Explain or face charges, DOE tells oil firms

The government will file criminal charges against officials of oil companies that refuse to explain their recent decision to increase oil prices.

Energy Undersecretary Peter Abaya said oil firms had not yet complied with Energy Secretary Raphael Lotilla’s order for them to explain in writing and under oath why they failed to inform the Department of Energy (DOE) before raising oil prices by 75 centavos over the weekend.

"Based on the Oil Deregulation Law itself, non-compliance to reportorial requirements or any order or instruction of the DOE secretary issued in the exercise of his enforcement powers under Section 15 of the Act when found guilty shall face penalty of imprisonment of two years and fines ranging from P250,000 up to P500,000," he said.

"Secretary Lotilla issued a letter to oil companies yesterday and at the moment, no one has complied. DOE has written them once again to remind them that the deadline is 5 p.m. Wednesday. They, too, are reminded of the provision in Section 15 of the law."

Petron Corp., the country’s largest oil refiner, said yesterday it would maintain its current price level as world crude prices continued to soften over the past few days.

Virginia Ruivivar, Petron public affairs manager said: "We have been looking at crude prices and have observed a softening over the past 10 days. Because of this, we see no immediate need to increase prices. We will hold off any increase as long as we can."

Petron had initiated the same strategy last November when it implemented its last oil price hike for 2004 amid the continuing rise in international crude prices.

Petron is 40-percent owned by state-run Philippine National Oil Co. (PNOC), 40 percent is held by Saudi Arabian Co., and 20 percent is listed on the Philippine Stock Exchange.

Meanwhile, Lotilla again called on the public to compare prices at various gas stations as several oil companies had not yet raised their prices including those of liquefied petroleum gas (LPG).

"Our monitoring shows that a number of oil companies have not increased their prices despite the recent upward adjustments implemented by their competitors," he said.

"I am calling on our consumers to be vigilant, to carefully compare prices and buy from outlets that are offering the lowest prices."

The DOE learned that a major oil company, several small oil players and major LPG firms have continued to hold pump prices at the same levels.

The following oil firms have jacked up their pump prices in Metro Manila: Caltex, Cityoil, Eastern Petroleum, Flying V, Seaoil, SBDI/PTT, Shell, Total and Unioil.

As of April 19, unleaded gasoline was being retailed at prices ranging from P30.65 to as high as P32.08 a liter, while diesel was priced between P25.70 to P27.65 a liter.

Depending on gasoline stations, motorists could save as much as P1.43 a liter on gasoline and P1.95 a liter on diesel.

The DOE monitoring teams have reported an 11-kilogram barrel of LPG now ranges from P356 to P420 – a price difference of as much as P64.

Some outlets have not raised their prices, while others have adjusted by varying amounts.

Prior to the adjustments, LPG was being sold at prices ranging from P345 to P405.

"This only shows that we have to be a lot more discriminating in choosing our suppliers," Lotilla said. "We have the power of choice. Choosing wisely will mean savings of a few precious pesos during difficult times."

However, Lotilla said based on the Oil Market Outlook by the International Monetary Fund, oil prices will remain high and volatile at the range of $39 to $56 per barrel in the coming years.

World petroleum demand will continue to grow robustly with 2.7 percent growth during the year as against a smaller increase in supply of 2.2 percent, he added.

Lotilla noted that China and India have been singled out among the non-OECD economies for contributing about 35 percent in incremental oil consumption between 1990 and 2003.

"As an oil importing country, we need to brace ourselves for tough times," he said.

Lotilla underscored the need for the country to be energy independent.

"If we want industry to be competitive, if we want to bring down production costs in the medium- to long-term, if we want economic growth with job creation, then we should not allow ourselves to be dependent on imported energy and consequently be held hostage by volatile international prices," he said.

Lotilla said to be able to accomplish the country’s energy independence program, the DOE shall proceed with the Second Contracting Round involving the auction of petroleum, geothermal and coal blocks.

"I have also directed that the draft Renewable Energy Bill be reviewed in 30 days on whether, within the Constitution, we can consider the economic necessity of defining geothermal resources as mineral resources," he said.

To pave the way for the bidding out of these blocks, a moratorium on new applications for negotiated service contracts for petroleum, geothermal and coal shall commence on May 1, he added.

Lotilla said this would allow the use of geothermal resources to be made on the same basis as the rest of the mining industry.

"We have precedents for this in other areas of the world and would not be (in violation) of the Constitution," he said.

"In the Philippines, this would allow the entry of much needed capital for the fullest utilization of the country’s geothermal resources on the same terms that the Supreme Court has recognized for the mining sector."

Lotilla sees the need to expand the pilot project for buses using Compressed Natural Gas (CNG) beyond the initial 200 units.

"I have directed that negotiations on a market price for CNG commence in two weeks’ time," he said.

"We call on the private sector for investments so that our target to have all our buses in Metro Manila running on CNG by 2010 is achieved."

Lotilla said construction of the Shell "daughter station" for the CNG Pilot Project along the South Superhighway in Biñan, Laguna resumed last April 11, after it had been interrupted.

"This project is essential if we are to roll out the first CNG-fueled buses in the country," he said. "I have asked PNCC and the local government to give the project their fullest support and to see it through to its uninterrupted construction and operation."

Lotilla said there is also a need to intensify the use of alternative fuels like coconut methyl ester, ethanol and autogas.