Small oil players bat for uniform diesel grade specs

The Independent Philippine Petroleum Companies Association (IPPCA) is urging the government to consider the adoption of a uniform grade diesel for both industrial and automotive use.

IPPCA consists of the smaller players in the downstream oil industry such as Castrol, Eastern Petroleum Corp., Filpride Energy Corp., Flying V, Liquigaz Philippine Corp., Oilink International Corp., 3n2J Shipping and Trading Services Inc., Pryce Gases, PTT Philippines Inc., Rambi Development Corp., Seaoil Philippines Inc., Subic Bay Distribution Inc., and Unioil Philippines Inc.

In a position paper submitted to the Department of Energy (DOE), IPPCA has proposed that the sulfur content for industrial diesel be lowered to the same level as automotive diesel to create a uniform grade for diesel.

The DOE is currently conducting public consultations on the need for a uniform grade diesel in time for the implementation of the Clean Air Act (CAA) on diesel specification by January 2004.

IPPCA noted that the CAA created two grades of diesel – automotive diesel and industrial diesel.

At present, automotive diesel has a sulfur content of 0.20 percent by weight while industrial diesel has 0.30 percent. The difference, IPPCA said, is negligible since oil companies can still sell the same sulfur levels for the two grades. IPPCA, however, said that for 2004, the CAA mandates that automotive diesel contain a sulfur content of 0.05 percent by weight. There is no further mandate for industrial diesel, thus, sulfur content would remain at 0.30 percent by weight.

"The association is of the position that since there is no legal impediment to implement a uniform grade of diesel or for the government to impose the same, lowering the sulfur content in diesel would be a significant step towards improving air quality and consequently, our health," it said.

It pointed out that there should be no distinction as to industrial and automotive diesel when talking about the health of the people.

IPPCA said the uniform grade of diesel will also prevent product adulteration. Considering that the cost of diesel with sulfur content of 0.30 percent is cheaper than that with sulfur content of 0.05 percent some traders might pass on the 0.30 percent diesel as 0.05 percent and profit from the same.

The group believed that the price quotations based on Mean of Platts Singapore (MOPS) show that price differential for the two grades of diesel would range from a low of $0.30 per barrel to $0.65 per barrel and would translate to a minimal P0.11 per liter.

According to IPPCA, the impact may not even be passed on to industrial companies as they enjoy competitive discount from oil companies because of bulk usage. – Donnabelle Gatdula