Question & AnswerQ&A (Republic Act No. 8180)
The short title is the "Downstream Oil Industry Deregulation Act of 1996."
The policy is to deregulate the downstream oil industry to foster a truly competitive market that can better achieve fair prices, and adequate, continuous supply of environmentally-clean and high-quality petroleum products.
It applies to all persons or entities engaged in any activities of the domestic downstream oil industry, as well as those directly importing refined petroleum products for their own use.
It refers to the business of importing, exporting, shipping, transporting, processing, refining, storing, distributing, marketing, and/or selling crude oil, gasoline, diesel, LPG, kerosene, and other petroleum and crude oil products.
Wholesale Posted Price (WPP) is the ceiling price of petroleum products set by the Energy Regulatory Board based on a formula using the Singapore Posting.
Prohibited acts include cartelization, which is any agreement among refiners/importers to fix prices or restrict outputs or divide markets to restrain trade, and predatory pricing, which is selling products below industry average cost to drive out competitors.
An imprisonment of three years and a fine ranging from Five hundred thousand pesos (P500,000) to One million pesos (P1,000,000) are imposed on the person involved, including company executives.
Refiners and importers must maintain a minimum inventory equivalent to ten percent (10%) of their respective annual sales volume or forty (40) days of supply, whichever is lower.
Offenders, including responsible officials, may face imprisonment for two (2) years and fines ranging from Two hundred fifty thousand pesos (P250,000) to Five hundred thousand pesos (P500,000).
The Board sets the Wholesale Posted Price (WPP) during the transition phase and shall approve a formula based on the Singapore Posting for automatic pricing adjustments without need for further hearings after the initial approval.
Full deregulation is to be implemented by the DOE upon presidential approval not later than March 1997, preferably when global oil prices are declining and the peso exchange rate is stable, marking the end of the transition phase.
The DOE-Department of Justice Task Force is mandated to determine the merits of the report and initiate necessary actions such as preventing cartelization.
Starting with the effectivity of the Act, a tariff of 3% is imposed on imported crude oil, and 7% on refined petroleum products, except fuel oil and LPG which are charged the crude oil tariff rate; from January 1, 2004, tariffs on crude oil and refined products shall be equal.
By requiring refiners and importers to keep minimum inventories—10% of annual sales or 40 days of supply—to sustain continuous availability.
The Department of Energy, Energy Regulatory Board, Department of Trade and Industry, Department of Environment and Natural Resources, Department of Labor and Employment, Department of Health, Department of Finance, and National Economic and Development Authority.