DOF, private sector back fuel marking initiative to counter smuggling

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Various groups are supporting a Philippine government proposal to adopt a fuel marking and monitoring system to prevent oil smuggling and improve collection of fuel excise taxes, according to the Department of Finance (DOF).

Officials of Dow Chemical, SICPA-Global Fluids International (SICPA-GFI), Authentix, and United Color Manufacturing Inc. all said, at a recent Lower House ways and means committee hearing, that a fuel marking system is an “economic, commercial, health, safety and environmental” concern that should be institutionalized by the government, DOF said.

These officials added that fuel marking will complement DOF’s proposal to adjust fuel excise tax rates as part of its Comprehensive Tax Reform Program (CTRP).

Mandatory fuel marking, which securely and covertly authenticates petroleum products, forms part of the first CTRP being pushed by the DOF under House Bill No. 4774 authored by House ways and means committee chair and Quirino representative Dakila Carlo Cua.

Roberto Batongbakal, who represents Dow Chemical, said that on top of helping curb smuggling, fuel marking will ensure that oil products sold in the market are safe, highly regulated, of high quality, and compliant with the country’s environmental laws.

“We recommend that the government develop a comprehensive fuel marking strategy for imported and locally produced fuel throughout the Philippines. We need to leverage best practices from governments that have successfully implemented fuel markings in their countries,” Batongbakal said.

He cited Philippine trade data showing that as of 2015, a total of US$7.2 billion of crude and fuel oil have been imported into the country, and that import volumes have grown 7% annually for the past five years.

Of these imports, 60% are crude oil and 40% are non-crude or finished products, he said.

Oil industry data also show that the government is losing $20 billion to $30 billion in revenues annually from oil smuggling.

“The government is not the only one losing revenues, but also legitimate fuel manufacturers and distributors,” he noted.

Gadi Gonen, managing director of Switzerland-based SICPA-GFI, said fuel marking is a must to thwart oil smuggling that terrorists and organized crime groups conduct in order to raise funds.

He said a fuel marking system implemented by his company in Tanzania raised some $142 million in additional revenues for the government of that African country.

Ramon Lacdan, local manager of Pennsylvania-based United Color, and Joel Fischl, managing director for Asia of Texas-based Authentix, agreed that fuel marking will boost tax revenues from oil products while protecting consumers as well.

“Vehicles are very sophisticated today, and if you put adulterated fuel or smuggled fuel into an automobile, it does bad things to the engines. So (fuel marking provides) consumer protection, public protection and revenue protection,” Fischl said.

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