DOE backs proposal to defer compliance with Clean Air Act

The Department of Energy (DOE) is supportive of the proposal for the deferment of the compliance to Clean Air Act (CAA) to 2007, an international oil expert said.

In a forum last week, East and West Center expert Dr. Fesheraki said both the DOE and the Department of Environment and Natural Resources (DENR) are aware of some issues surrounding the implementation of the CAA.

Fesheraki noted that local refiners have to contend with little incentive to adjust to the new standards such as the capital investment in a low profit environment while buying expensive low sulfur crude is hard to justify.

"Because of these problems, the DOE and the DENR are supportive of proposal for the deferment of the CAA to 2007," he said.

"If you do not delay the compliance, you force people to start making investments and this will increase cost to the consumers."

According to the oil expert, the sluggish economic condition of the country will not warrant such huge investment from the oil companies.

"Nothing is free. Better environment costs more. Is the Philippine economy able and ready to pay more substantially more cost? I don’t think so. That is why I think, (the DOE and the DENR) they understand it."

Fesheraki expressed optimism that in five years’ time, the local economy will show some signs of improvement. "I think five-year period is a reasonable timetable (for the CAA compliance)," he added.

Market leader Petron Corp. said regardless of the proposal for deferment, the company is still preparing to comply with the specification of the law.

"We have prepared our plans to comply with the CAA. If there is a deferral, this will not affect our plans," Petron president and chief executive officer Motassim Al-Ma’ashouq said.

But Al-Ma’ashouq admitted that their $600-million isomerization and hydro-heater project in connection with the compliance to the CAA might be delayed. "There might be a slight delay but we will make sure that we will be ready for the implementation of the CAA. We will push through with the investment but we are not sure if it would start within the year," the Petron chief said.

Caltex Phils. Inc. spokeswoman Marian Catedral said they will have to study the impact of the delay on their operations.

But Catedral pointed out that initial studies show that the retooling of the existing Caltex’s refinery would result to a pass-on cost of P1.25 per liter to consumers.