Diesel price hike by November

Diesel users in Metro Manila, including jeepneys and buses, will shoulder another P0.10 to P0.40 price increase by November this year due to the early implementation of the reduced sulfur content on automotive diesel by 75 percent from 0.2 percent to 0.05 percent.

Oil companies have voluntarily agreed to accelerate the use of lower sulfur diesel in about 600 oil retail stations in Metro Manila starting Nov. 1, two months earlier than the Jan. 1, 2004 original schedule under Republic Act 8749, or the Philippine Clean Air Act of 1999.

The Department of Energy (DOE) and the Department of Environment and Natural Resources (DENR) signed a covenant with the three major oil companies — Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc., other new oil players — Totalfinaelf Philippines Inc., Eastern Petroleum Corp., Unioil, Seaoil, Flying V, Filpride Energy Corp., Subic Bay Distribution Inc., and representatives from the Philippine Institute of Petroleum and Independent Petroleum Companies Association, to accelerate the use of low sulfur diesel in the metropolis.

Energy Secretary Vincent Perez said "with the efforts and investments being poured in such as CAA compliant fuel and fuel-related products, it is clear that the balance between development and environmental protection is being progressively met by the government and the private sector," he said.

Environment Secretary Elisea Gozun, for her part, said the estimated impact on health and economy of the dirty air for Metro Manila, Baguio and Cebu alone, amounts to $400 million a year. "This is relatively big compared to a few centavos that we have to bear to have a clean air," she said.

EPC chairman Fernando Martinez said the estimated impact of the accelerated compliance will not necessarily mean that oil firms will immediately pass on the cost to consumers.

Flying V spokesman Macky Lopez, on the other hand, said the passing on the cost of CAA compliance to consumers will depend on the market and competition. "It will hinge on the price of oil we will import. If the price of diesel during that time is low, we don’t have to pass it on to consumers immediately.

Petron corporate communications manager Virginia Ruivivar said so far, the company is importing some 30 to 40 percent of its oil requirement from abroad. Petron is constructing a P5 billion worth of refining facility (isomerization and hydrotreater) to become the only oil firm to produce CAA-compliant fuel in the country.

Other oil firms have opted to either import the CAA-compliant fuel or blending raw materials to be able to comply with the clean air law.

In Jan. 1, 2003, oil companies complied with and implemented the selling of unleaded gasoline with 35 percent aromatics and two percent benzene contents despite the fact that among Asian countries, only Thailand and South Korea have the refinery capability to produce such specifications. Local refiners would still have to upgrade their respective facilities to meet the specific requirements.