Amid high oil prices, DOE searches for cash to fund fuel subsidy

MANILA, Philippines — The Department of Energy is searching for cash to fund a possible fuel subsidy program amid rallying oil prices that’s fanning inflation and threatening to derail a fragile economic recovery from the pandemic.

Energy Assistant Secretary Gerardo Erguiza Jr. said agency had already asked the Department of Budget and Management if there are sources of funds for fuel subsidies, adding that the DOE is studying the possibility of using revenues from oil excise taxes to finance the program.

“The collection is for the pandemic and what we’re looking at right now maybe use Section 82 of TRAIN (Tax Reform for Acceleration and Inclusion) law,” Erguiza said in a press conference on Friday.

“We’ve talked it over and we will make necessary suggestions to get resources. Part of our recommendations to Congress is to ask the (DBM) if these still have funds and whether it could be used for this purpose,” he added.

It was the TRAIN law that imposed excise taxes on petroleum products and raised such levies in three tranches that ended in January last year.

Under Section 82 of the law, 30% of incremental revenues from TRAIN must be used to fund social programs meant to cushion the impact of the law on prices, including fuel vouchers to qualified jeepney franchise holders. The safety nets will stop after five years from the effectivity of TRAIN, which took effect in January 2018.

The budget department did not respond to a request for comment.

As it is, the fuel subsidy program is one of the measures that the government is looking into to immediately bring reprieve to consumers who are feeling the sting of elevated inflation, which settled at 4.8% in September, well-above the central bank’s 2-4% target.

Erguiza said the DOE also asked oil companies to give discounts to jeepney drivers and operators, with five firms heeding the agency’s request namely Jetti Petroleum Inc., Unioil Petroleum Philippines Inc., Seaoil Philippines Inc., Phoenix Petroleum Philippines Inc. and Pilipinas Shell Petroleum Corp.

“As a matter of fact, three of them are already giving discounts,” he said.

Erguiza added that the DOE coordinated with the transportation department to allow jeepneys to increase their passenger capacity from the current 50-percent cap to prevent fare hikes.

But as a long-term fix, the DOE is asking Congress to amend the Oil Deregulation Law to allow the unbundling of cost of petroleum retail products. According to Erguiza, the DOE will ask President Rodrigo Duterte to certify as an urgent measure the bill that would contain the amendments.

The agency also floated the idea of suspending the oil excise taxes, which the finance department said could cost the cash-strapped government P131.4 billion in revenues next year.