LPG firms: It’s not cartelization, but supply arrangements

Published by rudy Date posted on February 14, 2009

MANILA, Philippines – It all boils down to semantics. It’s not a cartel, but simply a supply arrangement.

According to Carlos Corpuz, president of the Liquefied Petroleum Gas Industry Association whose members include the Big 3 – Shell, Petron and Chevron – they are not engaged in cartelization to hoard cooking gas and create an artificial shortage.

What they did, and sometimes still do, Corpuz told the House committee on energy of Pampanga Rep. Juan Miguel Arroyo, is to make “supply arrangements” to ensure steady and adequate supply of LPG.

“We admit that in the interest of the public, we sometimes have so-called supply arrangements wherein we exchange products, but just to ensure adequate supply to our respective customers,” he said.

“But beyond that, the members of LPGIA deny that there is any collusion among ourselves in any manner that will adversely (affect) the public,” Corpuz told lawmakers during Wednesday’s hearing.

“For the record, we would like to state categorically that we deny that there is any collusion among LPG players, especially in the matter of pricing,” he said.

Corpuz, who is also a ranking official of Petronas Energy Philippines Inc. based in Iligan City, did not elaborate beyond saying that it is part and parcel of their business. He explained though that the scheme was never used to make profit by creating a shortage of LPG in the market.

Reps. Liza Maza and Luzviminda Ilagan of women’s group Gabriela pointed out this is in effect cartelization, apparently to manipulate the supply of LPG in the market, with the end in view of creating an artificial shortage, and jack up prices.

The president of the LPG Refillers Association also refuted yesterday assurances made by Energy Secretary Angelo Reyes that LPG supply is adequate and steady, insisting that the country needs to have more LPG to ensure there would be no shortage.

Bernie Bolisay told the House committee that the public cannot depend on the 17,000 to 22,000 metric tons supply of LPG from Liquigaz, since the country needs at least 100,000 metric tons of LPG monthly.

Bolisay admitted that LPG supply in Metro Manila has normalized, but stressed that Laguna, Cavite, Batangas, Bulacan, Pampanga, Tarlac, Pangasinan, San Fernando City, Baguio City and Ilocos Region are still facing scarcity of supply.

In the Feb. 4 hearing, Arnel Ty, the president of the LPG Marketers Association, hinted that the big oil companies are in cahoots with each other to create an artificial shortage of LPG. He, however, did not mention any company.

Sen. Manuel Villar Jr. recently sought a review of the regulation in the sale and distribution of LPG.

Villar said there is a need to put in place mechanisms and policies to ensure an effective regulation of LPG’s sale and distribution so consumers will be protected.

“A better regulated LPG market would also level the playing field and allow small industry players to compete head-on with the big multinationals,” Villar said.

Secretary Reyes, for his part, yesterday emphasized the need to pass LPG bills which aim to provide the overall regulatory framework for the LPG industry and to penalize prohibited activities.

House Bill Nos. 551 and 1934 seek to revive the licensing function of the Department of Energy, which was scrapped by the Oil Deregulation Law.

Reyes said by restoring this function to grant license to operate, the DOE can ensure that only compliant LPG players can engage in the business. –-Delon Porcalla with Jose Rodel Clapano, Donnabelle Gatdula, Philippine Star

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