Napocor suppliers given more time to comply with Clean Air Act

Oil companies supplying the fuel requirement of the National Power Corp. (Napocor) have at least until next year to comply with the fuel specifications under the Republic Act No. 8749, otherwise known as the Clean Air Act.

Sources said the state-run power utility firm met with officials of the big "3" oil firms recently.

In that meeting, they said suppliers of Napocor, of which the biggest is Petron Corp., will not be compelled to comply with the one percent sulfur specs until the grace period ends on March 2002.

The implementing rules and regulations (IRRs) of the CAA took effect last Jan. 1 but the proponents of the law are allowed an 18-month grace period or until March 2002 to fully comply with the IRRs.

The sources said the oil companies do not want to shell out funds for the adjustments of their sulfur content for both their fuel and diesel products to comply with the CAA.

They said the Napocor also does not want the oil companies to effect a price adjustment in the fuel products they are selling to the power firm since this might be pass on to end-users eventually.

Upward price adjustment, sources said, is likely since the local oil companies will be competing with other countries such as Korea and Japan for the low sulfur fuel products. "This means that prices would likely go up," they said.

Sources said the one-percent sulfur content is not being traded at the Singapore market. "We will have to negotiate for the production of low sulfur in Singapore but the price is yet unknown," they said.

Earlier, Petron Corp. said it will invest some P6 billion, to comply with the provisions of CAA of 1999 while it will need at least P20 million just to lower the sulfur content of its diesel products.

Second biggest refiner Pilipinas Shell Petroleum Corp., on the other hand, said that majority of their capital outlay last year went to the acquisition and installation of several equipment in their refinery in Batangas to implement provisions of the CAA.

Caltex Philippines Inc., the third biggest refiner in the country, is likewise expected to spend some P20 million just to comply with the sulfur reduction provision of the law. – Donnabelle Gatdula