Question & AnswerQ&A (Republic Act No. 8479)
Republic Act No. 8479 is known as the "Downstream Oil Industry Deregulation Act of 1998."
The policy is to liberalize and deregulate the downstream oil industry to ensure a truly competitive market with fair prices, adequate and continuous supply of environmentally-clean and high-quality petroleum products.
It applies to all persons or entities engaged in any activity of the domestic downstream oil industry, as well as persons or companies directly importing refined petroleum products for their own use.
The Downstream Oil Industry refers to activities involving importing, exporting, shipping, transporting, processing, refining, storing, distributing, marketing, and/or selling crude oil and petroleum products such as gasoline, diesel, LPG, kerosene, and others.
Cartelization to fix prices or divide markets and predatory pricing intended to destroy competition are prohibited acts, punishable with imprisonment of 3 to 7 years and fines ranging from P1,000,000 to P2,000,000.
Penalties include imprisonment for 2 years and fines ranging from P250,000 to P500,000.
The DOE Secretary can investigate business practices, require reports, investigate alleged violations, recommend suspension or revocation of business permits, make public necessary information (excluding trade secrets), and submit reports and recommendations to Congress.
New investments in refining, storage, marketing, and distribution registered with the BOI are entitled to incentives under the Omnibus Investment Code of 1987, including income tax holidays, additional labor deductions, customs duties and VAT exemptions on capital equipment, tax credits, and exemptions from various taxes and duties for five years.
The Energy Regulatory Board (Board) sets the wholesale posted price (WPP) based on an approved automatic pricing formula linked to international prices, such as Singapore Posting, and adjusts it automatically without further hearings.
The Transition Phase lasts five months from the effectivity of the Act, after which full deregulation of the downstream oil industry commences.
At least 10% of common stock must be offered publicly, and no single person or entity may own more than 5% of that stock offering.
The Joint Task Force investigates reports of unreasonable price increases and violations of anti-trust provisions and initiates necessary legal actions including filing suits to prevent or restrain violations.
A uniform tariff duty of three percent (3%) is imposed on both imported crude oil and refined petroleum products, subject to reduction by the President.
An initial P300 million fund is established to provide management and skills training and low-interest loans to qualified persons and cooperatives for establishing and operating gasoline stations.
The penalty is imprisonment from three months to one year and a fine ranging from P50,000 to P300,000.