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Oil firms oppose shift to Euro 2 diesel

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INDEPENDENT oil companies are opposing the directive of the Energy department to make Euro 2 diesel available at their fuel retail stations, saying the move would require “significant” spending for a problem of the government’s doing.

“We cannot be forced to make significant investments nor a temporary stop gap measure for a problem that they created by imposing higher excise taxes across all fuel products,” said Independent Philippine Petroleum Companies Association (IPPCA) in a statement over the weekend.

The association was reacting to Department Circular 002018-08-0012, signed by Department of Energy (DoE) Secretary Alfonso G. Cusi on Aug. 10, 2018, mandating oil companies to make available Euro 2 diesel in fueling stations to soften the impact of rising commodity prices.

The DoE cannot force oil companies to sell the fuel in their retail stations despite the move being a temporary stop-gap measure, the association said.

IPPCA said the investments include putting the necessary infrastructure such as storage tanks, dispensing pumps and pipes.

It earlier proposed easing the implementing rules and regulations under Republic Act 9637 or the Biofuels Act of 2006, which require oil companies to buy biofuels from local manufacturers despite the huge difference between local and imported biofuels, particularly ethanol.

With the suspension of the prescribed biofuels blend on gasoline and diesel, motorists could expect a P2 per liter and P1.80 per liter reduction in the pump prices of gasoline and diesel respectively, said the association, whose members includes “major” independents such as Eastern Petroleum Corp., Filoil Gas Co., Inc., Filpride Energy Corp., Pryce Gases, Inc. and Seaoil Philippines, Inc.

IPPCA said suspending the prescribed biofuel blend on fuel products would be more effective in bringing down local fuel prices, instead of reintroducing Euro 2 diesel that might not be feasible “due to logistical concerns and minimal price reductions.”

It said Euro 4 is ten times cleaner than Euro 2, and blending of ethanol would no longer be needed in achieving cleaner emissions from gasoline products.

IPPCA also said recent spikes and scarcity of table sugar could be attributed to the use of the same raw material, as sugar cane used in ethanol production is given higher priority due to its mandatory 10% blend in all gasoline products. This makes locally made ethanol expensive by P4 per liter as against imported gasoline.

The association also pointed out that there is not much difference between the price of Euro 2 and Euro 4 diesel as domestic and international refineries have upgraded and shifted their production to Euro 4 and even Euro 5 compliant diesel products. The upgrade has made Euro 2 diesel even less available.

IPPCA said the reintroduction of Euro 2 is a setback to the government and industry stakeholders for cleaner air. Going back to Euro 2 means reverting to fuel with 10 times more sulfur at 500 parts per million (ppm) as against the much cleaner diesel that has 90% less sulfur at 50 ppm.

IPPCA also said offering Euro 2 is “a logistical nightmare for oil companies,” requiring the installation of underground tanks at retail outlets since the fuel could not be co-mingled with Euro 4 diesel.

“The directive also undermines the President Rodrigo R. Duterte’s directive banning smoking in public places to protect people from the ill effects of smoking and secondhand smoke,” IPPCA said, adding that the DoE order “reverses the Clean Air Act of 1999 — which is intended to protect Filipinos from the ill effects of polluted air.” — Victor V. Saulon

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