Institutionalizing Transparency in the Philippine Downstream Oil Industry

Cher cit TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL 15 P2:02 SENATE RECEN D BY S.B. No. Introduced by Senator WIN GATCHALIAN AN ACT INSTITUTIONALIZING TRANSPARENCY IN THE PHILIPPINE DOWNSTREAM OIL INDUSTRY AND AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8479 OTHERWISE KNOWN AS THE DOWNSTREAM OIL INDUSTRY DEREGULATION ACT EXPLANATORY NOTE Republic Act No. 8479 (RA 8479) otherwise known as the Downstream Oil Industry Deregulation Act of 1998 was passed by Congress with the declared policy of creating a truly competitive market under a regime of fair prices, and promoting and encouraging entry of new participants. RA 8479 mandates the Department of Energy (DOE) to monitor and publish the movement of international and domestic oil prices, i as well as take measures to promote fair trade, and prevent cartelization, monopolies, and unfair competition in the downstream oil industry.? Pursuant to this mandate, the DOE has advocated for greater transparency from oil companies as to how imported petroleum products sold in the domestic market are priced. 3 By amending RA 8479, this proposed legislation institutionalizes transparency in the downstream oil industry by empowering the DOE to mandate oil companies to submit 1 Section 14. RA 8479. 2 Section 7. RA 8479. 3 DOE: Fuel unbundling, strategic oil reserve plan eyed to cushion impact of price hikes. CNN Philippines. 8 March 2022. Available at: https://www.cnnphilippines.com/news/2022/3/8/Department-of-Energy-fuel-unbundling-oil-reserve.html. Accessed on: 28 June 2022.

the actual cost components of their fuel price whenever the average price of Dubai crude oil, based on the Mean of Platts Singapore, is equal to or greater than eighty dollars (USD 80) per barrel. This measure also imposes penalties on oil companies failing to comply with this requirement, and on government officials who disclose proprietary and confidential information contrary to the provisions of the proposed measure. For these reasons, the immediate passage of this measure is sought WIN GATCHALIAN

CHArt C1! TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL 15 P2:02 SENATE RECENT D3 S.B. No. Introduced by SEN. WIN GATCHALIAN AN ACT INSTITUTIONALIZING TRANSPARENCY IN THE PHILIPPINE DOWNSTREAM OIL INDUSTRY AND AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8479 OTHERWISE KNOWN AS THE DOWNSTREAM OIL INDUSTRY DEREGULATION ACT Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

Section 1. Section 14 of Republic Act No. 8479 is hereby amended to read as

2 follows: "Section 14. Monitoring - (a) The DOE shall monitor and publish daily international crude oil prices, as well as follow the movements of domestic oil prices. IN PURSUANCE OF THIS MANDATE, THE DOE SHALL HAVE THE POWER TO REQUIRE DOWNSTREAM OIL INDUSTRY PARTICIPANTS ENGAGED IN THE RETAIL OF PETROLEUM PRODUCTS TO SUBMIT INFORMATION PERTAINING TO THE ACTUAL COST COMPONENTS OF THE PUMP PRICE OF THEIR PETROLEUM PRODUCTS SOLD AT RETAIL FUEL OUTLETS: PROVIDED, THAT THE AVERAGE PRICE OF DUBAI CRUDE OIL, BASED ON THE MEAN OF PLATTS SINGAPORE, FOR THREE (3)

CONSECUTIVE MONTHS IS EQUAL TO OR GREATER THAN EIGHTY DOLLARS (USD 80) PER BARREL: PROVIDED FURTHER, THAT THE COST COMPONENTS SHALLINCLUDE THE FOLLOWING: 1. ACTUAL COST PERTAINING TO INTERNATIONAL CONTENT SUCH AS IMPORT COSTS, FREIGHT COSTS, INSURANCE, AND FOREIGN EXCHANGE COSTS; 2. ACTUAL COST PERTAINING TO GOVERNMENT IMPOSITIONS SUCH IMPORT DUTIES, EXCISE TAXES, VALUE ADDED TAXES, AND OTHER TAXES; 3. ACTUAL COST PERTAINING TO BIOFUEL COST; 4. ACTUAL COST PERTAINING TO OTHER COSTS SUCH AS PORT CHARGES, REFINING COSTS, STORAGE COSTS, HANDLING COSTS, MARKETING COSTS, TRANSSHIPMENT COSTS, AND OTHER COSTS; AND 5. ACTUAL COST PERTAINING TO THE OIL COMPANY'S PROFIT. THE DOE SHALL NOT DISCLOSE ANY PROPRIETARY AND CONFIDENTIAL INFORMATION TO THE PUBLIC AND TO OTHER OIL INDUSTRY PARTICIPANTS UNLESS PRIOR CONSENT OF THE SOURCE OR OWNER OF SUCH INFORMATION HAS BEEN OBTAINED BY THE REQUESTING PARTY: PROVIDED, THAT PRIOR CONSENT SHALL NOT BE REQUIRED IF THE PROPRIETARY AND CONFIDENTIAL INFORMATION IS REQUESTED BY A GOVERNMENT AGENCY IN THE PERFORMANCE OF ITS FUNCTIONS: PROVIDED, FINALLY, THAT THE REQUESTING GOVERNMENT AGENCY SHALL NOT DISCLOSE THE PROPRIETARY AND CONFIDENTIAL INFORMATION TO THE PUBLIC AND TO OTHER OIL INDUSTRY PARTICIPANTS.

It shall likewise monitor the quality of petroleum products and stop the operation of businesses involved in the sale of petroleum products which do not comply with the national standards of quality that are aligned with the national standards/protocols of quality. The Bureau of Product Standards of the DTI, together with the Department of Environment and Natural Resources (DENR), the DOE, the Department of Science and Technology (DOST), representatives of the fuel and automotive industries and the consumers, shall set the specifications for all types of fuel and fuel-related products to improve fuel composition for increased efficiency and reduced emissions. The BPS shall also specify the allowable content of additives in all types of fuels and fuel-related products. XXX"

Section 2. Section 24 of Republic Act No. 8479 is hereby amended to read as

follows: "Section 24. Penal Sanction. - Any person who violates any of the provisions of this Act shall suffer the penalty of three (3) months to one (1) year imprisonment and a fine ranging from Fifty thousand pesos (P 50,000.00) to Three hundred thousand pesos (P 300,000.00): PROVIDED, THAT, ANY PARTICIPANT IN THE DOWNSTREAM OIL INDUSTRY ENGAGED IN THE RETAIL OF PETROLEUM PRODUCTS WHO SHALL FAIL TO COMPLY WITH THE REQUIREMENT TO SUBMIT INFORMATION PURSUANT TO THE PROVISIONS OF SECTION 14 (A) OF THIS ACT SHALL BE SUBJECT TO AN ADMINISTRATIVE PENALTY EQUIVALENT TO A FINE RANGING FROM A MINIMUM OF FIVE MILLION PESOS (PHP 5,000,000.00) TO A MAXIMUM OF FIFTY MILLION PESOS (PHP

50,000,000.00): PROVIDED, FURTHER, THAT ANY GOVERNMENT OFFICIAL WHO SHALL DISCLOSE PROPRIETARY AND CONFIDENTIAL INFORMATION CONTRARY TO THE PROVISIONS OF SECTION 14 (A) OF THIS ACT SHALL BE SUBJECT TO AN ADMINISTRATIVE PENALTY EQUIVALENT TO A FINE NOT EXCEEDING THE EQUIVALENT OF SIX (6) MONTHS' SALARY OR SUSPENSION NOT EXCEEDING ONE (1) YEAR, OR REMOVAL DEPENDING ON THE GRAVITY OF THE OFFENSE."

Section 3. Separability Clause. - Should any provision of this Act be held

unconstitutional, no other provision hereof shall be affected thereby.

Section 4. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in at least two (2) newspapers of general circulation. Approved,