Government to go full-blast with fuel-marking project

MANILA, Philippines - The government is now going full-blast with its fuel-marking project, expanding the coverage of the anti-smuggling measure to include all other ports with importations of diesel and kerosene.

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

According to Customs Memorandum Order 4-2010, fuel marking would now be implemented in all ports that have importations of diesel and kerosene, in addition to the Subic Special Economic and Freeport Zone, Clark Special Economic and Freeport Zone and the Port of Batangas where the government pilot-tested the project.

“In addition to the ports covered by CMO 16-08 on the pilot implementation of the Fuel Marking Program, this order shall also cover ports with importations of diesel and kerosene, whether or not, duty and tax paid,” Customs Commissioner Napoleon Morales said in the memorandum order published yesterday.

The move is meant to plug the leakage of duties and taxes due on kerosene and diesel initially entered into the country without payment of duties and taxes and which are eventually diverted to the domestic market or for other use which will subject the products to duties and taxes.

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 payments and P2.5 billion for import duties.

Before going full-blast with the project, the government did several pilot tests at the Ports of Subic and Clark last year.

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 last year, 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.