Department of Finance's fuel-marking project to go full-blast starting January

MANILA, Philippines - The Department of Finance (DOF) will go full blast with its fuel-marking project starting January next year, a ranking official said.

Finance Undersecretary Estela Sales said that through the pilot testing of the project, fuel marking has been found effective in detecting the presence of oil in gasoline stations not authorized to possess it.

As such, she said the government wants to go ahead with the full implementation of the project nationwide.

“By January, we will go full-blast with the project,” said Sales, chairperson of the Project Implementation Office.

The fuel-marking project mandates the use of a liquid chemical substance for marking imported kerosene and other oil products that enter the country duty-free.

The pilot testing of the fuel-marking project began at the Ports of Subic and Clark in December 2008 and on Jan. 29. It was supposed to end last Feb. 21 but was extended to May 31 and again to Dec. 31.

Sales said the extension was necessary to gather more information on the supply chain of smuggled fuel.

For the pilot testing, oil companies tapped the services of Switzerland-based Societe Generale de Surveillance SA or SGS.

Data from the Finance department showed that during the initial pilot-testing period from January to February, SGS has marked imported fuel amounting to 31.8 million liters.

At least 171 tests have been conducted on fuel covertly sampled from gasoline stations.

Finance officials said that during the initial pilot testing, there have already been three positive results that indicated the presence of tax-exempt fuel in gasoline stations not authorized to possess it.

SGS, which the Bureau of Customs (BOC) previously tapped, specializes in pre-shipment inspection. Without SGS, the Customs bureau is responsible for the valuation, classification and clearance functions for imports.

The country’s big oil industry players—Pilipinas Shell, Petron Corp. and Chevron—and other oil companies belonging to the Petroleum Industry of the Philippines (PIP) are shouldering the cost of the project.

However, Sales said there is no guarantee that SGS would be tapped for the full implementation of the project starting January. She said it would be up to the private sector to decide on the service provider.

The fuel-marking project covers all kerosene, including dual-purpose kerosene that enter the Philippines and are subject to zero excise tax. It also covers all diesel oil imported into the Philippines for which exemption from the payment of duties and taxes is claimed.

The government is losing as much as P9.5 billion in potential revenues every year due to rampant smuggling of petroleum products into the country, BOC estimates showed.

Of the amount, P7 billion account for excise tax payment and P2.5 billion for import duties.