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PH plans to bring in cheaper diesel from SG, not Russia anymore

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The Department of Energy (DOE) and Philippine National Oil Company-Exploration Corp. (PNOC-EC) have been making public announcements that they can finally inject into the market diesel products that will be cheaper by P5.00 to P8.00 per liter. However, they did not explain on how these would affect the prices of commodities on the level of the consumers, such as the jeepneys and the targeted industries.

In the previous pronouncement, President Rodrigo Duterte gave his green light to the Philippine National Oil Co.-Exploration Corp. on the stockpiling of diesel for energy security. But he wants the diesel to be sourced at Russia as it would be more cheaper because Russia is not part of the Organization of the Petroleum Exporting Countries (Opec) that is perceived to manipulate their prices according to PNOC-EC President Pedro Aquino .

However, the government suddenly decided now to import cheap diesel from Singapore, no longer Russia.

Meanwhile Energy Chief Alfonso Cusi also qualified that the diesel will be of Euro-4 and Euro-5 quality, and not Euro-2 which had been the preference set by the energy department in the past months.

“Definitely, it’s not Euro-2, it’s Euro 4 and 5,” the Cusi said. But details on the lower-priced procurement as well as system of distribution have been delegated to the PNOC-EC and the DOE’s Oil Industry Management Bureau (OIMB).

Both PNOC-EC and DOE cannot also explain where the discount level would come from. Is it from the procurement, logistics cost and taxes or the final cost as delivered to consumers in the prevailing market pump prices.

Many observers in the Industry said that the P5.00 to P8.00 per liter discount will be warranted if PNOC-EC will not be paying excise taxes, duties and value added tax. But this move could be igniting anti-competitive behavior which is a violation of the law; or if it is a “distressed cargo” or shipment that nobody would want because the products are off-specifications.

The PNOC-EC devealed that they would not disclose further details on the importation. The only information PNOC-EC revealed was the P2.0 billion budget for 50 million liters of diesel to be brought into the country. It has also been insisting for months on the planned importation of diesel despite caution raised by many legislators on that particular procurement undertaking. Apart from that, our state-run form does not have any known distribution network of fuel at retail point and how it will eventually sell diesel to the end-consumers is being anticipated.

While Aquino said it will be done through regional networks, a lot of people in the industry are wary because they have not given a categorical reply on how they could get the commodity down to end-users, mainly the public utility vehicles.

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