LPG prices steady, despite projections

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Tuesday, March 25, 2014


LIQUEFIED petroleum gas (LPG) distributors and dealers in Cebu are still waiting for advisories on any increase in LPG prices this month and in April, as projected by a government official.

House Deputy Minority Leader Arnel Ty reported last month that an increase in the cooking fuel’s prices is likely to happen in March due to Pilipinas Shell Petroleum Corp.’s oil refinery maintenance shutdown in Batangas, alongside the closure of Shell’s LPG import terminal.

The closure “will cut short our LPG supply by some 25 million kilos per month. This volume is more or less equal to 25 percent of the estimated national consumption of 100 million kilos per month,” said Ty, who represents the LPG Marketers’ Association (LPG-MA) in Congress.

However, a distributor and a dealer of Solane LPG in Mandaue City said they have not received advisories yet on any increase in LPG prices. Instead, the prices of Solane LPG started to decrease last March 3.

Gaseoso officer-in-charge Mary Rose Bernardo told Sun.Star Cebu that she has not received word yet on an increase this month.

Transfer

Jet Sales sales staff Gemma Geraldez said the same. She said that from P935 in the previous months for the 11-kilo Solane LPG tank, the price lowered to P885.

Bernardo explained that the closure of the LPG import terminal of Shell will not affect the prices of Solane LPG because Solane, formerly known as Shellane, is now under the Isla LPG Corp.

The corporation was formed to acquire the entire LPG business of Pilipinas Shell Petroleum Corp. (PSPC), from supply and trading to marketing and distribution. Isla LPG Corp., formerly Shell Gas LPG Philippines, Inc., operates 10 LPG refilling plants in the country. It has a nationwide distribution system consisting of more than 50 distributors and approximately 10,000 points of sale across the country, according to its website.

Meanwhile, Petrogas Marketing Corp in the North Reclamation Area, which sells Gas Petronas LPG, also reported no increase in prices this month, said clerk Tina Talisic.

Dominance

Last Dec. 2, the price of Solane LPG increased by P122.36 per tank but it decreased by P37 per tank on Dec. 27, said Bernardo.

Congressman Ty earlier raised his concern over the possibility that bigger oil firms that continue to dominate the LPG market will take advantage of the supply disruption and further increase prices.

He clarified, however, that there is no shortage of LPG that can be imported. Instead, the lack of infrastructure or import terminals to efficiently receive store, and transfer LPG into tanker trucks is the pressing problem. He said 80 percent of the country’s LPG supply is imported.

The problem, he said, began in September last year, when Shell, for business reasons, permanently closed its Tabangao, Batangas LPG import terminal.

The Shell Terminal is considered the country’s largest LPG import terminal, with the capacity to stockpile 42 million kilos of LPG, the country’s largest. It handled up to 25 million kilos of the cooking fuel every month, mostly for distribution throughout Southern Luzon.

Ty has called on the Department of Energy to reopen Shell’s now-deactivated LPG import terminal in order to allow a faster transfer of more supplies from abroad.

“There is no need for a declared emergency for the DOE to justify the State-induced reopening of Shell’s LPG import terminal. Government won’t be assuming ownership of the private facility, but will merely be temporarily running the terminal to allow the through-putting of LPG. The terminal is already of no use to Shell anyway,” Ty said.

Arrangement

A through-putting agreement is a commercial arrangement to put a specified amount of product per period through a particular facility. An example is a transaction to convey or transfer a specified amount of LPG per period through a particular facility, such as Shell’s LPG terminal that may be revived by the DOE.

“Actually, what we are asking is for the DOE to facilitate LPG through-putting agreements, using Shell’s already inactive terminal, for 12 to 36 months, the time needed for other oil firms to put up new import terminals,” the official added.

Republic Act 8479, or the Downstream Oil Industry Deregulation Law of 1998, “empowers the DOE to temporarily take over or direct the operation of any person or entity engaged in the industry when required by public interest.”

Published in the Sun.Star Cebu newspaper on March 26, 2014.

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