Perez bucks proposal to create National Oil Exchange

Energy Secretary Vincent S. Perez is opposing any proposal to create a National Oil Exchange (NOEC).

"The local oil industry is already healthy at the moment. We don’t see the need for the concept of an oil exchange," Perez told reporters.

He said the country has sufficient petroleum supply. "The spirit of a deregulated industry already allows transparency in the procurement of petroleum products," he added.

The energy chief said there is enough competitive pressure in the industry, thus there is no need an oil exchange.

The simplified NOEC bill version, sponsored by Rep. Enrique "Tet" Garcia, seeks to prohibit monopoly by allowing the government to take an active part in bidding out the supply need of oil companies. "The new version will do away with the problem of transparency and monopoly," Garcia said, noting that the consuming public will be able to know how much the oil companies will price their products based on the results of the bidding conducted by NOEC.

Garcia said he had removed all the provisions of the NOEC bill that received criticism from the industry such as the Subic Storage Facility. "It will basically deal on government policy to do procurement through bidding," he said.

He clarified that there would be no price control once the NOEC is put in place since "this law is actually an ideal example of deregulation because it would attract new players into the oil industry and promote honest-to-goodness competition."

Under the proposed bill, the NOEC will bid out on a monthly basis to more than 40 local and foreign oil traders and refineries the country’s total requirements of gasoline, diesel, kerosene, liquefied petroleum gas (LPG) and other refined oil products.

Garcia said a NOEC board, composed of representatives from the government, oil players, transportation, and other concerned groups, will be created to oversee the bidding.

Oil companies, on the other hand, are still opposed to the NOEC creation even though the law was simplified.

The oil firms said the NOEC would only bring back the government to the business of oil which will run counter to the spirit of deregulation. "This will send a wrong signal to international investors that the government is "flip flopping on its decision to deregulate the oil industry," they said.

Caltex Philippines Inc.’s Marian Cathedral said that while they welcome such congressional initiative they would still oppose the proposal NOEC law.

Petron spokesperson Virginia Ruivivar, on the other hand, said the NOEC would discourage oil refiners.

Fernando Martinez, Eastern Petroleum Corp. (EPC) chairman and chief executive officer, and New Petroleum Players Association of the Philippines president, meanwhile, said the creation of NOEC will threaten the security of supply as oil refiners will not be assured that their refined products would be sold in the proposed bidding scheme under the law.

"The oil refiners here will not survive. The simple act of bidding is a monopoly. The fact that they want the oil requirement to be coursed through the government is an act of monopoly," he said. – Donnabelle Gatdula