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Oil industry players seek clear-cut rules on fuel marking system

By: - Reporter / @bendeveraINQ
/ 05:12 AM June 24, 2019

The country’s biggest oil firms are pushing for uniform implementation of the fuel marking scheme by limiting it to their import terminals and refineries.

In a five-page position paper submitted to the Department of Finance (DOF) on the proposed guidelines for the fuel marking program, industry group Philippine Institute of Petroleum (PIP) said that while its members supported the government’s initiative to curb smuggling, they wanted “minimal disruptions within the oil companies’ facilities.”

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The PIP groups Chevron Philippines Inc., Isla LPG Corp., Petron Corp., Pilipinas Shell Petroleum Corp., PTT Philippines Corp. and Total Philippines Corp.

“To ensure uniformity of application, fuel marking should only be allowed in import terminal and refineries. Certification of marked fuels should be done on receiving tank (for import terminal) and on finished product tank (for refinery),” it said in the position paper.

Early this month, the DOF presented for public consultation the draft joint circular it would issue together with the Bureaus of Customs (BOC) and of Internal Revenue (BIR) to fully implement fuel marking nationwide.

Under the draft rules, field testing can be conducted in refineries, gasoline stations and other retail outlets under BIR supervision.

The BOC, meanwhile, will supervise testing in depots, tank trucks, vessels, warehouses and other fuel-transporting vehicles.

The PIP also listed implementation concerns during pre-, actual and post-fuel marking activities.

Prior to fuel marking, the PIP sought clarifications on the following: identification of specific locations where the fuel marking technology will be installed within the oil company’s facilities; procedure on how the fuel marking technology will be transported going to the oil company’s facilities; procedure on how the fuel marking technology will be installed within the oil company’s facilities/system; and the appropriate documentary requirements and signatories to certify the products marked.

During actual marking, the oil firms wanted to know the procedure on how the fuel marking injection technology will be done (through a process flow or diagram); the number and competency of personnel who will conduct the actual fuel marking activity; the representatives/personnel who will be present to witness the marking activity and will certify the products marked, and the documentary requirements that need to be signed to certify that the products are marked.

The PIP, in particular, wanted representatives of its member-companies to serve as witnesses during the fuel marking.

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As for post-fuel marking, the PIP sought clarifications on the document/report that need to be prepared after the fuel marking activity is performed within the oil company’s facilities; frequency of report submission and to whom the report will be submitted; how the marked fuel will be tested and who will be present during the validation test; specific location where the validation test of the marked fuel will be done; who will be present during the test validation of the marked fuel; what documentary requirement/report will be prepared after the validation test, as well as the frequency of validation report submission and to whom the validation test report will be submitted.

The joint venture of SGS Philippines Inc. and Switzerland-based SICPA SA will implement fuel marking in the country, having earlier bagged a five-year contract.

The two firms will establish and operate a fuel marking system that will supply and inject fuel marker in all taxable oil products, except Jet A-1, Avgas, crude oil and LPG. The venture will also implement and manage a fuel testing program, including fuel analysis and data management nationwide. The contract also requires the transfer of the group’s technological know-how to employees of the BOC and the BIR.

According to the DOF’s previous estimates, revenue losses from excise taxes and value-added tax due to oil smuggling and misdeclaration reached P26.9 billion in 2016, almost half of the actual P52.6 billion collected by the BOC and the BIR that year.

The Manila-based Asian Development Bank had a higher estimate of P37.5 billion in foregone tax revenue yearly from oil smuggling, while another study commissioned by the domestic oil industry placed revenue losses at P43.8 billion yearly.

As such, the government wanted to implement the fuel marking program to minimize smuggling and misdeclaration as well as jack up the collections of the BOC and the BIR.

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