Collusion allegations baseless –– DoE

November 16, 2019

The Department of Energy (DoE) has issued a statement on Laban Konsyumer, Inc.’s allegations of price-fixing and collusion.

Energy Secretary Alfonso Cusi said the DoE brands as ‘utterly baseless’ the agency’s inclusion in the complaint with the Philippine Competition Commission (PCC) filed by the Laban Konsyumer, Inc. (LKI) alleging price-fixing and collusion among 16 oil companies.

‘We find the complaint of LKI President, Atty. Victorio Mario Dimagiba unmeritorious, by accusing the Department of colluding with the oil companies by pointing to the pricing formula posted on the DoE website, as having facilitated said unacceptable illegal activities,’ Cusi said.

He explained that the pricing formula in question, made by the Energy Regulatory Board (ERB), has been on the DOS’ website since 2010. The posting, Cusi  maintains, is made in the interest of transparency.

‘The formula is not being prescribed nor dictated by the DoE to the downstream oil industry in any way, as claimed by Atty. Dimagiba.  Instead, it is being made publicly available to serve as a tool for all parties interested to understand and evaluate domestic oil price movements,’ he stressed.

By way of a background, Executive Order No. 172 was issued by then President Corazon C. Aquino on May 8, 1987.

The ERB is one of the earlier predecessors of the DoE  which was created in 1992. The said Board was made responsible for all regulatory and adjudicatory functions pertaining to the energy sector.

The passage of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 then abolished the ERB, with the present day Energy Regulatory Commission, a quasi-judicial body now focused only on power distribution rate regulation.

The price regulation of the oil industry was removed due to the passage of Republic Act No. 8479, or the Downstream Oil Industry Deregulation Act of 1998 and the nature of the ERB had to change.

With the ERB formula having been utilized by the Board in the performance of its functions over the course of 11 years, the DoE deemed it fit to adopt said pricing formula among all other alternatives due to its historical reliability.

Cusi says the DoE has explicitly indicated on its website that the Oil Deregulation Law does not prescribe any specific pricing formula, as the market is expected to set the prices.
He followed this up with a statement reminding industry players to adhere to the fundamental principle of fair prices, as provided for under the Oil Deregulation Law.

Furthermore, the energy secretary said the DoE, through its Oil Industry Management Bureau (OIMB), has always been dedicated to its mandate to protect the public against cartelization and predatory practices by closely monitoring actual oil price movements, specifically to prevent unreasonable adjustments and abuses.

Whenever discrepancies do arise, according to Cusi, the DoE-OIMB in fact has been consistent in issuing ‘show-cause orders’ to concerned oil companies.  In it, they are requested to provide pertinent documents and a formal explanation on how they arrived at their respective oil price calculations.

Despite the patently wrongful allegations however, Cusi says they welcome LKI’s call for the PCC to look into claims of price-fixing and collusion.

It must be emphasized that there is, in fact, a Memorandum of Agreement (MOA) signed on 11 July 2019 by Cusi with PCC Chairman Arsenio  Balisacan, with the aim of promoting fair market competition and consumer welfare in the energy sector. The said MOA facilitates closer coordination between the DoE and the PCC through information sharing, as well as investigation and enforcement support, the creation of joint task forces, capacity-building activities and consultative meetings.

Amid all these, the DoE continues to assure the public that it will never waver in its commitment to protect and uphold the welfare of consumers and that it would always condemn, in the strongest terms, all contrary practices. So, there!

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