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Euro 2 diesel to go back on sale as measure to keep inflation in check

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PHILSTAR

THE Department of Energy (DoE) has directed to oil companies to start selling diesel compliant with the Euro 2 standard, a step backward from previous moves to shift to the newer Euro 4, as an inflation-control measure.

In a press conference on Tuesday, Energy Undersecretary Felix Wiliam B. Fuentebella said the rising prices of commodities prompted the DoE’s order.

“We have a bigger problem to address… inflation,” he said.

He said DoE Secretary Alfonso G. Cusi instructed the department to study options to lower commodity prices after the Office of the President pressed government agencies to address inflation.

He said the Euro 2 “option” does not violate health and environmental standards and gives consumers the choice to buy lower-cost diesel while helping the economy through the reduction of fuel prices by around P0.28 to P0.30 per liter.

“Just by opening up that option, they will have to compete,” Mr. Fuentebella said in introducing Department Order DO2018- 08-0012.

“Competition will require them to do that because we’re adding another item to the menu,” he added.

The DoE order states that the issuance is authorized by Republic Act No. 8479 or the Downstream Oil Deregulation Law, and RA 8749 or the Philippine Clean Air Act. He said the DoE sat down with the Department of Environment and Natural Resources (DENR) to discuss the DoE’s planned issuance.

“(DENR’s) statement is to study it further probably because of emission standards,” he said.

He declined to say until when the department order will be in place and whether its effectivity is dependent on the government reaching a specific inflation rate, but he said the expected fuel cost reduction “is not negligible.”

“It has an impact on consumers,” he said, adding that public transport vehicles will be the biggest beneficiaries of the department’s move.

Mr. Fuentebella said the DoE consulted oil companies on the issuance.

“Some of the players are positive about it, some would like to clarify,” he said.

For now, there will be no sanction on oil companies that do not comply with the directive.

“[The] sanction is, consumers might not buy from you. The oil companies will have to adjust to the market,” he said.

During the past administration, the DoE set Jan. 1, 2016 as the deadline for oil companies to upgrade to cleaner emission standards of fuel from Euro 2 to Euro 4, a globally accepted emission standard for vehicles.

Euro 4 requires the use of fuel with a significantly low sulfur content of 0.005% or 50 parts per million, and benzene content at a maximum of 1%. Euro 2 fuels have up to 0.05% sulfur or 500 parts per million and up to 5% benzene.

Senator Sherwin T. Gatchalian, the Senate energy committee chair, asked whether the use of Euro 2 is compliant with the law. Many countries have even banned the fuel, he added.

“I know the Clean Air Act is already banning this type of dirty fuel. In fact, many tricycles have been made to convert to Euro 4. But going back to Euro 2 we might have a problem,” he said.

“We will have to study first if it is a violation of the Clean Air Act. If so, then we will need to be enlightened because instead of moving forward to cleaner fuels, we’re moving backward to dirtier fuels. We also have to weigh the 30 centavo price cut, but the externalities like health and respiratory illness might be… compromised. This must be studied well,” he said. — Victor V. Saulon

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