March 20, 2022 [philstar GLOBAL] – State-run Philippine National Oil Co. (PNOC) is eyeing an interim strategic petroleum reserve (SPR) through a co-storage, co-distribution program with oil players as immediate relief to vulnerable sectors amid rising fuel prices.
In a Senate hearing Monday, PNOC president and CEO Jesus Cristino Posadas said it is the position of the company, as the corporate arm of the Department of Energy (DOE), “to provide such oil reserves stock in order to prevent economic loss.”
“To initiate the SPR, we plan to have the immediate step of implementing a targeted relief project where we intend to lease storage capacities from oil industry players and help them carry out a distribution activity to provide discounted fuel to affected sectors,” he said.
The PNOC will be conducting a competitive bidding where oil players can submit proposals to co-store and distribute discounted fuel to targeted beneficiaries – the public transport, farmers and fisherfolks.
“The (DOE) Secretary (referring to Alfonso Cusi) already announced this to the industry players that PNOC is ready to accept any proposals to co-store discounted fuel,” Posadas said.
“They have the facilities already. The retail stations are already with the oil industry. We intend to package it. The proposal is co-storage and co-distribution with a discounted fuel,” he said.
The PNOC is preparing the terms of reference for the open competitive bidding.
Posadas said the discounted fuel – diesel, in particular – would be equivalent to the P6,500 subsidy per beneficiary.
To fund the purchase of fuel, PNOC is looking to fund the interest charge and storage cost against its operating budget and to borrow from the government financial institutions (GFIs) such as the Development Bank of the Philippines (DBP) or Landbank of the Philippines.
“We are, in parallel, looking at borrowing funds either from DBP or Landbank. We’re also asking the Department of Finance for some relief so this discounted fuel can be distributed to targeted beneficiaries,” Posadas said.
The co-storage, co-distribution program is targeted to be rolled out next month.
“This should be within April because our term will be ending in June,” Posadas said.
Amid calls for an oil stockpile, the DOE ordered the PNOC last month to fast-track the implementation of the strategic petroleum reserve, by creating a short- and long-term plan.
In a meeting last Feb. 18, the PNOC presented its three- to four-year plan for the PSPRP by building storage tanks and gas tanks.
However, the DOE directed the PNOC to have a short-term plan for disaster and emergency response by renting storage tanks, such as mobile dispensing lorry tanks.
The establishment of an SPR will undergo an 18-month detailed feasibility study and work program and budget review and approval by the PNOC and the DOE within 12 months thereafter.
The detailed feasibility study is necessary to determine the amount of oil reserves, the manner of withdrawals, and the priority sectors, among others.
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