Oil firms seek greater  efforts vs smuggling, non–PNS compliance

MANILA, Philippines — A national association of oil companies has asked the government to step up its efforts to combat fuel smuggling and non-compliance to Philippine National Standards (PNS) on petroleum to ensure a level playing field among all players in the country.

The Philippine Institute of Petroleum (PIP) said among the issues and challenges confronting its member companies include the non-compliance with the PNS, the biofuels blend, and fuel product smuggling.

The group is calling for the strict monitoring at the retail station level on compliance regarding the required biofuels blend, which is two percent on biodiesel and 10 percent on bioethanol.

Additional manpower and resources for the Department of Energy (DOE) are likewise sought in order to conduct regular field testing and inspection.

“There is a need for strict monitoring by the DOE at the retail station level in compliance with the required biofuel blend, including provision of additional manpower and resources for the DOE in order to effectively and regularly conduct field testing and inspection,” PIP assistant to the executive director Nimfa Villamayor said in a presentation.

“The government could also increase its vigilant monitoring on the presence of unreasonably low price products, which may be because of either unpaid taxes or due to smuggling or the non-compliance of the PNS,” she said.

On the plan to increase the biofuel blend, meanwhile, Villamayor said this is confronted with technical and operational issues, such as impact on the PNS of the base fuels, impact on overall fuel engine reliability, feedstock supply availability, and engine residue, among others.

Villamayor said another possible reason for low priced products in some retail stations is that because they are not properly blended with the required biofuels blend.

“There are reports of non-compliance to the current required blend at the retail level which contributes to the uneven playing field. More so is expected with a higher blend,” she said.

Further, Villamayor said local production of ethanol could only supply 50 percent of the requirements of the industry.

“To increase the blend percentage will require further evaluation, technical and operational, to ensure that there will be no adverse impact to the engine performance and will truly address our intention of environment protection and economic development,” she said.

Villamayor said increasing the current biofuel blend requires a thorough study and extensive consultations with stakeholders, not only within the petroleum industry, but also with stakeholders in the agricultural sector and the automobile industry.

As to fuel products smuggling, the PIP said the Department of Finance had already estimated about P44 billion in revenue losses per year due to smuggling.

This deprives the government of the needed revenues for social services and support infrastructure build up, as well contribute to the uneven playing field, the group said.

PIP is recommending plugging loopholes in the fuel tax collection through simpler process and tighter value added tax (VAT) payments monitoring, such as the issuance of receipts for all industry players.

“The government can intensify or revive its campaign to consumers to ask receipts from retail stations and to strictly mandate the issuance of official receipt by the retail station. This will enable the government to compare VAT-in and VAT-out, consequently flush out illegal traders, and increase tax revenue collection,” Villamayor said.

“The Philippine Institute of Petroleum has always been a partner of the government in its fight to stop fuel smuggling and we reiterate and we are hoping that the government technical service partner can resolve the homogeneity issues that limit efforts to do field testing and enforcement in the fuel marking program that we have today,” she said.

PIP is group of businesses operating in the downstream oil industry in the Philippines established in 1996.

Its member companies include Chevron Philippines Inc., Isla LPG Corp.,  Petron Corp., PTT Philippines Corp., Pilipinas Shell Petroleum Corp. and Total Energy.