DOE Saves Billions for Consumers with Tighter Watch on TRAIN Oil Excise Taxes

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The Department of Energy (DOE) saved consumers billions of pesos with its efforts to ensure that the imposition of the new excise tax rates on petroleum products under the Tax Reform for Acceleration and Inclusion (TRAIN) Law in the industry would be fairly and responsibly implemented by all the participants.

The DOE estimates that its actions saved consumers around P2.64 billion for liquid petroleum fuels, and P58.4 million from liquid petroleum gas (LPG).

Long before the onset of the TRAIN law's implementation, the DOE, through its Oil Industry Management Bureau, acted to safeguard consumers' welfare. These included meeting the industry stakeholders for guidelines, providing advisories to the public, conducting random inspections, data gathering and reviewing the inventory, examining the paper trail, as well as issuing show-cause orders to retail outlets that raised prices before January 15, the projected average period for exhaustion of old inventory.

“We implemented a lot of initiatives for the smooth implementation of TRAIN Law, because we did not want consumers to be compromised. The goal is to protect everyone, especially the consumers,” Secretary Alfonso G. Cusi said.

The DOE directed oil companies to: 1) submit duly notarized inventory report as of 31 December 2017, on per depot and per product basis for effective monitoring; 2) impose the excise tax under TRAIN only after the 31 December 2017 stocks of finished products are fully exhausted; 3) submit the daily summary of withdrawal starting 1 January 2018 until the depletion of the declared inventory as of 31 December 2017, supported by the Official Registry Book (ORB); and 4) advise their retailers to post in a conspicuous area, for transparency, notice of new excise tax implementation under the TRAIN in a signage measuring 1 meter by 1 meter in size.

The DOE responded to initial reports of early implementation of the TRAIN Law by some liquid fuel retail outlets (gas stations). Thus, a number of outlets were issued show-cause orders directing them to explain in writing why they had already imposed the new excise tax rates.

To validate whether the implementation of the TRAIN Law was proper, the DOE closely examined the supply chain, starting with the scrutiny of the dates of the source depot run-out vis-à-vis the implementation dates of price increases due to TRAIN; the latter being validated from the delivery invoices submitted. The delivery dates of the excised products were then compared to the implementation dates of the price increase in the outlet or gas station involved.

Despite the big number of retail outlets nationwide for validation, the requirements of the DOE Secretary were complied with, along with the order of the Senate, through Committee on Energy Chair Senator Sherwin T. Gatchalian, to reconcile and validate all the submissions. Based on these actions, the DOE has taken all the necessary steps to ensure that the TRAIN Law was properly implemented by the industry.

To help mitigate the impact of the imposition of the new excise tax rates on the commuting public, the DOE also held talks with several oil companies to provide, renew, and/or to expand their discount mechanisms to public utility vehicle (PUV) drivers.

In the following weeks, the DOE will be executing Memorandums of Agreement with several oil companies to formalize such Corporate Social Responsibility (CSR) programs to alleviate the plight of the PUV drivers.

Based on the three factors — (1) the mitigating mechanisms of the TRAIN Law; (2) the CSR programs to be extended by the oil companies; and (3) based on the correlation of historical data of petroleum prices and fare rates between 2014 and 2016 (where the increase in oil prices did not have a significant impact on the prices of rice and transport fares), the DOE believes that there would be a minimal impact on the public transportation sector.

Nevertheless, the DOE reiterated its commitment to ensure protection of the Filipino consumers against any disadvantageous trading of energy.

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