Conditions for Acceleration of Deregulation
- Joint recommendations from the DOE and DOF based on:
- Stability and downward trend of crude oil and petroleum product prices worldwide since January 1998.
- Stability of the peso exchange rate against the US dollar, averaging P40.00 to 1 US dollar over three months.
Institutional Framework
- Executive Order No. 377 (October 31, 1996) establishes the functions and responsibilities of various government agencies overseeing the deregulated downstream oil industry.
Objectives of Deregulation
- Promote a truly competitive market in the downstream oil sector.
- Achieve social policy objectives such as:
- Fair pricing of petroleum products.
- Adequate and continuous supply.
- Environmentally clean and high-quality petroleum products.
Declaration of Full Deregulation
- The President officially declares the full deregulation of the downstream oil industry.
- LPG, regular gasoline, and kerosene remain subject to automatic pricing formulas under RA 8479.
- This declaration takes effect immediately upon issuance.
Important Legal Concepts
- Deregulation: The removal or relaxation of government controls over pricing and supply, aiming to encourage competition.
- Transition Phase: A period allowing adjustment, especially for socially sensitive products, during which regulated pricing still applies.
- Automatic Pricing Mechanism: A formula-based system to set prices for regulated petroleum products during the transition.
- Role of Government Agencies: Oversight and administration of deregulation through defined functions to ensure orderly implementation.
Penalties and Enforcement
- The text does not specify penalties or enforcement mechanisms but implies adherence through institutional frameworks established in Executive Order No. 377 and related laws.