CHAPTER I THE PROBLEM AND ITS CONTEXT Introduction

Humanity faces a unique and far-reaching challenge. Our energy needs are growing as a result of continued population increases, economic growth, and individual energy consumption. At the same time, emissions from fuel wood and fossil fuels, the main energy source for heating in homes and powering our economies, are contributing to climate change and affecting the local air quality (WEC, 2005). Other countries like Ghana, Households, industries, and other consumers in Philippines are suffering from shortfalls of electricity supply and highly volatile oil prices. This situation usually has its roots in the mix of energy policy miscues, the countrys dependence on hydro power, and the high oil prices that have increased the cost of generating electricity. There are many opportunities for LPG to contribute to improved living standards. The introduction of LPG into this critical domestic market can then be leveraged to extend modern energy services to the wider community and for cultivating commercial and industrial growth in the local economy.(Inkoom, 2010) According to Asamoah((2012) LPG is increasingly becoming the preferred choice of fuel in the world. The increase in patronage could be attributed to its affordability, efficiency and environmental friendliness. Like other energy sources, there are challenges that impede the smooth supply of LPG resulting in shortage. Several factors are involved which ultimately affects the efficiency of the entire Supply Chain system.

Increasing of price of liquefied petroleum gas (LPG) is a factor that forced many households to shift to firewood/charcoal in the Philippines, causing tremendous pressure on the dwindling forest. The transition is more obvious in the rural area where firewood price is almost half of that in the cities. Both problems on big demand for firewood and the pressure on our forest. LPG has a potential to alter the leading consumption of biomass energy that causes various reason of deforestation in the Philippines. But according to Philippine Energy Plan (1999-2008), Biomass energy here in the Philippines usage of wood is on the decline because prices are rising and deforestation is severe. According to The Philippine Master Plan for Forest Development, estimated forest cover reduction of about 100,000 hectares per annum (DENR/FMB, 1991) while other assessments ranged between 50,000 and 70,000 hectares per annum while Forestry and Agriculture Organization provided a figure of 89,000 hectares per annum (FAO, 2000; 2003). Therefore, lower figures reflect the assumptions that since the natural forest are now relatively inaccessible; the forest conversion rate has slowed compared to the rates of the 1950s and 1970s (Acosta, 2005). According to the study of the Philippine Master Plan for development, the forest cover decreased from 17 million hectares in 1934 to 6.7 million hectares in 1990 and 5.4 million hectares of forest in 2000. Various sources showed different rates of deforestation in the Philippines (DENR/FMB, 1991).

Background of the study LPG (Liquefied Petroleum Gas) is a converted non-renewable natural gas. It is used worldwide as a modern, clean, low-carbon energy. It has considerably improved the lives of people who used to rely on wood, charcoal and animal waste for their primary domestic fuel. The term "LPG" in its broadest context refers to a group of refinery by product gases that may include the following compounds alone or in mixture: propane, propylene, butane, butylene, and isobutene. Liquefied petroleum gas can be used for the same domestic, commercial and industrial applications as natural gas. One of the main LPG markets is in rural areas for domestic cooking and heating. The main advantage of LPG relative to natural gas is that, under pressure, it is a liquid which reduces transportation costs and makes long term storage practical. The main disadvantages are higher fuel costs and potential safety hazards in the event of leaks arising from the fact that LPG is heavier than air and may settle in explosive pockets in the absence of local air movement. Liquefied petroleum gas is also used in commercial and industrial applications as a standby fuel to replace natural gas during emergencies, or curtailments of baseline fuels.(Gagnon, 1993) In recent decades, Consumption of Liquefied Petroleum Gas (LPG) has increased throughout the world. the supplies of LPG are growing to meet demand. In 1985, world supply was approximately 114 million tonnes and this was expected to increase to 240 million tonnes in 2005(Purvin and Gertz, 2000). LPG is used mainly for domestic cooking, heating and lighting. It is in the home where this exceptional energy has made a huge difference on peoples lives. The usage of

LPG in household has brought many changes particular in social, economic, environmental but most important, it has improved public health. LPG produces far less emissions than most other sources of energy. LPG is not only used in home. It is such a versatile energy, having so many powerful properties, that it is used in all manner of ways. It may used in food industry, it is used to bake bread; in agriculture, it is used to control weeds. In commerce, it is used in restaurants; and, of course, in transport, it displaces diesel and gasoline, Auto-LPG is a variety of LPG that can be used for properly-outfitted vehicles , in effect, reducing air pollution in the streets. (Philippine Daily Inquirer, 2011) Betting that the market will go for cheaper car fuels, the local auto-liquefied petroleum gas (LPG) expects to expand ten-fold in the next 10 years. According to World LPG Association President James Rockall said that With a population of 80 million, the potential is very high. The presence of the price differential with other fuels, As the price of fuels goes up, auto-LPG becomes more attractive.(Consti, 2007) Zenaida Y. Monsada, director for Oil Industry Management Bureau of the Energy department, said auto-LPG will always be at least 20%-30% cheaper than liquid fuels because it is not charged import or excise taxes by virtue of the value-added tax law. First, LPG is used as cooking gas, and lower costs will help the general public, and the poor. And as a car fuel, its clean; so the government sacrifices revenues, Gasoline is charged P4.35 per liter in excise taxes. she told BusinessWorld. (Consti, 2007) The Philippine LPG industry is currently dominated by six bulk suppliers. Two of those, Petron and Shell, are also refiners but they now meet only a little over 20% of domestic demand. But while cooking gas has a distribution network composed of 80

refillers, 90 marketers, and 1,000 dealers, the auto-LPG network now consists of just 94 public and 64 private or garage-based stations nationwide. (Consti, 2007)

According to Monsada(2007) The auto-LPG industry in the country is slowly emerging and is industry driven But there is growing interest especially for taxi fleets also for tricycles and some programs are even endorsed by local governments, Data from the Energy department showed that auto-LPG sales for the first half this year hit 35.33 million barrels, accounting for about 3.85% of total LPG sales in volume. she noted. (Consti, 2007) LPG Industry Association President Pete V. Jayme opined that the fuel has met with lukewarm reception because Filipinos are still apprehensive about using auto-LPG. They want to be sure its safe to use," he said, while highlighting that the gas produces less pollution and about 20% less greenhouse gas emissions. (Consti, 2007)

Mr. Rockall added that dirtier fuels are currently costing the Philippines a total of $2.5 billion annually. Switching to auto-LPG and cleaner fuels could save about 2% of the countrys gross domestic product and he said there are a little more than 4,000 autoLPG vehicles nationwide. The costs of conversion depends on the size of the engine, and ranges from P24,500 to P37,000. (Consti, 2007) The Energy department, has issued Department Circular No. 2007-02-2002 which strictly sets guidelines and standards to institute safety codes in the auto-LPG industry. (Consti, 2007)

Total auto-LPG consumption worldwide reached 219 million tons, as the number of vehicles adapted to the fuel rose 8.5% to 12.4 million. (Consti, 2007)

However, the study sought to examine the industry of LPG and its contribution to the economy. How our economy can still benefit from it, even though it affects our countrys natural resources and add up to the deforestation rate and the slash and burn agriculture.

Statement of the problem

Specific Problems The researchers aim to answer the following questions: 1. What has been the behavior of the following variables from 1986-2010? a. Consumption of LPG b. Domestic Production of LPG c. Importation of LPG d. Consumption of Charcoal e. Domestic Production of Charcoal f. World Production of LPG g. Population

2. Is there a significant relationship between Consumption of LPG and each of the following variables?

a. Domestic Production of LPG b. Importation of LPG c. Consumption of Charcoal d. Domestic Production of Charcoal e. World Production of LPG f. Population

3. Is there a significant effect between Consumption of LPG and each of the following variables? a. Domestic Production of LPG b. Importation of LPG c. Consumption of Charcoal d. Domestic Production of Charcoal e. World Production of LPG f. Population

4. Is Consumption of LPG is a stable function of the following variables? a. Domestic Production of LPG b. Importation of LPG c. Consumption of Charcoal d. Domestic Production of Carcoal e. World Production of LPG f. Population

5. Is the economic model correctly specified?

Objectives of the Study General Objective The primary objective of this paper is to examine the effects of the determinants and the contribution of LPG in Energy efficiency to the Philippine Economy covering the period of 1986-2010. Specific Objectives 1. To know the behavior of the following variables from 1986-2010: a. Consumption of LPG b. Domestic Production of LPG c. Importation of LPG d. Consumption of Charcoal e. Domestic Production of Charcoal f. World Production of LPG g. Population

2. To know and provide empirical evidence on the significant relationship between Consumption of LPG and its explanatory variables.

3. To know the impact of the different explanatory variables individually and collectively on Consumption of LPG. 4. To determine whether Consumption of LPG is a stable function of the following variables: a. Consumption of LPG b. Domestic Production of LPG c. Importation of LPG d. Consumption of Charcoal e. Domestic Production of Charcoal f. World Production of LPG g. Population

5. To determine whether the model is correctly specified.

Scope and Delimitation The scope of the study is focused on the Consumption and efficiency of LPG (Liquefied Petroleum Gas) and factors affecting the consumption of LPG in the Philippines. and this study tries to relate the sources and factors of Consumption of LPG to some of important variable that is significant in this study. Domestic Production of LPG, Importation of LPG, Consumption of Charcoal, Domestic Production of Charcoal, World Production of LPG, Population 1986-2010.

The coverage of this study is in the Philippine setting. The basis of the data and study provided were gathered in both non-life and life sector in the year 1986-2010. The data used were annual data a type of time series data and other factors converted to logarithmic form.

Significance of the Study The study can serve as a guide for;

Government The Government may use this study to promote energy efficiency and awareness on environmental conservation. This may also help them to formulate regulations or policies.

Private Sector This would help those people who are willing to engage or invest in this kind of activity. They may need to know the pros and cons and whatever it is needed to gain success in this kind of activity.

Students and Future Researchers This research may also help students to be more aware about the industry and its importance to the economy. To get a clear view and how does it affect the economy.

This research may also serve as a pattern for them to consider every decision that they have to come up with. They can assume and think of different strategies that can help them in accordance to the factors affecting the Consumption of LPG. They can formulate different hypothesis or theories but still stick to the original importance of the study.

Theoretical framework The core basis behind the development of this study was primarily on the idea that the Domestic Production of LPG, Importation of LPG, Consumption of Charcoal, Domestic Production of Charcoal, World Production of LPG and Population can affect the Consumption of LPG.

In explaining further the relationship between Consumption of LPG and Tax Revenue and RGDP the researchers come up with to include the theory of Keynes, He argued that relying on markets to get full employment was not a good idea. He believed that the economy could settle at any equilibrium and that there would not be automatic changes in markets to correct this situation. The researchers would like to examine the effect of taxes and Consumption of LPG on gross domestic product from 1996 - 2012 and how it is implied to Keynesian theory. And other theories (researching) Conceptual Framework

The figure shows the individual relationship of Real Gross Domestic Product, Lumber Import and Lumber export to Gross Value Added in Forestry. Gross Value Added at basic prices corresponds to the value of output less the value of intermediate consumption. Lumber import is basically buying lumber products abroad while Lumber export is selling lumber products outside our country. Gross Domestic Product is the market value of all final goods and services made within the borders of a country in a year. Therefore taken correctively the above relationship maybe summarized in single functional statement to wit:

LPG CON = f (RGDP,INF Rate ,TTR ,LE)

Therefore, to fit or in simple notations and to show the purpose of the study the following symbols will be substituted:

Gov Spend = Consumption of LPG GDP = Real Gross Domestic Product Finance= Finance INF Rate = Inflation Rate TTR = Total Tax Revenue

Definition of terms

CHAPTER III RESEARCH METHODOLOGY

Research Design The researcher made use of quantitative method as a general approach in view of the fact that the study deals with the effect of the Gross Value Added in Forestry from year 1986-2010 given some economic indicators. Secondary data were utilized in this study. The data gathered were summarized, cross-tabulated and presented in tabular and graphical forms. On its statistical treatment, a multiple regression model is used to determine the factors that could affect the Gross Value Added in Forestry. This includes Lumber Imports, Lumber Exports and Gross Domestic Product. The computer software Eviews (Econometric Views 7.0) was utilized.

Sources of Data The researchers used secondary data gathered from different government agencies such as National Statistics Office (NSO), and National Statistics Coordination Board (NSCB). Extensive research in the National Library, Philippine Institute for Development Studies, Ninoy Aquino Library Learning and Resource Center was done. The researchers also gathered information over the internet to obtain studies, reports, documents and data relevant studies. Statistical Treatment The data have been summarized, organized and analyzed. Data was edited and coded for entry into the computer using Econometric Views 7.0 (E-views 7.0) Data was categorized and cross-tabulated according to concepts in order to address the purpose of the study. Pie charts, pictures, and bar charts were also used. In some cases, chi-square analysis was adopted to test relationships between some variables a

1. Measure of Correlation The test of the correlation will be employed to examine if there is a relationship exist between its Service Sector and its individual repressors. The formula is: = If r lies between -1 to 1: If it is 1 the fitted regression will explain 100% of the variation in Y. If it is 0, model does not explain any variation in Y. Gov Spend = +

Gov Spend = Consumption of LPG RGDP = Real Gross Domestic Product Finance= Finance INF Rate = Inflation Rate TTR = Total Tax Revenue

Bi= regression coefficients (i = 0,1,2,3) = random error term

2. Test of the individual significance of the regression

To determine whether the variables used in the model are significant or not to the electricity consumption, the researchers used t-test at the 0.01 level of significance, defined by the formula. To get the t-values the actual estimator is divided by its standard error. If the value of the t-statistics exceeds the vertical value o the t distribution at 1% level of significance with n K degrees o freedom, we accept thatB1 and B2are statistically significant. 3. Test of the overall significance of the regression To check whether the hypothesis is accepted or rejected, the researchers considered F-test at the 0.01 level of significance. It is obtained by getting the ratio of the explained and unexplained variance.

4. Test of Goodness Fit (R2) To test how well the estimated regression line fits the actual line of value, the researchers will use the coefficient of determination, R2. The value of this tells the extent of the total variation in Y explained by the explanatory variables used in the regression.

Moreover, the adjusted coefficient of determination R2 is used mainly when there is the inclusion or more independent variables as degrees of freedom is reduced. Adjusted

Durbin-Watson test used to know if there is no correlation among error terms. This is a test of null hypothesis that there was no first order autoregressive correlation. The equation is: If the computed d is greater than the upper critical value of d, reject Ho. That is, there is a significant positive autocorrelation. If the estimated du<d<4-du, reject Ho. That is, there is statistically significant evidence of no autocorrelation. 5. Test of Structural Stability of Parameters Chow Test was used to the estimated relationships for different line periods. + + 1stestimated eq. 2nd estimated eq.

PDI= http://opinion.inquirer.net/17263/use-of-lpg-as-transport-fuel

Re: How many barrels of crude oil in one MT?

by Robert Fogt on 07/14/03 at 21:27:32
Petroleum has a specific gravity of 0.88 which means 1 liter weighs 0.88 kilograms. From the volume page we know that: 1 barrel [US, petroleum] = 158.9872972 liter So 1 barrel weighs: 158.9872972 * 0.88 = 139.908821536 kilograms 1 metric ton is 1000 kilograms: 139.908821536 / 1000 = 7.1475121 So there are a little over 7 barrels of petroleum in a metric ton. This is assuming that 0.88 is the correct specific gravity. Since as you said, the grade of the oil may make a difference. If you know the exact specific gravity of the oil in question, you will get more accurate results.

http://www.indexmundi.com/energy.aspx?country=ph&product=coal&graph=production DATA Charcoal United States Energy Information Administration

Use of LPG as transport fuel

Philippine Daily Inquirer
2:26 am | Tuesday, November 15th, 2011 14 980 479

First of all, lets be very clear: LPG (liquefied petroleum gas) is not toxic. On the contrary, it is used worldwide as a modern, clean, low-carbon energy. It has considerably improved the lives of people who used to rely on wood, charcoal and animal waste for their primary domestic fuel. Yes, LPG is used mainly for domestic cooking, heating and lighting. It is in the home where this exceptional energy has made a huge difference on peoples lives. The use of LPG in the home has brought many changes to peoples livessocial, economic, environmentalbut most important of all, it has improved public health. LPG produces far less emissions than most other sources of energy. If LPG were toxic it would clearly have no place in the home simply because it would expose the family to health risks. LPG is not only used in the home. It is such a versatile energy, having so many powerful properties, that it is used in all manner of ways. In the food industry, it is used to bake bread; in agriculture, to control weeds. In commerce, it is used in restaurants; and, of course, in transport, it displaces diesel and gasoline, in effect, reducing air pollution in the streets. We were, therefore, very much disappointed to read in the Inquirer about peoples concerns with the use of LPG as transport fuel. Over the last 50 years LPG has been used as an alternative to diesel and gasoline. Why? Because it reduces pollution, which is precisely what gave rise to the very concerns that Inquirer cited in its Nov. 3 issue. The World LP Gas Association spends a great deal of effort encouraging governments to adopt policies to move away from traditional polluting fuels such as biomass, kerosene and diesel. We therefore applaud the initiatives in the Philippines to convert diesel jeepneys to LPG vehicles. This will result in cleaner air in the cities and make a major contribution in raising the quality of public health and well-being. A good example is Hong Kong where in the late 90s all the taxi and minibus fleets were running on diesel, and street air pollution had become a grave concern for the government. After studying alternatives, the Hong Kong government decided to convert all taxicabs to LPG vehicles. Within a few years, all taxis, and many minibuses had switched to LPG and, today, the benefits are very palpable: street air quality has improved and incidents of respiratory ailments are down. Over 20 billion kilometers have been driven on LPG since it was first used as a transport fuel, and not a single major accident directly caused by LPG has been reported. Today, 16 million vehicles run on LPG in many countries, including Japan, Korea and Australia. It is not absurd to convert the jeepneys to LPG vehicles, it is good sense. LPG is an exceptional energy, and we encourage its continued use. It helps improve the quality of public health, it does not make it worse. DAVID TYLER, director, World LP Gas Association, www.worldlpgas.com

Rising oil prices to fuel auto-LPG market growth

November 22, 2007 11:26pm
0 0 0 17

By MARIA KRISTINA C. CONTI/BUSINESSWORLD BETTING that the market will go for cheaper car fuels, the local auto-liquefied petroleum gas (LPG) industry expects to expand ten-fold in the next 10 years.

World LPG Association President James Rockall told industry players at the First Philippine AutoLPG Summit yesterday that the countrys potential demand can easily hit one million tons a year. With a population of 80 million, the potential is very high. There is the price differential with other fuels. As the price of fuels goes up, auto-LPG becomes more attractive," he explained.

Auto-LPG is a variety of LPG that can be used for properly-outfitted vehicles.

Zenaida Y. Monsada, director for Oil Industry Management Bureau of the Energy department, said auto-LPG will always be at least 20%-30% cheaper than liquid fuels because it is not charged import or excise taxes by virtue of the value-added tax law. First, LPG is used as cooking gas, and lower costs will help the general public, and the poor. And as a car fuel, its clean; so the government sacrifices revenues," she told BusinessWorld.

Gasoline is charged P4.35 per liter in excise taxes.

But Mario C. Marasigan, director for Energy Utilization Management Bureau of the Energy department, tagged the lack of infrastructure as a key obstacle to the industrys development. Our distribution network is small and we need more [investments] from the private sector," he said.

In agreement, Mr. Rockall said global optimism is reflected in the global infrastructure.

The Philippine LPG industry is currently dominated by six bulk suppliers. Two of those, Petron and Shell, are also refiners but they now meet only a little over 20% of domestic demand.

But while cooking gas has a distribution network composed of 80 refillers, 90 marketers, and 1,000 dealers, the auto-LPG network now consists of just 94 public and 64 private or garage-based stations nationwide. The auto-LPG industry in the country is slowly emerging and is industry-driven," said Ms. Monsada. But there is growing interest especially for taxi fleets also for tricycles and some programs are even endorsed by local governments," she noted.

Data from the Energy depart-ment showed that auto-LPG sales for the first half this year hit 35.33 million barrels, accounting for about 3.85% of total LPG sales in volume.

LPG Industry Association President Pete V. Jayme opined that the fuel has met with luke-warm reception because Filipinos are still apprehensive about using auto-LPG. They want to be sure its safe to use," he said, while highlighting that the gas produces less pollution and about 20% less greenhouse gas emissions.

Mr. Rockall added that dirtier fuels are currently costing the Philippines a total of $2.5 billion annually. Switching to auto-LPG and cleaner fuels could save about 2% of the countrys gross domestic product, he said.

To date, there are a little more than 4,000 auto-LPG vehicles nationwide. The costs of conversion depends on the size of the engine, and ranges from P24,500 to P37,000.

However, Bureau of Product Standards (BPS) Director Jesus L. Motoomull warned the audience that the Trade department has licensed only seven auto-LPG converters: Naiadss Corp.; Macro Liquid Petroleum Gas Co., Inc.; Ferrotech Steel Corp.; Gasumu Marketing; Black Prince Communication, Inc.; Durasales, Inc.; and Lovely Home, Inc.

But the department is now processing the applications of 10 other converters.

Those that do not comply with the standards hurt the industry, by aggravating misconceptions about

the safety and benefits of the fuel, he stressed. In a presentation to LPG dealers, Mr. Motoomull outlined the Trade departments 463 standards for road vehicles. Two of those are specifically for vehicles using automotive LPG.

The Energy department, meanwhile, has issued Department Circular No. 2007-02-2002 which strictly sets guidelines and standards to institute safety codes in the auto-LPG industry. Mr. Rockall said the Philippines already has the appropriate policies. Thats an important criteria for growth," he said.

Last year, total auto-LPG consumption worldwide reached 219 million tons, as the number of vehicles adapted to the fuel rose 8.5% to 12.4 million. Since 2000, auto-LPG has grown from 6.6% to 8.8% of total world LPG consumption. This has meant a 34% increase in global auto-LPG consumption over the last six years," said Mr. Rockall.

In closing, Mr. Marasigan said the Energy department has a technical working group already drafting a program and guidelines for several fuel-economy test runs to spur local adoption of this global trend.

Liquefied petroleum gas (LPG) is a combination of gases made of hydrogen and carbon atoms. The most common mix includes 60% propane and 40% butane, with small quantities of alkenes. A strong odorant, ethanethiol, is added to facilitate the early detection of leakages. Its international standard is EN 589. Properties of LPG
LPG is the cleanest fuel, emitting lower amounts of carbon dioxide than coal or oil. It has a higher calorific value (46.1 MJ/kg) than both diesel and gasoline, but has the lowest energy density of the three. Being heavier than air, LPG tends to gravitate towards the floor and low lying spots, leading to ignition or suffocation hazards. It is non-toxic, non-corrosive and free of tetra ethyl red. It has a high octane number.

Uses of Liquefied Petroleum Gas

Here are some uses of liquefied petroleum gas:

It is used as a refrigerant and aerosol propellant. It emerges as a better option than chlorofluorocarbons that damage the ozone layer (which acts as a check on the harmful UV rays). This advocates their use in conventional refrigeration and air conditioning systems.

LPG is also used as a motor fuel (then known as autogas) in internal combustion engines and diesel engines. Also, stationary equipments like generators can also run on LPG.

http://www.economywatch.com/world-industries/oil/lpg-liquefied-petroleum-gas.html

Republic of the Philippines Congress of the Philippines Metro Manila Tenth Congress

Republic Act No. 8479

February 10, 1998

AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::

CHAPTER I GENERAL PROVISIONS Section 1. Short Title. This Act shall be known as the "Downstream Oil Industry Deregulation Act of 1998." Section 2. Declaration of Policy. It shall be the policy of the State to liberalize and deregulate the downstream oil industry in order to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply of environmentally-clean and high-quality petroleum products. To this end, the State shall promote and encourage the entry of new participants in the downstream oil industry, and introduce adequate measures to ensure the attainment of these goals. Section 3. Coverage. This Act shall apply to all persons or entities engaged in any and all activities of the domestic downstream oil industry, as well as persons or companies directly importing refined petroleum products for their own use. Section 4. Definition of Terms. For purposes of this Act, the following terms are hereinbelow defined: (a) Basel Convention shall refer to the international accord which governs the trade or movement of hazardous and toxic wastes across borders; (b) Board shall refer to the Energy Regulatory Board; (c) BOI shall refer to the Board of Investments; (d) Crude Oil shall refer to oil in its natural state before the same has been refined or otherwise treated, but excluding water, bottoms, sediments and foreign substances; (e) Dealer shall refer to any person, whether natural or juridical, who is engaged I the marketing and direct selling of petroleum products to motorists, end users, and other consumers; (f) DOE shall refer to the Department of Energy; (g) DOJ shall refer to the Department of Justice; (h) Downstream Oil Industry(DOI) or Industry shall refer to the business of importing; exporting, re-exporting, shipping, transporting, processing, refining, storing, distributing, marketing and/or selling crude oil, gasoline, diesel, liquefied petroleum gas (LPG), kerosene, and other petroleum products; (i) Hauler shall refer to any person, whether natural or juridical, engaged in the transport, distribution, hauling, and carriage of petroleum products, whether in bulk or packed form, from the oil companies and independent marketers to the petroleum dealers and other consumers; (j) LPG Distributor shall refer to any person or entity, whether natural or juridical, engaged in exporting, refilling, transporting, marketing, and/or selling of LPG to end users and other consumers;

(k) New Industry Participants shall refer to new participants in a particular sub-sector of the downstream oil industry with investments and initial business operations commencing after January 1, 1994; (l) Person shall refer to any person, whether natural or juridical, who is engaged in any activity of the downstream oil industry; (m) Petroleum shall refer to the naturally occurring mixture of compounds of hydrogen and carbon with a small proportion of impurities and shall include any mineral oil, petroleum gas, hydrogen gas, bitumen, asphalt, mineral wax, and all other similar or naturally-associated substances, with the exception of coal, peat, bituminous shale and/or other stratified mineral fuel deposits; (n) Petroleum Products shall refer to products formed in the case of refining crude petroleum through distillation, cracking, solvent refining and chemical treatment coming out as primary stocks from the refinery such as, but not limited to: LPG, naphtha, gasolines, solvents, kerosenes, aviation fuels, diesel oils, fuel oils, waxes and petrolatums, asphalt, bitumens, coke and refinery sludges, or other such refinery petroleum fractions which have not undergone any process or treatment as to produce separate chemically-defined compounds in a pure or commercially pure state and to which various substances may have been added to render them suitable for particular uses: Provided, That the resultant product contains not less than fifty percent (50%) by weight of such petroleum products; (o) Singapore Import Parity(SIP) shall refer to the deemed landed cost of a petroleum product imported from Singapore at a free-on-board price equal to the average Singapore Posting for that product at the time of loading; (p) Singapore Posting shall refer to the price of petroleum products periodically posted by oil refineries in Singapore and reported by independent international publications; and (q) Wholesale Posted Price (WPP) shall refer to the ceiling price of petroleum products set by the Board based on its duly approved automatic pricing formula. CHAPTER II LIBERALIZATION OF THE DOWNSTREAM OIL INDUSTRY AND PROMOTION OF FREE COMPETITION Section 5. Liberalization of the Industry. Any law to the contrary notwithstanding, any person or entity may import or purchase any quantity of crude oil and petroleum products from a foreign or domestic source, lease or own and operate refineries and other downstream oil facilities and market such crude oil and petroleum products either in a generic name or his or its own trade name, or use the same for his or its own requirement: Provided,That any person who shall engage in any such activity shall give prior notice thereof to the DOE for monitoring purposes: Provided, further, That such notice shall exempt such person or entity from securing certificates of quality, health and safety and environmental clearance from the proper governmental agencies: Provided, furthermore, That such person or entity shall, for monitoring purposes, report to the DOE his or its every importation/exportation: Provided, finally, That all oil importations shall be in accordance with the Basel Convention. Section 6. Tariff Treatment. (a) Any law to the contrary notwithstanding and starting with the effectivity of this Act, a single and uniform tariff duty shall be imposed and collected both on imported crude oil and imported refined petroleum products at the rate of three percent

(3%): Provided, however, That the President of the Philippines may, in the exercise of his powers, reduce such tariff rate when in his judgment such reduction is warranted, pursuant to Republic Act No. 1937, as amended, otherwise known as the Tariff and Customs Code:Provided, further, That beginning January 1, 2004 or upon implementation of the Uniform Tariff Program under the World Trade Organization and ASEAN Free Trade Area commitments, the tariff rate shall be automatically adjusted to the appropriate level notwithstanding the provisions under this Section. (b) For as long as the National Power Corporation (NPC) enjoys exemptions from taxes and duties on petroleum products used for power generation, the exemption shall apply to purchases through the local refineries and to the importation of fuel oil and diesel. Section 7. Promotion of Fair Trade Practices. The Department of Trade and Industry (DTI) and DOE shall take all measures to promote fair trade and prevent cartelization, monopolies, combinations in restraint of trade, and any unfair competition in the Industry as defined in Article 186 of the Revised Penal Code, and Articles 168 and 169 of Republic Act No. 8293, otherwise known as the "Intellectual Property Law". The DOE shall continue to encourage certain practices in the industry which continue to encourage certain practices in the Industry which serve the public interest and are intended to achieve efficiency and cost reduction, ensure continuous supply of petroleum products, and enhance environmental protection. These practices may include borrow-and-loan agreements, rationalized depot and manufacturing operations, hospitality agreements, joint tanker and pipeline utilization, and joint actions on spill control and fire prevention. The DOE shall monitor the relationship between the oil companies (refiners and importers) and their dealers, haulers and LPG distributors to help ensure the observance of fair and equitable practices and to ensure the enforcement of existing contracts: Provided, That the DOE shall conciliate and arbitrate any dispute that may arise with respect to the contractual relationship between the oil companies and the dealers, haulers and LPG distributors involving the dealers' mark-up, the freight rate in transporting petroleum products and the margins of LPG distributors for the protection of the public and to prevent ruinous competition: Provided, further, That the arbitration award of the DOE shall be subject to judicial review under existing law. Section 8. Program to Encourage the Entry of New Participants in the Industry. The DOE, the Department of Foreign Affairs (DFA) and the DTI shall jointly formulate and establish a program that will promote the entry of new participants in the Industry. Such program shall, among others, include a strategic international information campaign to be implemented through selected embassies and consular offices of the Philippines. This program shall commence implementation after three (3) months from the effectivity of this Act. In this regard, the DOE shall provide a "Philippine Downstream Oil Industry Investment Guide" to new industry participants and prospective participants. This guide, shall, among others, contain: (a) An introduction to the Philippine Downstream Oil Industry and the government's unwavering commitment to deregulation; (b) The entry requirements; (c) Information on the benefits and incentives for new industry participants which shall specify: (i) all the incentives and benefits they can enjoy, and (ii) the procedural and substantive requirements needed for entitlement; and (d) Such other information the DOE may deem necessary to promote the entry of new participants.

Section 9. Incentives for New Investments. To the extent applicable, persons with new investments as determined by the DOE and registered with the BOI in refining, storage, marketing and distribution of petroleum products, shall be extended the same incentives granted to BOI-registered enterprises engaged in a preferred area of investments pursuant to Executive Order No. 226, otherwise known as the "Omnibus Investments Code of 1987". Such incentives shall include: (1) Income tax holiday; (2) Additional deduction for labor expenses; (3) Minimum tax and duty of three percent (3%) and value-added tax (VAT) on imported capital equipment; (4) Tax credit on domestic capital equipment; (5) Exemption from contractor's tax; (6) Unrestricted use of consigned equipment; (7) Exemption from the real property tax on production equipment or machineries; (8) Exemption from taxes and duties on imported spare parts; and (9) Such other applicable incentives under Article 39 of Executive Order No. 226. Any provision of the law to the contrary notwithstanding, the said incentives may be availed by persons with new investments for a period of five (5) years from registration with the BOI: Provided, however, That in the storage, marketing and distribution of petroleum products, only the investments of new industry participants shall be entitled to incentives provided in the said Code. As used herein, "marketing of petroleum products" shall include the establishment of gasoline stations. For this purpose, the industry shall be included in the annual Investment Priorities Plan (IPP): Provided, That nothing in herein contained shall preclude qualified persons or entities as provided under the "Omnibus Investments Code" from applying from or continue enjoying incentives and benefits under the said Code. Section 10. Promotion of Retail Competition. To achieve the social and policy objective of fair prices, facilitate the attainment of a truly competitive product market in the retail level, the DOE shall promote and encourage by way of information dissemination, networking, and management/skills training, the active and direct participation of the private sector and cooperatives in the retailing of petroleum products through joint venture/supply agreements with new industry participants for the establishment and operation of gasoline stations: Provided, That the training herein shall include LPG retailing. To this end, the DOE shall, in accordance with the Technology and Livelihood Resource Center (TLRC) and Technical Education and Skills Development Authority (TESDA), coordinate with new industry participants and existing petroleum dealers' associations in the formulation and implementation of a two-fold program on management and skills training for the establishment, operation, and maintenance of gasoline stations.

Persons who successfully complete the two-fold program shall be entitled to government assistance being extended by government lending agencies, in the form of medium- to long-term loans with low interest rates and to the gasoline training station training and loan fund provided hereunder, to serve as capital for the establishment and operation of gasoline stations. For these purposes, there is hereby established a gasoline station and loan fund with the initial amount of Three hundred million pesos (P 300,000,000.00) to be provided by the Philippine Amusement and Gaming Corporation (PAGCOR) and administered by the DOE under a separate account. Of this amount, two percent (2%) plus any additional funding shall be allocated for he two-fold program; one percent (1%) plus any additional funding shall be set aside for administrative, maintenance, and other operating expenses; ninety-four percent (94%) shall be used exclusively for lending and financial assistance; the remaining three percent (3%) shall be utilized in accordance with the provisions of Section 26 of this Act: Provided, That the loans to be awarded herein shall be from short- to medium-term with low interest rates; Provided, further, That these loans shall be awarded to qualified persons who are able to comply with the conditions set forth in the next two (2) preceding paragraphs. CHAPTER III ANTI-TRUST SAFEGUARDS, OTHER PROHIBITED ACTS AND REMEDIES Section 11. Anti-Trust Safeguards. To ensure fair competition and prevent cartels and monopolies in the Industry, the following acts are hereby prohibited: (a) Cartelization which means any agreement, combination or concerted action by refiners, importers and/or dealers, or their representatives, to fix prices, restrict outputs or divide markets, either by products or by areas, or allocate markets, either by products or by areas, in restraint of trade or free competition, including any contractual stipulation which prescribes pricing levels and profit margins; (b) Predatory pricing which means selling or offering to sell any oil product at a price below the seller's or offeror's average variable cost for the purpose of destroying competition, eliminating a competitor or discouraging a potential competitor from entering the market: Provided, however, That pricing below average variable cost in order to match the lower price of the competitor and not for the purpose of destroying competition shall not be deemed predatory pricing. For purposes of this provision, "variable cost" as distinguished from "fixed cost", refers to costs such as utilities or raw materials, which vary as the output increases or decreases and "average variable cost" refers to the sum of all variable costs divided by the number of units of outputs. Any person, including but not limited to the chief operating officer, chief executive officer or chief finance officer of the partnership, corporation or any entity involved, who is found guilty of any of the said prohibited acts shall suffer the penalty of three (3) to seven (7) years imprisonment, and a fine ranging from One million pesos (P 1,000,0000.00) to Two million pesos (P 2,000,000.00). Section 12. Other Prohibited Acts. To ensure compliance with the provisions of this Act, the refusal to comply with any of the following shall likewise be prohibited: (a) submission of any reportorial requirements; (b) use of clean and safe (environment and worker-benign) technologies;

(c) any order or instruction of the DOE Secretary issued in the exercise of his enforcement powers under Section 15 of this Act; and (d) registration of any fuel additive with the DOE prior to its use as an additive. Any person, including but not limited to the chief operating officer or chief executive officer of the partnership, corporation or any entity involved, who is found guilty of any of the said prohibited acts shall suffer the penalty of imprisonment for two (2) years and a fine ranging from Two hundred fifty thousand pesos (P 250,000.00) to Five hundred thousand pesos (P 500,000.00). Section 13. Remedies. (a) Government Action. Whenever it is determined by the Joint Task Force created under Section 14 (d) of this Act, there is a threatened or imminent or actual violation of Section 11 of this Act, it shall direct the provincial or city prosecutors having jurisdiction to institute an action to prevent or restrain such violation with the Regional Trial Court of the place where the defendants reside or has his place of business. Pending hearing of the complaint and before final judgment, the court may at any time issue a temporary restraining order or an injunction as shall be deemed just within the premises, under the same conditions and principles as injunctive relief is granted under the Rules of Court. Whenever it is determined by the Joint Task Force that the Government or any of its instrumentalities or agencies, including government-owned or controlled corporations, shall suffer loss or damage in its business or property by reason of violation of Section 11 of this Act, such instrumentality, agency or corporation may file an action to recover damages and the costs of the suit with the Regional Trial Court which has jurisdiction as provided above. (b) Private Complaint. Any person or entity shall report any violation of Section 11 of this Act to the Joint Task Force. The Joint Task Force shall investigate such reports in aid of which the DOE Secretary may exercise the powers under Section 15 of this Act. The Joint Task Force shall prepare a report embodying its findings and recommendations as a result of any such investigation, and the report shall be made at the discretion of the Joint Task Force. In the event that the Joint Task Force determines that there has been a violation of Section 11 of this Act, the private person or entity shall be entitled to sue for and obtain injunctive relief, as well as damages, in the Regional Trial Court having jurisdiction over any of the parties, under the same conditions and principles as injunctive relief is granted under the Rules of Court. CHAPTER IV POWERS AND FUNCTIONS OF THE DOE AND DOE SECRETARY Section 14. Monitoring. (a) The DOE shall monitor and publish daily international crude oil prices, as well as follow the movements of domestic oil prices. It shall likewise monitor the quality of petroleum products and stop the operation of businesses involved in the sale of petroleum products which do not comply with the national standards of quality that are aligned with the national standards/protocols of quality. The Bureau of Product Standards of the DTI, together with the Department of Environment and Natural Resources (DENR), the DOE, the Department of Science and Technology (DOST), representatives of the fuel and automotive industries and the consumers, shall set the specifications for all types of fuel and fuel-related products to improve fuel composition for increased efficiency and reduced emissions. The BPS shall also specify the allowable content of additives in all types of fuels and fuel-related products. (b) The DOE shall monitor the refining and manufacturing processes of local petroleum products to ensure that clean and safe (environment and worker-benign) technologies are applied. This shall also apply to the process of marketing local and imported petroleum products.

(c) The DOE shall maintain a periodic schedule of present and future total industry inventory of petroleum products for the purpose of determining the level of supply. To implement this, the importers, refiners, and marketers are hereby required to submit monthly to the DOE their actual importations, local purchases, sales and/or consumption, and inventory on a per crude/product basis. (d) Any report from any person of an unreasonable rise in the prices of petroleum products shall be immediately acted upon. For this purpose, the creation of the DOE-DOJ Task Force is hereby mandated to determine within thirty (30) days the merits of the report and initiate the necessary actions warranted under the circumstance:Provided, That nothing herein shall prevent the said task force from investigating and/or filing the necessary complaint with the proper court or agency motu propio. Upon the effectivity of this Act, the Secretaries of Energy and Justice shall jointly appoint the members of a committee who shall be tasked with the drafting of the rules and guidelines to be adopted by the Task Force in the performance of its duty. These guidelines shall ensure the efficiency, promptness, and effectiveness in the handling of its cases. The Task Force shall be organized and its members appointed within one (1) month from the effectivity of this Act. (e) In times of national emergency, when the public interest so requires, the DOE may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any person or entity engaged in the Industry. Section 15. Additional Powers of the DOE Secretary. In connection with the enforcement of this Act, the DOE Secretary shall have the following powers: (a) To gather and compile appropriate information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person or entity in the Industry; (b) To require, by general or special orders, persons or entities engaged in a particular activity of the industry: (i) to file an annual or special report, or both in such form as the Secretary may prescribe; or (ii) to answer specific questions in writing, furnishing to the Secretary such information as he may require as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals of the respective persons or entities filing such reports or answer. Such reports and/or answer shall be filed with the Secretary under oath and within such reasonable time as the Secretary may prescribe; (c) Upon the direction of the President or either House of Congress, to investigate and report the facts relating to any alleged violation of this Act by any person or corporation; (d) Upon the application of the Secretary of Justice, to investigate and make recommendations for the readjustment of the business of any person or entity alleged to be violating this Act in order that such person or entity may thereafter maintain his or its organization, management, and conduct of business in accordance with law; (e) To recommend to the proper government agency the suspension or revocation and termination of the business permit of an offender; (f) Concomitant with the policy of ensuring a continuous, adequate and economic supply of energy to exercise his powers and functions provided under Section 5 (c) of Republic Act No. 7638;

(g) To make public from time to time such portions of the information obtained by him hereunder as are in the public interest; and to make annual and special reports to Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of his reports and decisions in such form and manner as may be best adapted for public information and use: Provided, That the Secretary shall have any authority to make public any trade secret or any commercial or financial information which is obtained from any person or entity which is privileged or confidential, except that the Secretary may disclose such information to officers and employees of appropriate law enforcement agencies or to any officer or employee of any such law enforcement agency upon the prior certification by an officer of any such law enforcement agency that such information will be maintained in confidence and will be used only for official law enforcement purposes; and (h) Whenever a final order has been entered against any defendant in any suit brought by the government to prevent and restrain any violation of the anti-trust provisions of this Act to make investigation, upon his initiative, of the manner in which the decree has been or is being carried out, and upon the application of the Secretary of Justice, it shall be his duty to make such investigation. He shall transmit to the Secretary of Justice a report embodying his findings and recommendations as a result of any such investigation, and the report shall be made public at the discretion of the Secretary. CHAPTER V TRANSITION PHASE Section 16. Phases of Deregulation. In order to provide a smooth implementation of deregulation, the policy shift shall be done in two (2) phases: Phase I (Transition Phase) and Phase II (Full Deregulation Phase). Section 17. Buffer Fund. The President may, when the interest of the consumers so requires, taking into account the rise in the domestic prices of petroleum products, use the "Reserve Control Account" as a buffer fund in an amount not exceeding Two billion nine hundred million pesos (P 2,900,000,000.00) to cover increases in the prices of petroleum products, except premium gasoline, during the Transition Phase over the prices prevailing as of the date of the effectivity of this Act. The "Reserve Control Account" refers to a lump sum collation of reserve impositions deducted from the appropriations approved by Congress for the operation of the government and the implementation of projects and programs. Section 18. Automatic Oil Pricing Mechanism. To enable the domestic price of petroleum products to approximate and promptly reflect the prices of oil in the international market, an automatic pricing mechanism shall be established. To this end, the following laws are hereby amended: (a) Paragraph (a), Section 8 of Republic Act No. 6173, as amended by Section 3 of Executive Order No. 172, to read as follows: "SEC. 8. Powers of the Board Upon Notice and Hearing. The Board shall have the power: "(a) To set the wholesale posted price of petroleum products during the Transition Phase. "For this purpose and for the protection of the public interest, the Board shall, after due notice and hearing, at which any consumer of petroleum products and other parties who may be affected may appear and be heard, and within one (1) month after

the effectivity of this Act, approve a market-oriented formula to determine the WPP of petroleum products based solely on the changes of either the Singapore Posting of refined petroleum products, the SIP or the crude landed cost. "Thereafter, the Board shall at the proper times automatically adjust the WPP of petroleum products based on the approved formula, through appropriate orders, without the need for notice and hearing. "The Board shall, on the dates of effectivity of the automatic oil pricing formula, the initial WPP or the adjusted WPP, publish the same, together with the corresponding computation in two (2) national newspapers of general circulation." (b) Paragraph 1 of Letter of Instruction No. 1441, to read as follows: "1. To review and reset the prices of domestic petroleum products up or down as necessary on or before the third Monday of each month to reflect the new WPP of refined petroleum products based on the approved automatic pricing formula." (c) Paragraph 2 of Letter of Instruction No. 1441 is hereby deleted. In lieu thereof a new paragraph is inserted to read as follows: "2. The price adjustment shall be reflected automatically in the approved WPP of each petroleum product." (d) The provisions of Section 3 (a) and (c) and Section 5 of Executive Order No. 172 to the contrary notwithstanding, the Board shall, during the Transition Phase, maintain the current margin of dealers and rates charged by water transport operators, haulers and pipeline concessionaires. Depending on the basis of the APM, the Board shall, within one (1) month after the effectivity of this Act and after proper notice and full public hearing, prescribe a formula which will automatically set the margins of marketers and dealers, and the rates charged by water transport operators, haulers and pipeline concessionaires: Provided, That such formula shall take effect simultaneously with the effectivity of the automatic oil pricing formula. Thereafter, the Board shall set the said margins and rates based on the approved formula without the necessity for public notice and hearing. The Board shall, on the day of the effectivity of the aforesaid formula, publish in at least two (2) newspapers of general circulation the mechanics of the formula for the information of the public. CHAPTER VI FULL DEREGULATION PHASE Section 19. Start of Full Deregulation. Full deregulation of the Industry shall start five (5) months following the effectivity of this Act: Provided, however, That when the public interest so requires, the President may accelerate the start of full deregulation upon the recommendation of the DOE and the Department of Finance when the prices of crude oil and petroleum products in the world market are declining and the value of the peso in relation to the US dollar is stable, taking into account the relevant trends and prospects: Provided, further, That the foregoing provisions notwithstanding, the five (5)-month Transition Phase shall continue to apply to LPG, regular gasoline, and kerosene as socially-sensitive petroleum products and said petroleum products shall be covered by the automatic pricing mechanism during the said period.

Upon the implementation of full deregulation as provided herein, the Transition Phase is deemed terminated and the following laws are repealed: (a) Republic Act No. 6173, as amended; (b) Section 5 of Executive Order No. 172, as amended; (c) Letter of Instruction No. 1431, dated October 15, 1984; (d) Letter of Instruction No. 1441, dated November 15, 1984; (e) Letter of Instruction No. 1460, dated May 9, 1985; (f) Presidential Decree No. 1889; and (g) Presidential Decree No. 1956, as amended by Executive Order No. 137: Provided, however, That in case full deregulation is started by the President in exercise of the authority provided in this Section, the foregoing laws shall continue to be in force and effect with respect to LPG, regular gasoline and kerosene for the rest of the five (5)-month period. Section 20. Jurisdiction on Pricing of Piped Gas. Section 3 of Executive Order No. 172, is hereby amended to read as follows: "SEC. 3. Jurisdiction, Powers and Functions of the Board. The Board shall, upon proper notice and hearing, fix and regulate the rate of schedule or prices of piped gas to be charged by duly franchised gas companies which distribute gas by means of underground pipe system." CHAPTER VII FINAL PROVISIONS Section 21. OPSF Balance. All outstanding claims against OPSF as of the effectivity of this Act, subject to the existing auditing rules and regulations of the Commission on Audit (COA), shall be considered as accounts payable of the National Government. For this purpose, and any law to the contrary notwithstanding, the reimbursement certificates issued by the DOE covering the said outstanding claims shall be honored and accepted by the Bureau of Customs and the Bureau of Internal Revenue as payment to the extent of ten percent (10%) per payment of the tariff duties and specific taxes from the creditor-claimants against the OPSF until such claims are settled in full: Provided, That the reimbursement certificates shall not be transferable. Section 22. Initial Public Offering. In compliance with the constitutional mandate to encourage private enterprises to broaden their base of ownership and in recognition of the vital role of oil in the national economy, any person or entity engaged in the oil refinery business shall make a public offering through the stock exchange of at least ten percent (10%) of its common stock within a period of three (3) years from the effectivity of this Act or the commencement of its refinery operations: Provided, That no single person or entity shall be allowed to own more than five percent (5%) of the stock offering: Provided, further, That any crude oil refining company and any stockholder thereof shall not acquire, directly or indirectly, any share of stock offered by any other crude oil refining company pursuant to his Section: Provided, finally, That any such company which

made the requisite public offering before the effectivity of this Act shall be exempted from the requirement. Section 23. Implementing Rules and Regulations. The DOE, in coordination with the Board, the DENR, DFA, Department of Labor and Employment (DOLE), Department of Health (DOH), DOF, DTI, National Economic and Development Authority (NEDA) and TLRC, shall formulate and issue the necessary implementing rules and regulations within sixty (60) days after the effectivity of this Act. Section 24. Penal Sanction. Any person who violates any of the provisions of this Act shall suffer the penalty of three (3) months to one (1) year imprisonment and a fine ranging from Fifty thousand pesos (P 50,000.00) to Three hundred thousand pesos (P 300,000.00). Section 25. Public Information Campaign. The DOE, in coordination with the Board and the Philippine Information Agency (PIA), shall undertake an information campaign to educate the public on the deregulation program of the Industry. Section 26. Budgetary Appropriations. Such amount as may be necessary to effectively implement this Act shall be taken by the DOE form its annual appropriations, the DOE' Special Fund created under Section 8 of Presidential Decree No. 910, as amended, and such amount allocated under Section 10 of this Act. Section 27. Separability Clause. If, for any reason, any section or provision of this Act is declared unconstitutional or invalid, such parts not affected thereby shall remain in full force and effect. Section 28. Repealing Clause. All laws, Presidential decrees, executive orders, issuances, rules and regulations or parts thereof, which are inconsistent with the provisions of this Act are hereby repealed or immediately modified accordingly. Section 29. Effectivity. This Act shall take effect upon its complete publication in at least two (2) national newspapers of general circulation. Approved: February 10, 1998

Diesel to LPG Conversion Progra m launched for Philippine PUV drivers

June 17th, 2008

Update: DOE is changing its recommendation on the use of a Diesel LPG system in PUVs. Philippine President, Gloria Macapagal-Arroyo, announced the P1B budget allocated for the public utility vehicle drivers so that they can convert their jeepneys from diesel to Diesel-LPG. It boils down to P80/day charged to the driver for repayment of his debt for converting his jeepney so that it can accept the cheaper priced Auto LPG. The diesel engine will then run at a mixture of 70% diesel and 30% LPG. According to her Excellency, the current price of converting a diesel engine to intake partially LPG is P70,000. A brand new vehicle that is Auto LPG ready costs around P550,000. Interested jeepney drivers just have to go to the Development Bank of the Philippines to apply. I dont know which is better economically? Converting your diesel engine to accept a 30% mixture of LPG or ditching your diesel engine with a regular combustion engine and converting it to run on 100% LPG? Doing a search in some local Philippine Buy and Sell sites, the price to convert your gasoline engine to run on LPG is around P30,000. At a junk shop before, they were charging me P15-P20k for a second hand Toyota 1.6GLi fuel injected engine found in a recently totalled Toyota Corolla. Ad in P10k for labor and miscellaneous to the conversion and engine change process and you get P60k tops. The math is a bit close as it comes out slightly cheaper if you go for the gasoline engine conversion instead of the diesel-LPG. Im not really sure how much mileage you get with auto LPG, but it costs something like P29 -31/li versus the P50/li that diesel is selling at right now. Not to mention, that at least you are just wrestling now with a single fuel system rather than a dual fuel system (diesel and LPG.) Update: According to a mechanic I talked to, one of the drawbacks of AutoLPG system being offered in the market, is that there is a noticeable powerloss in the engine when going up inclines or during high revs. Not something youd want if you were driving a jeep full of passengers. It is suggested to use the newer electronic injection type of Auto LPG systems in order to prevent this power loss problem. Update: According to the Shell, its a 15% -25% increase in consumption compared to gasoline. heres a more comprehensive FAQ on Auto LPG Conversion. Of course there is also the slight problem of LPG being used to cook food in the kitchen. Right now there are only a few cars running on AutoLPG, but what would happen if majority of all cars run on LPG? Wouldnt that raise the price of LPG to astronomical proportions because of the demand from the transportation sector? I hope not. Auto LPG isnt free from being affected by the surging oil markets either. Between 2007 and 2008, the price of auto LPG increased from P23/li to P29/li, a 26% increase. Reference : $1 = P44 [source]

http://www.alternat1ve.com/biofuel/2008/06/17/diesel-to-lpg-conversion-program-launched-forphilippine-puv-drivers/

DOE closely monitors LPG pricing to address overpricing concerns

From the Department of Energy The Department of Energy (DOE) assures the public of its continued close monitoring of the prices of Liquefied Petroleum Gas (LPG) to ensure that the adjustments are fair and reasonable. Per monitoring of the DOE, LPG prices have decreased six times totaling to P9/kg since January as opposed to only one increase this month of P2.50/kg. Under Republic Act No. 8479, otherwise known as the Oil Deregulation Law, the pricing of petroleum products is left with the LPG companies, with the DOE determining the reasonableness of the price computation based on submitted information. The DOE computation of petroleum product prices only serves as a guide estimate of the prevailing prices of the commodity in a deregulated oil market. Oil companies are required to inform the DOE of their price adjustment six hours before their implementation. In addition, the DOE regularly sends out field inspectors to monitor the price movements of LPG in the market to ascertain that they are implementing their declared prices. For reports or complaints about pricing abuses, consumers can all call (02)840-2130 / (02) 840-2267 or directly file their complaints to the DOE. Consumers are reminded to keep their purchase receipts as support for complaints. Retailers or distributors which are proven to have overpriced customers of its LPG products may be subject to a fine of up to P500,000. doe.gov.ph

http://www.gov.ph/2013/07/05/doe-closely-monitors-lpg-pricing-to-address-overpricingconcerns/

What the government can do are: a) aggressive promotion of firewood plantation, b) simplify further the old technology on establishing firewood plantation to encourage more farmers, c) improve charcoal processing and d) promote the use of efficient stoves. This write up discusses the need for firewood plantation, areas available for planting, where to plant in farms, what species to plant in a particular soil type/location for optimum growth, planting methods, harvesting, marketing, and the side lights on the ecological benefits derived from plantation aside from wood.

Purvin, & Gertz. (2000). Continued LPG demand growth changes historical trade patterns. Oil & Gas Journal. [Online] Available: www.purvingertz.com

1 source Source: Philippine Energy Plan. 1999-2008. Republic of the Philippines:

Department of Energy. http://www.doc.gov.ph/PEP-Demand.htm

Source:DENR/FMB. (1991). Philippine master plan for development. Quezon City, Department of Environment and Natural Resources.
2nd

forest