Definitions of Key Terms
- Defines important terms such as Act (Republic Act 8180), Automatic Oil Price Mechanism, Board (Energy Regulatory Board), Petroleum Products, Refiner, Importer, Marketer, Downstream Oil Industry, and others.
- Provides detailed descriptions to avoid ambiguity in regulatory applications.
Phases of Deregulation
- Deregulation is implemented in two phases: Phase I (Transition) and Phase II (Full Deregulation).
Liberalization and Tariff
- Any person/entity may import, purchase, own or operate refineries, and market petroleum products under liberalized conditions.
- Requires filing a notice with the Bureau before engaging in downstream oil activities, including submission of business plans and local permits.
- Notice is also required prior to every importation with detailed cargo and arrival information.
- Enforces Basel Convention compliance for hazardous waste movements.
- Reportorial requirements include submission of safety certificates, insurance certificates, import-export documentation, and monthly inventory reports.
- Tariff duties imposed: 3% on crude oil and 7% on refined products except fuel oil and LPG (3%); tariffs harmonized by 2004.
- Exemption for National Power Corporation on taxes and duties for petroleum products used in power generation.
Security of Supply and Fair Trade
- Refiners and importers must maintain minimum inventory equal to 10% of annual sales or 40 days supply (whichever is less).
- Inventory includes stocks in-country and imports in-transit.
- Bureau sets minimum inventory levels annually.
- DOE may implement contingency plans during supply disruptions.
- Prohibits discrimination against compliant businesses and promotes joint industry activities like borrow-and-loan agreements and joint tanker use.
Monitoring: Price, Quality, and Processes
- DOE monitors and publishes daily international oil prices; retailers must display prices prominently with color coding.
- DOE-DOJ Task Force addresses unreasonable price hikes.
- Bureau monitors product quality, preventing adulteration and misrepresentation, enforcing national and international standards.
- Sampling and testing conducted with costs borne by business except when public complaints justify Bureau coverage.
- Periodic calibration of measuring equipment required.
- Bureau monitors refining, manufacturing, and marketing processes to ensure environmental and worker safety.
- Facilities must conform to national or international standards, with detailed information and permits submitted.
- Safety regulations govern equipment use, installations, LPG cylinder management, and transport.
- Qualified servicemen required for LPG system installations.
Prohibited Acts
- Cartelization, predatory pricing, failure to comply with reportorial requirements, minimum inventory, and use of safe technologies are prohibited.
- Violators face criminal and administrative penalties including fines and potential suspension or revocation of permits.
Transition Phase and OPSF
- DOE maintains a buffer fund of Php 1 billion in the Oil Price Stabilization Fund (OPSF).
- OPSF covers claims from importers/refiners due to price cap amounts allowed under the Act.
- Implement automatic oil price mechanism adjusting prices based on international benchmarks.
Full Deregulation Phase
- DOE to implement full deregulation not later than March 1997 upon Presidential approval.
- OPSF and foreign exchange forward cover terminated upon full deregulation.
- Outstanding claims from transition phase against OPSF settled from the buffer fund.
Administrative Provisions
- DOE may impose fines between Php 100,000 to Php 1,000,000 for violations of reportorial and inventory requirements.
- Secretary of DOE may recommend suspension or revocation of business permits.
- Public information campaigns to educate on deregulation.
- IRR takes effect 15 days after publication in two newspapers.