Manila: A bill has been filed at the Senate seeking to establish a permanent fuel-security framework that would strengthen government monitoring of the oil market and provide temporary measures during fuel emergencies.
According to Philippines News Agency, Senator Loren Legarda, the bill's author, stated that the government must closely monitor the fuel market under normal conditions and act quickly when prices reach critical levels. Under Senate Bill 2435, or the proposed Philippine Fuel Security and Strategic Petroleum Reserve Act, the government would have clear but temporary powers during a declared fuel emergency while strengthening regular monitoring and verification mechanisms.
The proposal responds to gaps exposed during the recent oil crisis and Senate PROTECT Committee hearings, where questions arose over fuel inventories, actual acquisition costs, industry margins, and the basis for price adjustments. 'During the hearings, we saw how quickly prices could rise, while the government and the public had limited information on the actual cost of fuel already in the country, existing inventories, industry margins, and the basis for each adjustment. Families felt the increase immediately, but many basic questions could not be answered with the same speed,' Legarda said in a statement Wednesday.
Oil companies explained during the hearings that pump prices may be based on replacement cost, or the expected cost of the next shipment, even when the fuel being sold was acquired earlier at a lower price. The government, however, did not always have ready access to records needed to independently verify the costs and margins involved, Legarda said.
Under the bill, the Department of Energy (DOE) would continuously monitor fuel supply, inventories, acquisition and landed costs, price movements, distribution, and market behavior. When verification is necessary, the DOE may require contracts, invoices, bills of lading, import entries, and documents covering freight, insurance, storage, and hauling costs.
The authority would apply even without a declared emergency but would be limited to monitoring, verification, planning, consumer protection, and enforcement. It would not constitute ordinary price control, while commercially sensitive information would remain confidential. During a declared fuel emergency, the DOE may impose temporary pricing and supply measures, including price or margin limits, priority allocation for essential services, inventory requirements, distribution directives, and emergency procurement.
The DOE may also limit, adjust, suspend, or require verification of replacement-cost pricing when its continued use is likely to result in premature price increases, delayed rollbacks, excessive margins, or market abuse. An emergency pricing method may instead consider actual acquisition cost, average inventory cost, landed cost, reasonable logistics expenses, and reasonable margins.
The measure also addresses questions raised during the hearings about additional government revenues generated when higher fuel prices increase value-added tax (VAT) and other fuel-related collections. It requires the publication of a Fuel Tax Transparency Report comparing actual collections with official revenue assumptions.
If substantial additional or windfall collections are identified, the Department of Finance (DOF) and the Department of Budget and Management (DBM) must recommend appropriate relief. These may include temporary fuel-tax reductions, public transport support, assistance for farmers and fisherfolk, food logistics, or disaster response.
The bill also seeks to establish a Strategic Petroleum Reserve for major national supply disruptions and a Government Operational Fuel Reserve to keep essential services running. The DOE would lead the program, while the Philippine National Oil Company would serve as the state's fuel-security agent.
Source: Philippines News Agency
