Cheaper diesel from Russia for stock, fuel vouchers for jeepneys to soften rising costs

DOE Undersec. Felix Fuentebella (Photo:

By Lara Climaco | FilAm Star Correspondent

The first shipment of cheap diesel imports under the Strategic Petroleum Reserve (SPR) program recently activated by the Department of Energy (DoE) is expected to come in by the end of the month, the agency announced on June 2 amid increasing agitation over volatile oil prices.

“We are looking at other countries. Russia is just an option. The Philippine National Oil Company-Exploration Corp. (PNOC-EC) expects to receive the first shipment by end of June,” DoE Sec. Alfonso Cusi was quoted in the agency press release.

Earlier, Cusi authorize PNOC-EC, a state-owned firm which he chairs, “to prepare for oil trading and retail to provide competition to existing oil industry players and pacify domestic oil prices,” as part of the SPR program, which the agency has been studying since 2003.

This directive marks the first time that the government will be intervening in the market with its own fuel supply since the oil industry was de-regulated in 1998.

“The government is aware of the country’s vulnerabilities to abrupt changes in the international oil situation and impending threats on the same, hence we are formulating various strategies to address those vulnerabilities to cushion the impact for consumers,” Cusi was quoted last May 29 when DoE announced that SPR had been given the go-ahead.

The stockpiling program looks to source fuel from non-members of the Organization of Petroleum Exporting Countries (OPEC) — such as Russia, Thailand and the United States — on a government-to-government procurement basis. Storage facilities in Subic and Quezon — both in Luzon, and the Phividec Complex in Mindanao are being eyed for the SPR.

At a press briefing in Bontoc, Mountain Province last May 29, Presidential Spokesperson Harry Roque said at least two retailers, Petron and Phoenix Petroleum, have expressed willingness to sell diesel at minimal margins.

“I will take the liberty of saying that I’ve talked to at least two companies, Petron and Phoenix, and well, Mr. Ramon Ang and Mr. Dennis Uy said that if we are able to import cheap diesel, they will sell it more or less at the price that we’re able to import it, plus administrative cost,” Roque said.

The landed cost of diesel from Russia is estimated to be between PHP 25 and PHP 27 per liter, Roque revealed. This is about 70 to 80 percent lower than the average prevailing retail price of diesel.

“Pero mukhang tinitingnan na pupuwedeng diesel from Russia, pero baka kinakailangan pang i-subject daw to additional processing sa Singapore before we can use Russian diesel. But at half the price, maski may additional cost pa ang re-processing sa Singapore, I think it would be a lot cheaper than current prices of diesel,” Roque said.

At a separate briefing in Malacañang on May 31, DoE Undersecretary and Spokesperson Felix William Fuentebella noted that the oil stockpiling program will not likely have immediate effect on prices.

“Kaya nga kailangan mag-scrutinize tayo kung talagang advantageous siya. Pero advantageous na siya at one point — energy supply security — so, nandoon siya. Kung price ang pinaguusapan natin, hindi siya immediate,” Fuentebella said.

He added that the DoE is working with the Department of Transportation (DoTR) and the Department of Budget and Management on providing fuel vouchers for public utility vehicles, as called for by Section 82 of the Tax Reform for Acceleration and Inclusion or the TRAIN Act.

DoTR expects to issue fuel voucher guidelines by the end of the month. About 179,000 jeepney franchise holders are targeted for the subsidy, which has a budget of PHP 977 million for this year, according to testimony by a DOTr representative at the June 1 hearing of the Senate committee on public services.

DOE also plans to require oil industry players to unbundle their prices so that consumers are better informed about what they are paying for. TRAIN, which took effect January this year, is being blamed for current runaway prices since it imposed higher excise tax on fuel, the price of which dictates the cost of many other things.

“International geo-political developments, which include U.S. sanctions on Iran, the drop in OPEC production levels and the political changes unfolding in Venezuela have resulted in the recent up-trend in oil prices for the past weeks,” according to DoE.

Local oil companies slashed pump prices at the start of this month, giving consumers respite after three straight weeks of price surges.