City’s fuel costlier to entice suppliers

CEBU, Philippines - The Cebu City government has bought diesel fuel worth P68.3 million from two private suppliers that charged over P1.1 million more compared to pump prices based on the Department of Energy-Visayas’ monitoring of petroleum products.

Records show that the city had made several purchases of diesel products worth P60 million from Phoenix Petroleum Philippines, Inc. and another P8.3 million of fuel from Evvolve Marketing Corporation.

The P8.32-million diesel purchased from Evvolve Marketing Corporation can be bought only at P7.76 million from other private suppliers, while the P60.06 million  worth of diesel that were acquired from Phoenix Petroleum can be also purchased at P58.5 million from other sources that are accredited by DOE.

COA Circular No. 2012-003 dated October 29, 2012 provides that the term “excessive expenditures” refers to unreasonable expenses incurred at an immoderate quantity and exorbitant price. It also includes expenses which exceed what is usual or proper, as well as expenses which are unreasonably high and beyond just measure or amount.

The city’s fuel budget last year was P100 million, with P10 million of it spent for lubricants.

Explaining this, the administration told state auditors that deliveries of fuel products were done in staggered basis due to limited storage capacity of the fuel tank located at the city’s asphalt batching plant in the mountain barangay of Budlaan.

 The city said delivery requires double axle tankers due to the difficult terrain and overhead pump trucks because the city’s diesel storage is elevated.

The other reason given by the city officials was that the entire payment process take several months to entice bidders since the city cannot immediately pay the fuel upon delivery.

The COA, though, was not satisfied with the explanation because delay in the processing of payments is not a valid justification to buy products at higher prices.

“It is advisable for the city to provide a system wherein the disbursement system entails shorter processing time instead of taking several months before a transaction is completed,” state auditors recommended. (FREEMAN)