Fuel marking seen to curb smuggling starting 2019

Oil smuggling is expected to decline after the government signed the contract with the joint venture of SGS Philippines Inc. and Switzerland-based SICPA SA for the rollout of the fuel marking program beginning 2019.

The Department of Budget and Management’s Procurement Service (DBM-PS) has issued the notice to proceed to the two firms, allowing them to start the establishment and operation of a fuel marking and field testing system for the Bureau of Customs (BOC) starting last Oct. 30.

Fuel marking will cost P0.06884 a liter, DBM-PS executive director Bingle B. Gutierrez said. It was the proposed contract price of SGS and SICPA, the lone bidder.

As such, SGS and SICPA’s joint venture is expected to “[perform] the services under the terms and conditions of the agreement and in accordance with the delivery schedule,” Gutierrez said.

The five-page contract agreement between the BOC and SGS-SICPA was signed last Oct. 29 by former Customs chief Isidro S. Lapeña, Gutierrez and three of the joint venture’s representatives: SICPA regional counsel Benedict Sapin, SGS Philippines managing director Ariel Miranda and SGS oil, gas and chemicals director Christa Filius.

Lapeña was eventually replaced by Customs Commissioner Rey Leonardo B. Guerrero on Oct. 31.

Under the contract, the DBM-PS will pay the consultant the contract price during the first year of the fuel marking program. From the second year until the fifth year, the payments will be sourced from the trust receipt created under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The contract gave SGS and SICPA a maximum and non-extendible 60-day grace period to comply with its deliverables without penalty.

Liquidated damages and other penalties apply when the joint venture fails to deliver, including breach of security resulting in replication of the fuel marker or failure of the field testing equipment.

The SICPA-SGS joint venture became the lone bidder after Texas-based Authentix Inc. backed out and did not submit a bid.

Authentix was SGS’s partner when the fuel marking system was implemented at the Subic Bay Freeport Zone by former Customs chief Napoleon L. Morales years back. —BEN O. DE VERA