DOE conducts multi-sec advocacy on downstream oil industryZAMBOANGA CITY - Officials from the Energy Department arrived here for the conduct of a multi-sector advocacy campaign on Downstream Oil Industry (DOI) at the Garden Orchid Hotel yesterday. The campaign aimed to create and capacitate pool of government communicators including media practitioners that would serve as agents of information dissemination of the benefits of DOI implementation. More than a hundred participants came to attend and actively participate in this information drive. The whole day advocacy campaign tackled subjects and issues pertaining to Liquefied Petroleum Products (LPP) and the Liquefied Petroleum Gas (LPG), laws, rules and regulations among others in consonance with the administration’s drive in “ensuring a competitive market under a regime of fair prices, adequate and continuous

supply of environmentally-clean and high quality petroleum products.” The activity also sought to discuss the salient provisions of RA 8479 otherwise known as the “Downstream Oil Industry Deregulation Act of 1998.” RA 8479 provides that it shall be the policy of the state to liberalize and deregulate the downstream oil industry in order to ensure a truly competitive market and that the State shall promote and encourage the entry of new participants in the downstream oil industry, and introduce adequate measures to ensure the attainment of these goals. The whole day activity was divided into two sessions. The morning session was a

briefing on Downstream Oil Industry with government information officers and media practitioners while the afternoon session centered on LPP and LPG Rules with local chief executives, licensing officers, city/municipal treasurer, Bureau of Fire Protection (BFP) heads and others. Specifically the discussions will focus on LPG Regulatory Framework /Auto LPG, LPP retail rules, basic principle on metrology, basic principle in calibration and sealing of mechanical pump After the briefing, the DOE went the nearest gasoline station for the conduct of hands-on calibration of dispensing pumps. (PIA9)

By Jocelyn P. Alvarez

DOE conducts multi-sec advocacy on downstream oil industry

Multi-Sectoral Advocacy Campaign on Downstream Oil Industry

Registration of DOE-MSA participants at Garden Orchid Hotel, Zamboanga City on September 5, 2013

5 September 2013, 9am-5pmGarden Orchid Hotel, Zamboanga City

Briefing on Liquid Petroleum Products andLiquefied Petroleum Gas Laws, Rules and Regulations

Welcome Remarks given by Philippine Information Agency - IX Regional Director Noemi B. Edaga. She expressed her gratitude over the presence of the participants from the media and local oil industry stakeholders including representatives from the local government unites in the region. She cited the importance of their participation in such an endeavour to help them further understand the mechanics and systems operating behind this multi-million-peso industry. She hopes that after the activity, the stakeholders will properly disseminate the information they have gathered to their municipalities and communities, bringing forth informed public opinion to further develop and strengthen the oil industry in their areas.

The following are a run-down of the discussions:

Downstream Oil Industry Overview, presented by Director Zenaida Y. Monsada of the Oil Industry and Management Bureau of the Department of Energy. The following items were discussed in detail:

- The history of the oil industry in the Philippines

- All oil companies must have a permit to operate issued by the DOE

- There is an unfair expectation from the public with regards as to the scope of operations of the DOE, particularly in believ ingthattheDOEisresponsiblefor“fixingtheprices”.Theagencyisonlytaskedtomonitorthequalityandquantity oftheproducts.Thereareresearchlaboratoriesthattestthequalityandquantityoftheproducts.

- Oil Deregulation Law

- Onpowergeneration,oilequalsonly4%ofthetotalconsumption.

- Upstream oil industry refers to the locating of oil in its natural deposits, and extracting them therefrom. Downstream refers to transporting the extracted oil to the retailers and consumers – ultimately down to the gasoline stations.

- Most of RP’s oil come from Shell and Petron in Batangas. The oil is delivered by tankers, however there is a pending pipeline project which is yet to be approved by the Supreme Court.

- Dieselaccountsforthebiggestshareinconsumption.70%oftheoilisusedmainlyfortransportationfuel.Thisisperhapsthe reason why there are many irate drivers and motorists.

- 75%oftheoilisconsumedinLuzon,15%inMindanaoand13.9%inVisayas.Thisvariableforthisquantityistheamountof agricultural products that need transport present per island cluster.

- ThekeyplayersinRPimportthegasolinebecausewedonothavetherefineriestoprocessthem.

- Sincetheoilindustrywasderegulated,theindustryhasspentPhp43Billion.

- There is an unfair expectation from the public with regards as to the scope of operations of the DOE, particularly in believing that the DOE isresponsiblefor“fixingtheprices”.Theagencyisonlytaskedtomonitorthequalityandquantity oftheproducts.Thereareresearchlaboratoriesthattestthequalityandquantityoftheproducts.

- Oil Deregulation Law

- Onpowergeneration,oilequalsonly4%ofthetotalconsumption.

- Upstream oil industry refers to the locating of oil in its natural deposits, and extracting them therefrom. Downstream refers to transporting the extracted oil to the retailers and consumers – ultimately down to the gasoline stations.

- Most of RP’s oil come from Shell and Petron in Batangas. The oil is delivered by tankers, however there is a pending pipeline project which is yet to be approved by the Supreme Court.

- Dieselaccountsforthebiggestshareinconsumption.70%oftheoilisusedmainlyfortransportationfuel.Thisisperhapsthe reason why there are many irate drivers and motorists.

- 75%oftheoilisconsumedinLuzon,15%inMindanaoand13.9%inVisayas.Thisvariableforthisquantityistheamountof agricultural products that need transport present per island cluster.

- ThekeyplayersinRPimportthegasolinebecausewedonothavetherefineriestoprocessthem.

- Sincetheoilindustrywasderegulated,theindustryhasspentPhp43Billion.

- Issues and concerns with regards to pricing. Why is oil expensive? Because, > It is imported > Oil is a non-renewable resource > Prices are used to manage demand (Middle East oil giants control the prices) > Speculations on rapidly diminishing supply due to expectations of war, and other instances, > Stiffer pollution prevention and management, as well as taxation.

- Comparative prices. More developed countries have higher taxes for oil; however, the governments of most Asian countries subsidizetheoilprices.

- Dynamic nature of oil prices.The primary reason why oil prices either decrease or increase is due to the basics of supply and demand. Also, geopolitical factors can also be taken into consideration.

- Disparity of oil prices in every locality. Prices may vary among different towns, considering that operational expenses while transporting the product from one town to the other also vary (i.e.theincidenceofbadroads,“tong”,andothercosts).

- DOE Initiatives. > Regular public updating through price posting on the website (doe.gov.ph) > Calibration of mobile testing facilities all over the country > Mobile inspections in coordination with the Bureau of Fire Protection (BFP) and Department of Trade and Industry (DTI).

- Challenges. TheDOEdoesnothaveregionaloffices,andthe workforce is very limited compared to other agencies. This becomes an issue with regards to their close monitoring of the prices. Their immediate areas of concern are key cities.

- Retail rules for the operation of gas stations. > Bawal ang above-ground tank > Bawal ang bote-bote baka masunog, > Bawal ang mobile stations > Bawal ang underdelivery > Bawal ang adulteration.

- LGUs need to monitor the pump meters of the gas stations. If they donothavetechnicalknowledgeandthetools,theycanrequestfor assistance from the DOE. There have been many violations done by gas stations such as the tinting of gasoline to claim having a high octane content, and LGUs should take charge of monitoring such incidents.

- OnLiquefiedPetroleumGas(LPGs).The LPG demand nowadays is decreasing. There are many LPG players now sprouting in Mindanao. Meanwhile,itwasemphasizedthatrefillingofLPGtanksisstrictly prohibited. When transporting LPG tanks, they should not be placed sideways, they should always be upright. LPG tanks should never be transported inside closed trucks as they may explode.

- The Energy Regulatory Board is the agency responsible for setting the prices of oil products, and not the DOE. What the DOE does is ensure that there is a supply, that the prices are reasonable and to improve the qualityoffuels,aswellasexploreothersourcesforalternativefuel. The DOE encourages fair competition among the industry players.

- DOE’s appeal. Director Monsada appealed to the LGUs to inspect the retailers and gasoline stations prior to granting them permit to operate and to be vigilant with regards to possible violations. She likewise advised the stakeholders andthegeneralpublictobeequallyvigilantinreportingtheretailers’ andgasstationoperators’violationstotheiroffice. Stakeholders may also issue suggestions to further improve the delivery of services in the oil industry.

Q: Inmostcases,vehiclesarerefilledwithgaseventhoughtherearepassengers.Aparticipantsuggestedthatit should be a business practice to stop this incident, especially with the tricycles because this poses a health hazard with the persons inside.A: Medyo mahirap. We have standards in the gasoline stations to reduce the exposure to fumes. We will bring this to the attention of the business operators.

Q: Out of 4 gas stations in Isabela City, only 1 is compliant. Yung pag-aari ng vice mayor. Baka wala silang ` calibrating bucket.A: Angcalibratingbucket,requiredsalahat,althoughhindilahatmeron.Dapatitoupdatedangcalibrationbecauseof normal wear and tear.Before starting selling,they should always calibrate.

Q: Your topic eases publicstress because of oil price hike. Madaling ma-convince ang public sa negative implications ofoilpricehike.Weneedanintensifiedinformationcampaign.A: Dir. Monsada: Bago lang kami nag-umpisa sa IECs. Hindi alam ng tao ang ginagawa ng DOE. Gustohin man namin, maydifficulty.Wegototheofficeofthemayortoinformhimaboutusandourmandate.Nasafirstroundpakami, umiikot kame. Depende rin ito sa invitation ng LGU. Pupuntahan namin pero hindi agad-agad;.we will be having website langis.org.

Q: Nahohoard ba din yung oil? What are our countermeasures?A: According to the law: Hoarding is refusal to sell at a time increasing ang price and to somebody who offers to buy in cash.Weencouragethemtohaveinventory.Wehaverequirement15daysinventorysamgaplayersexceptrefinerka which is 30 days. This will only be hoarding when tumaas ang presyo. Meron provisions in the law against hoarding.

Open Forum(Question and Answer)

Q: Inmostcases,vehiclesarerefilledwithgaseventhoughtherearepassengers.Aparticipantsuggestedthatit should be a business practice to stop this incident, especially with the tricycles because this poses a health hazard with the persons inside.A: Medyo mahirap. We have standards in the gasoline stations to reduce the exposure to fumes. We will bring this to the attention of the business operators.

Q: Out of 4 gas stations in Isabela City, only 1 is compliant. Yung pag-aari ng vice mayor. Baka wala silang ` calibrating bucket.A: Angcalibratingbucket,requiredsalahat,althoughhindilahatmeron.Dapatitoupdatedangcalibrationbecauseof normal wear and tear.Before starting selling,they should always calibrate.

Q: Your topic eases publicstress because of oil price hike. Madaling ma-convince ang public sa negative implications ofoilpricehike.Weneedanintensifiedinformationcampaign.A: Dir. Monsada: Bago lang kami nag-umpisa sa IECs. Hindi alam ng tao ang ginagawa ng DOE. Gustohin man namin, maydifficulty.Wegototheofficeofthemayortoinformhimaboutusandourmandate.Nasafirstroundpakami, umiikot kame. Depende rin ito sa invitation ng LGU. Pupuntahan namin pero hindi agad-agad;.we will be having website langis.org.

Q: Nahohoard ba din yung oil? What are our countermeasures?A: According to the law: Hoarding is refusal to sell at a time increasing ang price and to somebody who offers to buy in cash.Weencouragethemtohaveinventory.Wehaverequirement15daysinventorysamgaplayersexceptrefinerka which is 30 days. This will only be hoarding when tumaas ang presyo. Meron provisions in the law against hoarding.

Open Forum

Q: Why is the increase of price usually higher than the decrease? Why is increase more frequent than decrease?A: Increase/decrease is not at the discretion of the local companies. Pinaparusahan ang dealer if hindi ka nagrollback. Sisingilin ka. Or tinatanggal ka. because their contracts are not long- term. Madali na lang ngayon magsumbong sa text or email. You can report to us so we can report to the dealers.

Q: Director Raymond Domingo, NYC-IX: In Zambo, we have uniform prices. Price of oil is 4-5pesos higher than in Manila. Mas malaki ang price sa Zambo kaysa sa Davao dahil mas malayo ba yung davao?A: Thereareotherfactors.Nextyear,wewillreallylookintothesituationintheotherareas.Wecanonlyseealimited picture. Hopefully by next year madisaggregate na namin para makita ano ang rason bakit malaki ang presyo. Mag-cocompute kami sa pricing sa iba-ibang areas. Lahat ng municipalities may price for themselves. We monitor how many gas stations are already including the new players.

Q: DTI representative: Our policy is to ensure fair prices of commodities. Petroleum products are sourced from Singapore. The small player can afford to sell lower prices than the big players. 1-2pesos higher. In fact, small players have very limited resources, but they can afford to lower their prices. Why can they do this but not t he big companies?A: The big companies have standards from their mother companies. Mas mataas ang operating costs nila as well as overhead costs. Pag bago at small, they really make the prices small parang promo. Dapat mas mura sila para makapasok sila sa competition. However, in some areas, the major players match the new ones in terms of pricing.

Q: Jayvee Faustino, Zamboanga Today: In determining a reasonable price, we are considering all the factors. Kasali baangprofitmargin?Hanggangsaanlangpuedengitaasangprice?Dowehavethis?A: When we issue notice of prices, we do not adjust the price. The oil companies talaga (the ones in-charge). They only notify usby text. Basis is price of previous week. Increase usually is on Tuesdays. Pag rollback, Sabado or Linggo. Pag increase, nag-aantayan sila.

Q: Howbigistheprofitoftheoilcompanies?Forexample46pesos,howmuchangprofit?Istherea computation?Howcanwehaveafairpriceifiba-ibaangpricing?A: Thegovernmentdoesnotsettheprice.It’safreemarket.Importeratrefinermagkaibasilangprices.

Q: Municipality of Ramon Magsaysay representative: On LPGs, upon inspection, “hindi korek” ang calibration. In such a situation, sellers or retailers are only victims of the company because they are buying this from the company. Maybe this law is very unfair to the dealers – because hindi nila alam kulang ang timbang ng kanilang binibili.Ang nakakaalam lang ang end users. A: We will go after the mother companies. The mother company should be liable as well as the retail outlets.

Q: Is there a local monitoring mechanisms? Lugi ang mga consumers. Or is there a reporting mechanism.A: We have text hotline for complaints. Puede rin sa i-course ang complain sa DTI.

Q: DTI representative: Is there no government agency that checks if the oil selling price is similar to its real value in themarket?Ineconomicswehavemarketindexprice.A: The law will give the parameters of what is fair. We do not currently have a law to set margins of prices. We are asking for a law. The DOE Secretary is instructing the oil companies to conduct intensive IEC campaign. We will come up with brochures with PIA so the public will be aware about the violations.

TheLGPRegulatoryFramework/AutoLPGdiscussedbyEngr.AlexRayos,OIC-Division Chief, RMMSCD of the Department of Energy. The following items were discussed:

- WheneverthereisacomplaintonLPGtanks,consumersmaylodgethesamewiththeDTI.Nootherpersonisauthorizedto tamper or mend with the LPG tank.

- Laws on LPG regulation.

- Anewbillhasbeenfiledinthe16thCongress,purposelytogivemorepowertotheDOEandDTIintermsofmanagingthe LPG regulation. In this law, the DOE can shut down establishments violating the law.

- On tank ownership.The law states that the brand name is the tank’s owner. Consumers are not the owner, they are merelyrentingthetanksfortheircontents.Theowners,asdefinedbylawhavethedutytomaintainthetanks.If in case there are accidents, they shall be liable for them. Consumers can switch brands whenever they please.Onlythetankownershavetheauthoritytorefillthetanks.Thepolicecanactoncertain knownviolations.Thesetanks,uponbeingempty,shouldgobacktotheirrefillingstations.Consumers are advised not to purchase tanks without a seal.

- The same appeal to the LGUs was shared by Engr. Rayos – that LGUs should maintain and illustrate a sense of accountability and responsibility over the operation and monitoring of private retailers. However, this appeal was also re-echoed to the consuming public – they also have the responsibility to check for any violations prior to purchasing the LPG tanks. Unsealed tanks should not be purchased. Companies have the responsibility of ensuringthatfilledtanksaresealed.Everyviolationhasacorrespondingpenalty.

Inherdiscussion,Ms.Syemphasizedthatthecontinuousillegalbote-boteoperationsdeprivetheconsumingpublicoftheproducts’truequantity,ineffect,cheatingthepublic.Thecontinuousoperationofthisillegalpracticeisveryriskyandvolatile.Shealsodis-cussedontherequirementsneededtobesubmittedbyretailerspriortobeingissuedacertificatetooperate.

The DOE sees to it that the calibrating machines themselves should be regularly checked since they themselves cannot be completely accurateiftheyarealreadyout-datedandoverused.Sheemphasizedthatthelocalgovernments’supportisneededinorderforDOEtoperform its mandate.

Basic Principle on Metrology discussed by Mr. Jose Marco Latosa, Science Research Specialist of the Department of Science and Technology. Mr. Latosa’s discussion focused primarily on measurement of oil productquantitiesandtheneedto have an accurate measure-mentthereof.Heemphasizedthat the industry uses a stan-dardizedmetrologicalsystemallthroughout the country.

LPG retail rules discussed by Ms. Delia Sy, Senior Science Research Specialist of the Department of Energy – Mindanao FieldOffice.

Mr. Art Valerio of the CSI Global Services Corporation then discussed the basic principles in calibration and the sealing of the mechanical pump in detail. Towards the end of the activity, the participants were brought to LandOil Gasoline Station in Gov. Camins Avenue for an actual demonstration.

Q: MunicipalityofRamonMagsaysayrepresentative:Howcanwemonitorillegalretailers/refillers?A: Malalaman ninyo agad sa selyo. Dapat ang brand na nakatatak sa tank yun din ang nasa seal.

Q: DTIrepresentativefromZamboangaSibugay:Php500isequivalentto11.76liters,butbuyinginagasstationin Sibugay,thisamounthasonlycovered.73kilometers.Pleaseexplain.A: There either might be a problem with the gas pump, or with the vehicle itself.

Q: Municipality of RT Lim, Zamboanga Sibugay representative: If in case the retailers will opt to have a new supplier,willtheystillneedtosecureanewcertificateofcompliance?A: The COC is 3 valid for years.Hindi na kailangang kumuha ng bagong COC. Sa renewal na i-specify ang bagong supplier.

Q: Municipality of Ramon Magsaysay representative: Can the LGU operate a gas station business? The LGU of RM was denied such. We went into a joint venture between RM employees. A: The LGU can operate. However, it could have been misunderstood. The LGU can deny this application, but not the DOE. Thisactionmayhavebeenpoliticalinnature.Infact,LGUscanhaveaPhp5-10Millionloanpergasstationwith6% interest for 7 years.

Q: KimMateofromtheCityTreasurer’sOfficeofZamboangaCity:Wehaveourowncalibrationbucket,wehave already checked it 3 times. After 3 attempts not lower than -50 ang result. Can latest models adjust pumps without manually calibrating the inside of the machine?A: Yes it can be done. It’s a new trend.

Open Forum(Question and Answer)

Q: Carmen Laguardia, DTI representative of IsabelaCity: Karamihan pag maycomplaints, takbuhan nila ang DTI. We cannot avoid them, even if we do not have jurisdiction.We receive the complaints, then endorse them to concernedagency.ButwhataboutcomplaintsonLPGnakulangsatimbang?Malayoofficeninyo(DOE).How longwillwehavetowaitforanaction?Whatactionscanweexpect?Kungpuedekaminalangsanamag-aksyon. Pano po pag yung consumer mismo pumunta at magreklamo?A: YoucanendorseittoourMindanaofieldofficeinDavao.Hindipuedeyungdtilangumaksyon.Wehavecommon functionsinnewbill.ButthereareactionsthatonlytheDOEcando.Weconductjointinspection,weconfiscate the defective LPGs on site. Inform niyo lang po ang DOE.

Q: Isabela City Administrator: What we need is immediate action, ang layo ng Davao. Nawawala na kami ng gana to conduct monitoring on pricing, quality, quantity. Only 1 out of 4 is complying In Isabela.Can there be a system, like on the phone so we can resolve this within a day?A: Youhavejurisdictiononthecylinders.Youcanconfiscateiftheyaresubstandard.Youcanalsocalldoewith regards to gas station under-deliveries. But you can close them down, selyohan ninyo. But please inform theDavaoFieldOffice.

Closing remarks. Thepanellistshaveallemphasizedthatboththebusinesspersonsandtheconsumershavethesameresponsibility in ensuring that the oil products should meet the standards by being vigilant. These standards were set for a reason, and that is to ensure public safety and that the public is not cheated. The DOE is always open to complaints and even the DTI and the local government units can receive and forward the complaints to the DOE.

Meanwhile,Ms.DeliaSyreiteratedthatalldocumentaryrequirementsfromtheretailersshouldbepreparedpriortorenewaloftheircertificatesofcompliance.SheaddedthattheymaycheckadditionalinformationfromtheDOEofficialwebsite:doe.gov.ph.ItwasalsoemphasizedthatthosewhobuycalibratingbucketsshouldfirsthavethemcheckedwiththeDOSTtoensurethattheyarecalibratedwell.Iftheyhaveanyquestionswithregardstothecalibratingbuckets,oranyrelatedinquiries,theymayvisittheDOST.

Towards the end of the program, Dir. Zenaida Monsada shared that the downstream oil industry affects many aspects of society, not just the investors and consumers, and also the government. LGUs should be the frontline service providers in ensuring that oil businessesintheirlocalityarecomplianttothelaw.ShehademphasizedthattheLGUissupreme,andtheycanmonitorandimposeon businesses within their own jurisdiction. LGUs can even impose sanctions, however, it is to be noted that the DOE will always be available whenever their technical assistance is needed.

Dir. Monsada announced that in the coming months, the DOE will be distributing calibrating buckets to the LGUs, and in coordination withthePIA,theywillconductanevenmoreintensifiedinformationdisseminationtopenetratethegeneralpublic.

Photo GalleryPhilippine Information Agency Region - IX staff meeting with Regional Director Noemi B. Edaga

The arrival of DOE staff in Zamboanga International Airport, Zamboanga City on September 4, 2013.

DOE and PIA9 luncheon meeting in Palmera’s Restuarant, ZamboangaCityonSeptember4,2013.

VenueinGarden Orchid, Zamboanga City

DOE Backdrop

Registration of guests and participants

Open Forum

Media InterviewACTUAL DEMONSTRATION LandOil Gasoline Station along Gov. Camins Avenue, Zamboanga City.

Media Interview

Documentation

MasterofCeremoniesReneV.Carbayas PIA9 staff compose messages for text blast.

PIA9 staff and a hired videographer document the proceedings of the activity.

Submitted by:

NOEMI G. BERNARDINO-EDAGA Regional Director

Philippine Information Agency Region - IX