incomprehensible.

He said Oilex will not bring about another monopoly as claimed by the Big "3" oil firms since the Oilex will not participate in the bidding as a seller nor as a buyer of gasoline and other finished petroleum products, but will merely receive bids from all over the world, in open and transparent bidding, and declare the lowest qualified bidder/s for each finished petroleum product.

The objection that Oilex will not bring about lower prices, he said, is false since the objective of the Oilex is to secure and assure the lowest possible prices through open and transparent bidding participated in by oil refineries and traders the world over.

He said creation of Oilex will not send the wrong signals to foreign investors as claimed by the oil companies because there will always be an incentive to construct new refineries and/or expand existing capacities to meet growing local demands.

While the cost of operating the Oilex will be added to the cost of finished petroleum products, Garcia stressed that it will only be minimal.

"Even if we assume an operating cost of P100 million per year, which will be added to the price, it is equivalent to only less than 1/2 centavo per liter, certainly picayune compared to the excessive monopoly/cartel prices being imposed on us," he said.

Garcia admitted that without the certification of the President, the proposed Oilex will be junked altogether.