‘Oil depot transfer may push up fuel prices’

MANILA, Philippines - The transfer of the oil depot in Pandacan could lead to higher fuel prices due to increased transportation and delivery costs, Energy Secretary Carlos Jericho Petilla warned yesterday.

Petilla, however, said it would be up to the big three oil companies to decide if they would pass on the added costs to consumers.

This developed as the city government of Manila said yesterday it would negotiate with the private owners of the 33-hectare property where the Pandacan oil depot is currently situated to turn it into an income-generating site.

Manila Mayor Joseph Estrada said the decision of the Supreme Court (SC) upholding an earlier city ordinance ordering the transfer of the oil depot of Petron, Pilipinas Shell and Chevron in Pandacan by the end of January 2016 will give the city more income.

Should the owner of the site agree to the city government’s plan, Estrada said it would create thousands of jobs and earn for the city millions of pesos in revenues.

Estrada said some investors have proposed to build high-rise buildings, malls and other business establishments in the area.

“The city government will become more stable should that plan push through. We will not only be able to pay our debts in electricity and water, but we will also be able to have more savings that could fund some of our programs for poor Manileños,” Estrada said.

Estrada said he was grateful that the Supreme Court sustained the city ordinance ordering the transfer of the Pandacan oil depot.

“I want the oil depot in Pandacan transferred because it not only poses danger to the residents in the area, but also to our neighboring cities and to Malacañang,” he said.

The SC on Tuesday ordered the transfer of the Pandacan oil depot, which for decades has housed the storage facilities of Petron, Shell and Chevron. The residential areas of Pandacan developed around the depot.

The high court’s order overturned an ordinance of former Manila mayor Alfredo Lim allowing the continued operation of the oil depot in Pandacan.

“My order to transfer the Pandacan oil depot came much earlier than the Supreme Court. But I welcome the Supreme Court’s order because it means that there will be no more stumbling block in the removal of the oil depot from Pandacan,” Estrada said.

Estrada issued in April this year an order to the oil companies to present to the city government their respective comprehensive plans and schedules for the relocation of their depots from Pandacan. He gave a deadline of Jan. 31, 2016.

The Pandacan oil depot supplies roughly 50 percent of the country’s total fuel demand and 100 percent of the transport and industrial sector’s lubricants. More than 1,800 retail stations in Regions 1 to 4 – of which about 500 are in Metro Manila – get their fuel supply from the facility.

The depot, which serves 70 percent of the shipping industry’s fuel needs and 75 percent of the region’s aviation fuel requirements, has been an industrial zone for 90 years.

The cost of transferring

Petilla pointed out the problem of logistics.

“Pandacan supplies Metro Manila and neighboring areas. This means that all the stations will not source their supplies from Batangas. The implication of that is there is a delivery cost for supplies coming from Batangas,” Petilla also said in a television interview.

“They may maintain their prices to be competitive or they may increase to survive. It’s an open competition,” he pointed out.

Petilla said it would be up to the oil firms to appeal the SC’s decision but the order does not come as a surprise as the Pandacan terminal has long been surrounded by controversies amid complaints from nearby residents and environmentalists.

Petilla said the Department of Energy would also require oil companies to submit their contingency plans.

Petron chairman and CEO Ramon Ang said in May that the company has already built alternative depots in Rosario in Cavite, Navotas, Limay in Bataan and Harbor Center as part of its efforts to move out of Pandacan.

Shell also said it would abide by the SC order.

Residents of Pandacan have long been complaining of the risks of having the oil depot in their area.

Last year, the depot was again the center of debates following an oil spill that came from a bunker fuel warehouse in Old Panaderos in Sta. Ana. – Jose Rodel Clapano, Iris Gonzales, Paolo Romero, Evelyn Macairan