DOE pushes discount scheme for public utility vehicles

The Department of Energy (DOE) will urge oil companies to reconsider their decision to scrap the oil price discount to the public transport groups once the P1.50 increase in minimum fare is implemented starting tomorrow.

"We will try to talk things out with the oil companies on the discount issue. Though the discount was voluntarily carried out by the oil firms to cushion the impact of the rising oil prices on the transport sector, these companies have the option to end the program," Energy Undersecretary J.V. Emmanuel de Dios said.

De Dios said they will try to convince the oil companies if they could partly extend the implementation of the discount until such time that the oil industry has fully recovered from the reeling effect of the global oil price volatility.

Another option, De Dios said, is for oil companies to give discounts to jeepney and bus associations willing to buy petroleum products in bulk.

"They may consider giving discount to guaranteed bulk buyers," the DOE official said.

But De Dios admitted that the oil firms have also been suffering from the effects of rising crude prices in the international market. "We understand that it is also not proper to always give dole out or subsidy. The oil firms also have under-recoveries to recoup," he said.

While a number of small independent oil players have openly announced their decision to scrap the discount program on jeepney and bus associations, the three largest oil players – Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. – opted to remain mum on the issue, saying that they are still studying the situation "since this is a very socially-sensitive matter".

"We need to review and study if we need to pull out or lower the discount. We are willing to discuss this with the other major oil players and the government," Shell country chairman Edgar Chua said.

Chua, however, pointed out that the discount was implemented merely "to help alleviate the condition of the transport sector until such time that they get the fare increase they are asking from the government."

Under a deregulated environment, though, oil companies are forced to adjust their prices based on market forces. It would be observed that once a number of oil firms decide to increase or decrease their pump prices, others are compelled to follow suit.