Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
B. Distura 2017
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Contents
INTRODUCTION........................................................................................................................... 3
THE D.O.E. ..................................................................................................................................... 1
BUREAUS AND SERVICES ......................................................................................................... 7
OFFICE OF THE SECRETARY ................................................................................... 7
OFFICE OF THE UNDERSECRETARY ......................................................................... 7
OFFICE OF THE ASSISTANT SECRETARY ................................................................ 7
INVESTMENT PROMOTION OFFICE ...................................................................... 8
CONSUMER WELFARE AND PROMOTION OFFICE ........................................... 8
PUBLIC AFFAIRS OFFICE .......................................................................................... 9
INTERNAL AUDIT OFFICE ...................................................................................... 10
ADMINISTRATIVE SERVICES ................................................................................ 11
GENERAL SERVICES DIVISION ................................................................................ 12
TREASURY DIVISION .................................................................................................. 13
FINANCIAL SERVICES .............................................................................................. 14
BUDGET DIVISION....................................................................................................... 14
ACCOUNTING DIVISION ............................................................................................ 15
COMPLIANCE DIVISION ............................................................................................. 16
LEGAL SERVICES....................................................................................................... 19
HEARING DIVISION ..................................................................................................... 19
LEGAL COUNSELLING DIVISION ............................................................................. 19
CONTRACT DIVISION ................................................................................................. 20
INFORMATION TECHNOLOGY AND MANAGEMENT SERVICES ................ 21
ENERGY RESEARCH TESTING AND LABORATORY SERVICES .................. 22
GEOSCIENTIFIC RESEARCH AND FUEL TESTING LABORATORY DIVISION 22
LIGHTING AND APPLIANCE TESTING DIVISION ................................................. 24
ENERGY POLICY AND PLANNING BUREAU ...................................................... 27
PLANNING DIVISION .................................................................................................. 27
POLICY FORMULATION AND RESEARCH DIVISION ........................................... 28
ENERGY COOPERATION AND COORDINATION DIVISION ................................ 29
ENERGY RESOURCE DEVELOPMENT BUREAU ............................................... 31
PETROLEUM RESOURCES DEVELOPMENT DIVISION ........................................ 31
COAL AND NUCLEAR MINERALS DIVISION ......................................................... 32
ENERGY UTILIZATION AND MANAGEMENT BUREAU ................................. 33
ALTERNATIVE FUELS AND ENERGY TECHNOLOGY DIVISION....................... 33
OIL INDUSTRY MANAGEMENT BUREAU ........................................................... 33
OIL INDUSTRY STANDARDS AND MONITORING DIVISION ............................. 34
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INTRODUCTION
Energy as a natural resource is vital to the economic development of the Philippines and
any country for that matter. With sufficient supply of energy, a nation has one of the most
indispensable natural resources so that various activities can be implemented for the benefit of the
people. In particular, the people will benefit from a steady supply of energy in terms of
improved income due to economic activities, better literacy, improved health and healthcare
services, enhanced security and many more.
Under the 1987 Constitution, potential energy is one of the natural resources (NR). NRs are
owned by the State (jura regalia) and includes: (Art. XII, Section 2)
For the purpose of this endeavor, we shall consider ENERGY RESOURCE the exploration,
development, utilization, distribution and conservation of which shall be under the full control and
supervision of the State. For a comprehensive lists of laws, regulations and issuances regarding the
energy sector see, Annex 1.
It is best to view it in a business perspective, after all, the thrust of the government is to
privatize the energy sector. Michael Porter of Harvard Business School discussed in his influential
1985 book "Competitive Advantage," the concept of the value chain. (Fig. 1) According to him,
value chain is a set of activities that an organization carries out to create value for its customers.
1
Sec. 3, EO No. 172
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Porter proposed a general-purpose value chain that companies can use to examine all of their
activities, and see how they're connected. Below is the generic value chain that Porter pioneered.
The model consists of Primary Activities2 and secondary activities3. We shall consider only the
primary activities.
Inbound Outbound
Operations Marketing Sales Services
Logistics Logistics
Procurement (purchasing)
HR Mgt
Technological Devt
Infrastructure
The Supply Chain4 is nearer to the raw materials while the Demand Chain5 is nearer to
the customer. We shall make use of this conceptual model so that we can understand better the role
of DOE which is to manage the whole of energy sectors value chain. (See Figure 2)
It is worthy to note that the energy sector uses the concepts: UPSTREAM, MIDSTREAM
and DOWNSTREAM.
The upstream industry finds and produces crude oil and natural gas. The upstream is
sometimes known as the exploration and production (E&P) sector. The midstream industry
processes, stores, markets and transports commodities such as crude oil, natural gas, natural gas
liquids (NGLs, mainly ethane, propane and butane) and Sulphur. The midstream provides the vital
link between the far-flung petroleum producing areas and the population centers where most
2 Primary activities relate directly to the physical creation, sale, maintenance and support of a product or service. They
Inbound logistics These are all the processes related to receiving, storing, and distributing inputs internally. Your
supplier relationships are a key factor in creating value here.
Operations These are the transformation activities that change inputs into outputs that are sold to customers. Here, your
operational systems create value.
Outbound logistics These activities deliver your product or service to your customer. These are things like collection,
storage, and distribution systems, and they may be internal or external to your organization.
Marketing and sales These are the processes you use to persuade clients to purchase from you instead of your
competitors. The benefits you offer, and how well you communicate them, are sources of value here.
Service These are the activities related to maintaining the value of your product or service to your customers, once it's
been purchased. (https://www.mindtools.com/pages/article/newSTR_66.htm)
3 Procurement (purchasing), Human resource management, Technological development, Infrastructure
4 Entire network of entities, directly or indirectly interlinked and interdependent in serving the same consumer or customer.
It comprises of vendors that supply raw material, producers who convert the material into products, warehouses that store,
distribution centers that deliver to the retailers, and retailers who bring the product to the ultimate user. (businessdictionary.com)
5 The entity who chooses among competing products and services and, thus, controls the demand. (businessdictionary.com)
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consumers are located. The downstream industry includes oil refineries, petrochemical plants,
petroleum products distributors, retail outlets and natural gas distribution companies.6
R
A VALUE CHAIN
(Demand)
W C
M U
A Supply Chain
S
T Explore and T
Manufacturing Distribution
Produce
E (Inbound)
(Operations) (Outbound)
Marketing Sales Service
O
R M
I UPSTREAM MIDSTREAM DOWNSTREAM E
A R
L PROCESSES, STORES, REFINES, SELLS,
S E&P MARKETS AND
DISTRIBUTES
TRANSPORTS
Hence, the UPSTREAM is nearer to the raw materials like the supply chain. The
DOWNSTREAM is nearer to the consumers like the DEMAND chain. The MIDSTREAM is what
connects the UPSTREAM to the DOWNSTREAM.
Here is a generic example of an energy supply chain that illustrates the three (3) industries,
upstream, midstream and downstream.
Sec. 4 of RA No. 7638 outlines the responsibility the DOE shall assume, to wit:
The Department of Energy shall prepare, integrate, coordinate, supervise, and control ALL
plans, programs, projects, and activities of the Government relative to energy exploration,
development, utilization, distribution, and conservation8. It can be simplified by saying that the
DOE manages the energy value chain.
energy through such things as insulating your home or using public transportation; generally it saves you money and helps the planet.
The conservation of energy has nothing to do with saving energy: it's all about where energy comes from and where it goes.
(http://www.explainthatstuff.com/conservation-of-energy.html)
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9
Maniego, P. H. (October 1, 2016). Renewable energy can sustain PH industrialization. Philippine Daily
Inquirer. (http://opinion.inquirer.net/97799/renewable-energy-can-sustain-ph-industrialization)
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The countrys energy self-sufficiency level of 53.5 percent fell short of the 60 percent target
in 2015. The countrys total primary energy supply was placed at 50.4 metric tons of oil equivalent
(MTOE) with local energy comprising 26.9 MTOE of the total. Oil remained the countrys major
energy source accounting for 32.2 percent of the energy mix. (See Figure 5)
The countrys total final energy consumption reached 29.8 MTOE with the transportation
sector accounting for 10.6 MTOE, and the residential sector for 8.7 MTOE.
Power generation has increased but is still insufficient to meet the growing demand, and the
situation is further exacerbated by feedstock security concerns. Policies have been initiated to
increase competition in power generation and support development in renewable energy. However,
power supply is still insufficient to meet the ever-increasing demand for electricity which, in turn,
contributes to the high cost of electricity.
The Philippines total installed capacity grew by 4.6 percent from 17,944 megawatts (MW)
in 2014 to 18,765 MW in 2015 (Table 1). Power generation grew by 6.7 percent with the addition
of 5,152 gigawatt-hour (GWh) from 2014 to 2015.
The Luzon grid had thin reserves up until September 2016 while the electricity supply in
the Visayas was critical in the second semester of 2016. On the other hand, Mindanao has sufficient
reserves until February 2017, with reserve capacity of more than 50 percent. While fiscal and
nonfiscal incentives were provided to encourage investments in the sector, the timely entry of the
private sector in power generation has been impeded by protracted red tape in the processing of
necessary permits.
10
Source: PDP 2017
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Despite the passage of the Renewable Energy Law in 2008 and the adoption of the National
Renewable Energy Program for 2012-2030, only 7,013.9 MW of renewable energy has been
installed out of the potential 14,499.8 MW.
Hydropower plants comprised 19.2 percent of the countrys total installed capacity, but
extremely hot or dry weather conditions, like the El Nio phenomenon, affected the adequacy and
reliability of energy supply. (More on the renewable energy below.)
Natural gas from Malampaya powers 23 percent of the Luzon dependable capacity. But the
depletion of the Malampaya Natural Gas Field, as well as the expiry of the Gas Supply Purchase
Agreement between Shell Philippines Exploration and its off-takers, threatens energy security.
Continued exploration works in existing petroleum service contracts failed to produce new
indigenous natural gas of commercial quantity. Disputes in the West Philippine Sea also contribute
to uncertainties in petroleum exploration. The lack of policies and backbone infrastructure hampers
the growth of the natural gas industry in the country.
Meanwhile, the private sector continued to invest in coal-fired power plants in view of
shorter gestation period and in response to the countrys baseload capacity requirement. Indonesia
supplies 70 percent of the Philippines coal import needs, but their moratorium on coal shipments
following the risk of kidnappings and piracy in the West Philippine Sea threatened the countrys
coal supply.
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Development of the transmission network and distribution facilities was hampered by issues
on right-of-way, security and resiliency to natural calamities. The lack of interconnection between
Mindanao and the Luzon-Visayas grid meant that surplus in the former could not be utilized in the
latter, and vice-versa. Likewise, there is still no established structured market in Mindanao similar
to the existing wholesale electricity spot market (WESM) in Luzon and Visayas. Aggravating the
issue of reliable supply is the concern on resiliency against natural calamities and the safety of
energy facilities against such issues as the sabotage of electricity transmission and distribution
facilities, especially in Mindanao.
In addition, the difficulty of acquiring right-of-way necessary for the National Grid
Corporation of the Philippines to implement transmission line projects is a constant obstacle to grid
expansion. This is especially true in urban areas and even in the rural areas with indigenous peoples.
Limited island-to-island interconnection is also seen as a hindrance to extending secure and reliable
electricity service.
Part of the Philippine commitments to the ASEAN are the ASEAN Power Grid (APG) and
the expansion of the Trans-ASEAN Gas Pipeline (TAGP). The Philippines has yet to develop its
domestic pipelines prior to connection with other ASEAN countries due to the absence of an
enabling legal and regulatory framework that will oversee and regulate the natural gas industry,
including incentives to prospective investors.
While there has been considerable effort in recent years to pursue nationwide distribution
of electricity, gaps in access especially in the rural and off-grid areas remain. The household
electrification level has reached 89.61 percent (20.36 million out of 22.72 million households) in
July 2016 through the provision of technical and financial support to electric cooperatives and the
implementation of missionary electrification programs, including the New Power Provider and
Qualified Third Party programs. However, much is still needed to achieve the 7th sustainable
development goal of universal energy access by 2030, particularly in Mindanao where household
electrification level stands only at 72.38 percent (see Table 2).
As of June 2016, the total rated capacity of the 285 National Power Corporation-Small
Power and Utilities Group power plants used in missionary electrification is 193.72 MW, with a
total dependable capacity of 136.75 MW. Most of the power plants operate for limited hours only
(i.e., 4, 8, or 12 hours). Generally, the distribution and provision of electricity has been hampered
by the following:
a. High costs of fuel and logistical support for diesel plants and the low capacity to
pay and low willingness to pay for the service of households especially in rural areas
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c. Increasing number of households and service demands (e.g., request from 8 hours
per day to 12 hours per day service)
Gains in energy efficiency and conservation have been achieved but more work is needed
to optimize the benefits of demand-side management.
In 2015, the country was able to save energy amounting to 5,199.6 kiloton of oil equivalent
through the various programs under the National Energy Efficiency and Conservation Program.
Moreover, as of March 2016, DOE has accredited 15 energy service companies (ESCOs) to
accelerate the implementation of the governments energy efficiency and conservation (EEC)
initiatives. The initiatives will need to be expanded to include the development and promotion of
new technologies and programs. This is to encourage the practice of sensible energy habits in
government and private establishments, households and transportation to achieve greater energy
savings.
Even at full capacity, indigenous supply is still way below the local demand to meet the
increasing blending requirements of the local fuel industry. Due to the implementation of Republic
Act 9367 (Biofuels Act) in 2009, 249 million liters (ML) and 179 ML of fuel have been displaced
in 2015 through the mandated blending for bioethanol and biodiesel, respectively.
However, total bioethanol and biodiesel plant capacities in the country stand at 198 ML and
584.9 ML annually, respectively.
The Philippines electricity rates remain amongst the highest in Asia. Electricity rates in the
Philippines are high mainly because there is no state subsidy for the rates of privately-generated,
transmitted, and distributed power supply. Users are charged with the feed-in-tariff (FiT)-All,
universal charges, value-added taxes (VAT), and system losses in transmission and generation.
There were other problems like minimal competition in the energy market, the alleged market
manipulation, and other unforeseen disruptions in power supply.
While reducing the cost of electricity is vital to improving the competitiveness of industries
and encouraging private sector investments, there should be a balance between the rates, service
reliability, and the environmental implications of the different technologies utilized.
Too much intermittent renewable energy affects grid reliability, but reliance on cheaper
fuels, such as coal, increases greenhouse gas emissions. An optimal energy mix is needed to provide
maximum benefits at the most reasonable costs to consumers while safeguarding the sector from
external shocks.
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Renewable Energy Resources (RE Resources) refer to energy resources that do not have an
upper limit on the total quantity to be used. Such resources are renewable on a regular basis, and
whose renewal rate is relatively rapid to consider availability over an indefinite period of time.
These include, among others, biomass, solar, wind, geothermal, ocean energy, and hydropower
conforming with internationally accepted norms and standards on dams, and other emerging
renewable energy technologies.11
The energy consumption for the whole world reveals that oil, coal and gas remain most
consumed energy source (Figure 7). These three (3) are Fossil Fuels and Non-Renewable. These
will be depleted in the near future. Number 4 Nuclear is arguably controversial and Dangerous.
Renewable is the way forward but is way short of its desired levels of development &
consumption.12
11
RA 9513 (RE Act of 2008)
12
https://www.doe.gov.ph/sites/default/files/pdf/announcements/acd_01_re_malaysia.pdf
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In 2013 renewables accounted for almost 22% of global electricity generation. The
International Energy Agency (IEA) Medium-Term Renewable Energy Report 2015 foresees that
share reaching at least 26% increase in 2020.13
The Philippines enacted the Renewable Energy Act in 2008 wherein renewable energy
offers an alternative to traditional fossil fuels (e.g., coal, natural gas, and petroleum). The trend is
to shift to renewable energy, also known as green energy or clean energy.
Biomass
Based on information from the Department of Agriculture (DA) and the Department of
Environment and Natural Resources (DENR), the Philippines could generate substantial volumes
of residues which can be utilized as energy fuel. Latest estimates reveal that biomass supply
potential is more than 500MW. (Table 3) Based on geographical consideration on biomass supply,
there is an abundant supply of bagasse in Regions III, IV, VI and VII. Coconut residues abound in
Regions IV, VIII, IX and XI while ricehull is abundant in Regions II, III, IV and VI.
Wind
The Philippines, being situated on the fringes of the Asia-Pacific monsoon belt, exhibits a
promising potential for wind energy. Data from the Philippine Geophysical Astronomical Services
Administration (PAG-ASA) shows that the country has a mean average of about 31 watts per square
meter (W/m2) of wind power density. In addition, a study conducted by the US-NREL in 1999
shows over 10,000 sq. km. of windy land areas estimated to exist with a good-to-excellent wind
resource potential. Using conservative assumptions of about 7 MW per sq. km., this windy land
could theoretically support over 70,000 MW of potential installed capacity. (Table 3)
Solar
The same study also conducted a resource assessment of solar power potential. Results of
previous ground-based measurements of the daily total number of hours of sunshine duration were
combined with US-NREL's Climatological Solar Radiation (CSR) Model. The model converts
information on satellite and surfaced-derived data to estimate the monthly average daily total global
horizontal solar resource. The study showed that the country has an annual potential average of 5.1
kilowatt-hour (kWh)/m2/day. (Table 3)
Ocean
The country's ocean resource area consists of 1,000 sq. km. attributed mainly to its
archipelagic nature. Based on a study conducted by the Mindanao State University (MSU), the
potential theoretical capacity for this resource is estimated to be about 170,000 MW. (Table 3)
Although there is little available information on the potential of ocean energy, navigational
experiences hypothesized that these systems present significant resource options. Initial ocean
13
Ibid
14
DOE Website
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energy potential sites identified include the Hinatuan Passage, Camarines, Northeastern Samar,
Surigao, Batan Island, Catanduanes, Tacloban, San Bernardino Strait, Babuyan Island, Ilocos
Norte, Siargao Island and Davao Oriental.
The Philippines could be considered one of the world leaders in renewable energy because
of its abundant renewable energy sources such as solar, wind, biomass, ocean, small hydro and
geothermal (World Resources Institute). According to the Department of Energy (DOE), the
Philippines is the world's second largest generator of geothermal energy next to the United States.
15
http://www.irena.org/eventdocs/Philippines%20presentation.pdf
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of America. It is also the first among the members of the Association of Southeast Asian Nations
(ASEAN) to invest in large-scale solar and wind technologies.16
The Philippines registered an average renewable energy supply of 16.47 million tons of oil
equivalent (MTOE) from 2000 to 2012, with an average share of 43.21 percent to the total energy
supply17 (Table 4). Based on the latest data of the International Energy Agency (IEA), the
Philippines ranked first in terms of the contribution of renewable energy to total energy supply
among the ASEAN countries (Figure 8).
16
The following are lifted from Senate Economic Planning office, Renewable Energy At a Glance
(https://www.senate.gov.ph/publications/AAG%20on%20Renewable%20Energy_June%2030_FINAL.pdf)
17
Total energy supply refers to the total amount of energy generated domestically and imported abroad by the
country while renewable energy supply is the total amount of renewable energy generated by the country from its
natural resources such as solar, wind, geothermal, hydro, ocean and biomass.
18
Accordingly, the first project to go into operation will be the 10-MW Cabangan Ocean Energy Thermal
Conversion (OTEC) Project in Zambales.
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Renewable energy resources are tapped for motor fuels, water/space heating, rural (off-grid)
energy services, and more importantly, electricity generation. Renewable energy constitutes a
significant share of electricity generation in the Philippines. In 2012, its installed capacity19 from
renewable energy stood at 5,521.20 megawatts (MW) from 61 plants/facilities located nationwide.
Of the total renewable energy plants, hydropower (large and small) contributed the biggest share
(63.77% of total renewable energy capacity mix) with installed capacity of 3,520.80 MW, followed
by geothermal (33.46%) with 1,847.70 MW. Total dependable capacity from renewable energy
resources stood at 4,539.50 MW (Table 2).
Gross power generation20 from these plants in 2012 amounted to 20,761 gigawatt-hours
(GWh), which contributed 28 percent to the countrys total power generation. Coal-powered plants
remained the top producer of electricity since 2010, accounting for 39 percent. On the hand, natural
19
Installed capacity is the maximum capacity that a given plant/facility can generate while dependable
capacity is the capacity of a plant/facility that can be relied upon to carry system load for a specified time interval and
period.
20
Power generation is the amount of electricity a generator produces over a specific period of time. Many
generators do not operate at their full capacity all the time, hence they may produce little. They may vary their output
according to conditions at the power plant, fuel costs, or as instructed from the electric power grid operator.
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gas had a contribution of 27 percent of the total power generation while oil-based generation only
accounted 6 percent (Figure 9).
On June 14, 2011, the government through the DOE launched the National Renewable
Energy Program (NREP) to steer the country in achieving the goals laid down under the Renewable
Energy Act of 2008. The NREP sets targets for each renewable energy source including solar, wind,
geothermal, hydro and ocean technologies within the timeframe 2011 to 2030. It targets to more
than triple the countrys renewable energy-based installed capacity to 15,234.30 MW by 2030 from
5,439 MW in 2010 (Table 6). Moreover, it contains a framework for action, existing and future
measures, and instruments and policies for the promotion of renewable energy. It also includes a
roadmap that will guide efforts towards actualizing the market penetration targets of each renewable
energy source as well as the feed-in-tariffs (FIT)21 for sustainable energy generation.
21
FIT refers to a renewable energy policy that offers guaranteed payments on a fixed rate per kilowatthour
(kWh) for renewable energy generation, excluding any generation for own use. The Energy Regulatory Commission
(ERC) approved the initial FITs on July 27, 2012 which shall apply to generation from renewable energy sources,
particularly to run-of-river hydro (PhP5.90/kWh), biomass (PhP6.63/kWh), wind (PhP8.53), and solar (PhP9.68/kWh)
renewable energy projects.
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13
12 9
10
11
The Philippine basins are rich in Oil and Gas (Table 5). The Visayas and Mindoro-Cuyo
Basins have nearly 2M barrels of undiscovered oil. The basins near the South China Sea have so
much potential as can be seen below.
However, the Philippines is only 6th in the ranking among ASEAN countries in terms of Oil
and Natural Gas Proved Reserved based on U.S. Energy Information Administration despite the
potential of Philippines in oil and natural gas (Table 6). The solution is to increase exploration
efforts on our basins.
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So the DOE launched in May 2014 the fifth PECR (PECR5) for petroleum.
Under this bid, 11 petroleum blocks, with a total of more than 4.7 million hectares in West
Luzon, Southeast Luzon, West Masbate/Iloilo, East Palawan and Recto Bank, were offered for
exploration and development. (Figure 8)
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Two of the blocks are close to the Spratly Islands, of which a portion is being claimed by
the Philippine government, which are areas under territorial dispute with China.22
Under PECR 5, only two exploration companies passed the qualifying stage for three areas.
Israel-based Ratio Oil Exploration submitted bids and qualified for Area 4, a 416,000-hectare area
in East Palawan, while local company Colossal Petroleum qualified for the 576,000-hectare Area 5
in East Palawan and the 468,000-hectare Area 7 in Recto Bank.
A petroleum service contract has seven-year exploration period, which could be extended
up to 10 years.
However, the DOE has not yet awarded the contracts to the qualified bidders following legal
impediments in the oil and gas exploration industry such as Commission on Audit (COA) and Japan
Petroleum Exploration Co. Ltd. (JAPEX) issues.
In 2015, COA upheld its 2009 findings that P53.14 billion in taxes were uncollected from
the Malampaya project operated by Shell Philippines Exploration B.V., Chevron Malampaya LLC
and the Philippine National Oil Co. Exploration Corp. (PNOC-EC).
Meanwhile, the Supreme Court declared SC 46 between the government and JAPEX as
unconstitutional, raising concerns over the legality of service contracts.23
As for coal, 15 areas were opened for coal contracting projects, namely:
22
http://www.businessmirror.com.ph/doe-sets-offering-of-some-areas-near-disputed-west-philippine-sea-
for-petroleum-exploration/
23
http://www.philstar.com:8080/business/2017/07/13/1718941/doe-targets-launch-new-oil-gas-contracting-
round-december
24
Source, DOE Website
20
COAL PRODUCTION
SEMIARA is the leading coal producer in the country with 97% share of total coal
production in the Philippines.
COAL CONSUMPTION26
Coal consumption has been increasing trend worldwide since 1977 up to 2013 based
on historical data. The Philippines has similar trend despite the thrust of the government
towards RE.
25
Source, DOE Website
26
Source, DOE Website
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THE D.O.E.
History27
Electricity was known to have reached the country in 1890. Sociedad Mercantil which
became La Electricista provided electricity in Manila and nearby provinces. La Electricista was
established in 1892 in association with the Compania de Tabacos de Filipinas
(TABACALERA). The Municipal Council of Manila signed a 20-year contract with Sociedad
Mercantil Millat, Marti y Mitjans to provide electric lighting for city streets, parks and other
public places originally illuminated by oil lamps. The contract also allowed Sociedad to enter
into arrangements with private customers to have their homes and establishments lighted by
incandescent lamps. La Electricista was given rights to Sociedads 20-year contract.
MERALCO was established in 1903 and bought La Electricista the following year. By early
1905, some 40,129 incandescent lights, 495 arc lamps were installed in both public and private
areas (Cabrera, 1992).28
In 1925, MERALCO expanded services to the municipalities of Rizal and other parts
of Luzon by purchasing the franchises and plants of the small provincial electric companies. It
began retrenching its provincial operations after the Second World War to concentrate on
rehabilitation and expansion of its Manila facilities. By 1953, MERALCO had disposed all its
provincial facilities, and in 1961 it became Filipino-owned when a group of Filipino
businessmen led by Eugenio Lopez, Sr. bought MERALCO from General Public Utilities
Corporation of New York.29
On November 3, 1936, Commonwealth Act 120 (See Annex 1) was enacted creating
the NATIONAL POWER CORPORATION for the purpose of undertaking the development
of hydraulic power and the production of power from other sources. Among its functions
include:
To take water from any public stream, river, creek, lake spring or waterfall
in the Philippines, for the purposes specified in this Act;
To intercept and divert the flow of waters from lands of riparian owners and
from persons owning or interested in waters which are or may be necessary
for said purposes, upon payment of due compensation therefor;
27
Tracing the History of the Department of Energy (DOE website)
28
Epictetus E. Patalinghug, An Analysis of the Philippine Electric Power Industry, University of the
Philippines. Diliman, Quezon City, October 2003.
29
Ibid
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river, creek, lake, spring and waterfall in the Philippines and supplying such
power to the inhabitants thereof;
To sell electric power and to fix the rates and provide for the collection of
the charges for any service rendered (the rates of charges shall not be subject
to revision by the Public Service Commission)
The National Power Corporation (NPC) has, since its establishment in 1936, controlled
and monopolized both the transmission and generation sectors. But legislations and presidential
decrees have been put in place to put an end to the monopoly.
On April 30, 1971, R.A. No. 6173 was passed creating the Oil Industry Commission
(OIC), which was tasked to regulate the oil industry and to ensure the adequate supply of
petroleum products at reasonable prices.30
On September 24, 1972 then President Ferdinand E. Marcos issued Presidential Decree
(P.D.) No. 1 which ordered the preparation of the Integrated Reorganization Plan by the
Commission on Reorganization. The Plan abolished the Public Service Commission (PSC) and
transferred the regulatory and adjudicatory functions pertaining to the electricity industry and
water resources to then Board of Power and Waterworks (BOPW).31
P.D. 8 was amended by P.D. 87, other-wise known as The Oil Exploration and
Development Act of 1972, which was issued on December 31,1972. Under P.D. 87, the Board
was composed of the Philippine National Oil Company as Chairman, and the Secretary of
National Defense, the Executive Secretary, the Secretary of Natural Resources, the Secretary
of Finance, the Secretary of Justice, the Secretary of Industry, the Governor of the Central Bank
and the Director of Mines as members.
30
Tracing the History of the Department of Energy (DOE website)
31
Ibid
32
Ibid
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However, P.D. 910, issued on March 22, 1976, abolished the Petroleum Board and its
powers and functions were transferred to the Energy Development Board which was composed
of the Secretary of Finance, Secretary of Industry, Secretary of Justice, Secretary of National
Defense, Secretary of Economic Planning, Secretary of Natural Resources, and the Chairman
of the Philippine National Oil Company. The President of the Philippines designated the
Chairman of the Board from among its members.
The officials next in rank to the members of the Board, as designated by them, served
as alternate members. They attended the meetings of the Board whenever their principals were
absent or their positions were vacant.
Thus, while the Petroleum Board was tasked to regulate the exploration, development,
production and exploitation of indigenous petroleum and natural gas through the Service
Contract system, the Energy Development Board had wider powers and functions in the sense
that it regulated not only petroleum and natural gas but also coal, geothermal and natural re-
sources and other less conventional forms of indigenous energy resources.
Under PD No. 1206 (Oct. 6, 1977) creating the Ministry of Energy (later Department
of Energy), the Energy Development Board is abolished and its powers and functions are
transferred to the Department except those that are specifically transferred to the Bureau of
Energy Development under Section 12 of this decree.
The Philippine Atomic Energy Commission (PAEC) was transferred to the control and
supervision of the MOE from the Office of the President. Presidential Decree No. 1206 attached
the National Electrification Administration (NEA) to the Ministry of Energy in 1978.
Under Presidential Decree No. 1206, the National Power Corporation (NPC) was
attached to the new ministry for purposes of policy coordination and integration with sectoral
programs.
The government created the Department of Energy (DOE) and consequently abolished
the Oil Industry Commission (OIC), which was replaced by the creation of the Board of Energy
(BOE) through PD No. 1206. It was later replaced by the Energy Regulatory Board (ERB) now
Energy Regulatory Commission (ERC), which was responsible for overseeing and regulating
pricing activities of the industry. This included determining wholesale and retail prices, dealer
and hauler margins, the revenue of refiners, and the contribution to or claims that resulted from
the fluctuation of oil prices in the world market and the adjustments in the peso-dollar exchange
rate.
On May 8, 1987, the Board of Energy was reconstituted into the Energy Regulatory
Board (ERB), pursuant to Executive Order No. 172 issued by then President Corazon C.
Aquino34 as part of her governments reorganization program. The rationale was to consolidate
33
Ibid
34
It is noteworthy that the DOE was once under the DE(E)NR during Pres. Aquino in 1987. (See, Annex
1). REORGANIZING THE MINISTRY OF NATURAL RESOURCES AND RENAMING IT AS THE
DEPARTMENT OF ENVIRONMENT, ENERGY AND NATURAL RESOURCES ABOLISHING THE
MINISTRY OF ENERGY INTEGRATING ALL OFFICES AND AGENCIES WHOSE FUNCTIONS RELATE
TO ENERGY AND NATURAL RESOURCES INTO THE MINISTRY DEFINING ITS POWERS AND
FUNCTIONS AND FOR OTHER PURPOSES (EXECUTIVE ORDER NO. 131 (January 30, 1987))
3
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and entrust into a single body all the regulatory and adjudicatory functions pertaining to the
energy sector. Thus, the power to fix and regulate the power rates of private electric utilities
was transferred to the ERB.
With the issuance of Executive Order No. 193 on June 10, 1987 reorganizing the
Department of Energy into the Office of Energy Affairs (OEA), the ERB was vested with other
powers. The directive transferred to the Board the regulatory and adjudicatory functions
exercised by the National Coal Authority relating to the coal industry.
In 1987, the Aquino administration passed Executive Order No. 215 to encourage
private sector participation. In 1990, Republic Act No. 6957, more popularly known as the
Build-Operate-Transfer Law (BOT Law) was enacted which permitted private contractors
under a build-operate-transfer or build-and-transfer (BAT) scheme to construct and operate
power generations facilities. But despite the enactment of these laws, the increase in demand
for energy wasnt met and the factors that contributed to it was the suspension of the expected
operations of the Bataan Nuclear Powerplant (BNPP) and the fact that investors were said to
be discouraged from investing since they were forced to negotiate power supply contracts
exclusively with NPC.35
December 28, 1992 R.A. No. 7638 was enacted creating the Department of Energy and
to rationalize the organization and functions of government agencies related to energy.
Republic Act No. 7718 amended the BOT law to include Rehabilitate-own-and-operate
(ROO) schemes, as well as the concept of unsolicited proposals.36
Republic Act No. 7468, otherwise known as the Electric Power Crisis Act of 1993
gave the president the power to enter into and negotiated contracts for the construction, repair,
rehabilitation, improvement or maintenance of power plants, projects and facilities. This in turn
resulted in an increase of investments made by Independent Power Producers (IPP). Despite
this, NPC remained in debt. In 2001, NPC owed approximately US$ 16.39 billion to
creditors.37
EPIRA38
The Electric Power Industry Reform Act (R.A. 9136, 2001), also known as EPIRA
Law was created in order to bring down electricity rates and to improve delivery of power
supply to end users by encouraging competition and efficiency in the electricity industry. After
being in place the NPC will undergo restructuring and there will be a separation of the different
components of the power sector, namely, generation, transmission, distribution and supply.
NPCs privatization is also included in the said reforms. The state-owned power firms
generation and transmission assets (e.g. power plants and transmission facilities) were put on
sale to private investors.
35
PHILIPPINE ENERGY SECTOR, Overview and Business Opportunities (www.mzv.cz/manila),
hereafter, PES
36
PES, p.2.
37
Ibid.
38
Ibid.
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PSALM39
In the end of 2012, the Power Sector Assets and Liabilities Management (PSALM),
a government-owned and controlled corporation tasked to undertake the privatization of the
assets of the National Power Corporation (NPC) and the National Transmission Corporation
(Transco) as well as the privatization of the management of NPC's IPP (Independent Power
Producer) contracts, had managed to privatize 70% of the total capacity of generating assets of
NPC in Luzon and Visayas and more than 70% of the total energy output of power plants under
contract with NPC to the IPP administrations.
The EPIRA also introduced the concept of Retail Competition and Open Access. Retail
Competition means that eligible electricity customers or retail customers may themselves
contract for the supply of electricity with authorized suppliers, rather than through the
franchised distribution utility. Open Access on the other hand is the means by which the Retail
Competition is achieved. It means that the retail electricity customers and suppliers of
electricity may also contract with the transmission company and the distribution company for
the wheeling or delivery of energy/electricity through the transmission of distribution ware.
In the event that there are emergency cases of power outage and there is a need for the
production of more energy, it is only then that the government may request for emergency
powers to address the immediate need.
The Department is mandated to prepare, integrate, coordinate, supervise and control all
plans, programs, projects and activities of the Government relative to energy exploration,
development, utilization, distribution and conservation.
MISSION41
We at the Department of Energy, in partnership with our stakeholders, shall improve
the quality of life of the Filipino by formulating and implementing policies and
39
Ibid.
40
DOE website
41
Ibid
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VISION42
A globally-competitive DOE powering up Filipino communities through clean,
efficient, robust and sustainable energy systems that will create wealth, propel industries and
transform the lives of men and women and the generations to come.
PERFORMANCE PLEDGE43
42
Ibid
43
Ibid
44
Ibid
6
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For detailed functions of DOEs bureaus and attached agencies and corporations, see Annex 2.
(Click the drop down arrow to reveal the functions of each bureau and service.)
See also Annex 6 for DOEs Organizational Chart.
Establishes policies, plans, programs and standards for the effective, efficient and economic operation
of the Department of Energy and its attached agencies, and exercises direct supervision and control over
all functions and activities
establishes polices, plans, programs and standards for the effective, efficient and economic
operation of the Department and its attached agencies in accordance with the programs of the
Government
exercises direct supervision and control over all functions, activities and personnel of the
Department and its attached agencies
ensures the implementation of policies, plans, programs and standards relative to the
Department's mandates
creates regional offices and such other service units and divisions as may be necessary
performs such other functions as may be necessary
Advises and assists the Secretary in the formulation and implementation of the
Department's Policies, Plans, Programs and Standards, and serves as the secretary's
deputy in all matters relating to the operations of the Department
advises and assists the Secretary in the formulation and implementation of the
department's policies, plans, programs and standards
serves as deputy to the secretary in all matters relating to the operations of the
Department
oversees and coordinates the operational activities of the office's areas of
responsibility
temporarily discharges the duties of the secretary in the latter's absence or
inability to discharge duties for any cause or in case of vacancy of said office
performs such other functions as may be assigned
Investment Marketing
Formulates and implements the department policies, plans and programs relative to
consumer information, welfare promotion, empowerment and protection.
Power
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Prepares and implements plans and programs for media and public relations as well as
coordinates activities for special events of the Department
coordinates the organization and promotion of special events and energy exhibits
acts as the focal point for the National Energy Week Celebration
plans and supervises production of special publications, films, broadcasts and
videos
prepares educational and publicity programs and informational materials to
increase awareness of the developments in the energy secto
assists in the preparation of brochures, reports, newsletters and other materials
(e.g., promotional collaterals, investment kits, frequently asked questions, annual
reports, etc.)
9
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Monitors, audits and reviews the implementation of existing Internal Control Systems,
Work Processes and Policies, and recommends improvements and corrective actions
thereto
Financial Audit
Management Audit
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ADMINISTRATIVE SERVICES
Treasury Division
o Collection Section
o Disbursement Section
o Fund Management Section
Formulates policies, plans and programs related to the department's human resource
management and ensures effective implementation thereof and compliance with government
regulations and standards
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o Processes HRD opportunities and activities I.E., local and foreign study and non-study
programs
o Handles gender and development (GAD) related activities,day care center and other
development programs that would enhance employee performance and well-being
o Coordinates with OP,CSC,NEDA,DFA and other agencies on HR development matters
o Provides secretariat support to the personnel development and GAD committees
o Performs AD HOC functions as may be assigned
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o Provides secretariat support to the bids and awards committee and disposal
committee
o Performs AD HOC functions as may be assigned
General Administration
TREASURY DIVISION
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FINANCIAL SERVICES
Formulates and implements fiscal policies, programs and regulations, including those
on indigenous energy resource service contractors; monitors the utilization of
government-administered energy funds; and provides staff support services pertaining
to budget and accounting
Accounting Division
Budget Division
Compliance Division
o Petroleum Section
o Coal and Ocena, Solar & Wind (OSW) Section
o Geothermal Section
o Special Compliance Concerns Sections
BUDGET DIVISION
Formulates plans and programs related to the department`s budgetary requirements and
obligations and ensures effective implementation thereof and compliance with
government rules and regulations
o Executive Offices
o Administrative Services
o Financial Services
o Legal Services
o Energy Policy and Planning Bureau
o Energy Research and Testing Laboratory Services
o Information Technology and Management Services
o Prepares, reviews and submits budget proposals and related requirements of the
above- enumerated offices/units
14
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Operations
Projects
ACCOUNTING DIVISION
Formulates policies, plans and programs related to the department`s general accounting
services and ensures effective implementation thereof and compliance with government
rules and regulations
Financial Reporting
o Prepares and timely submits to management and fiscal agencies financial and
other special reports
15
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Payables
COMPLIANCE DIVISION
Formulates policies, plans and programs related to the compliance of service contractors
with their financial obligations as provided for in their service contracts,and ensures
effective implementation thereof and compliance with government regulations and
standards, evaluates financial qualifications of prospective contractors, as well as
monitors the utilization of DOE-administered energy funds.
Petroleum
16
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Geothermal
17
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18
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LEGAL SERVICES
Provides legal advice, legal counselling and legal support to service contract
negotiations and hearings:serves as the official legislative liaison to the congress of the
philippines
Legal Counselling
Contracts Division
Hearing Division
HEARING DIVISION
Conducts hearing of cases arising from complaints pertaining to violations of laws, rules
and regulations on the downstream oil industry, and on applications for petitions on the
construction, operation and maintenance of pipeline systems
Issues legal opinions, prepares draft orders/ resolutions/ decisions and other issuances
and handles employee-related cases and other cases affecting the department
19
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CONTRACT DIVISION
20
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21
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Petrology Section
Palentology Section
Coal Section
Geothermal Section
Petroleum Section
Appliance/Equipment Section
Lighting and Other Electrical Devices Section
Calibration, Instrumentation and Control Section
A. GEOLOGICAL UNITS
PETROLOGY SECTION
o Processes and analyzes surface and subsurface rock samples in accordance with
international standards
o Synthesizes, correlates and interprets petrological data
o Conducts research and correlation studies on Philippine rock samples
o Establishes and maintains Philippine petrological database and rock type
collection
o Conducts field investigations
o Conducts on-the-job training/orientation programs in support of the academe and
the energy industry
o Coordinates with various DOE units and concerned agencies, academe, energy
industry and other stakeholders on matters related to the above enumerated
functions
o Performs AD HOC functions as may be assigned
Paleontology Section
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o Processes and analyzes surface and subsurface rock samples for faunal fossil
content in accordance with international standards
o Synthesizes, correlates and interprets micropaleontological data
o Conducts micropaleontological/biostratigraphical research on Philippine rock
samples
o Establishes and maintains Philippine biostratigraphical and bathmetry database
and faunal type collection
o Conducts field investigations
o Conducts on-the-job training/orientation programs in support of the academe and
the energy industry
o Coordinates with various DOE units and concerned government agencies,
academe, energy industry and other stakeholders on matters related to the above
enumerated functions
o Performs AD HOC functions as may be assigned
Palynology Section
o Processes and analyzes surface and subsurface rock samples for floral fossil
content in accordance with international standards
o Synthesizes, correlates and interprets palynological data
o Conducts palynological research on Philippine samples
o Establishes and maintains palynological database and floral type collection
o Conducts field investigations
o Conducts on-the-job training/orientation programs in support of the academe and
the energy industry
o Coordinates with various DOE units and concerned government agencies,
academe, energy industry and other stakeholders on matters related to the above
enumerated functions
o Performs AD HOC functions as may be assigned
B. GEOCHEMICAL UNITS
Coal Section
o Processes and analyzes coal & other solid fuels as well as environmental samples
in accordance with international standards
o Synthesizes, correlates and interprets analytical data
o Conducts research and methods studies on coal geochemistry
o Conducts fields investigations
o Conducts on-the-job training/orientation programs in support of the academe and
the energy industry
o Coordinates with DOE units and concerned government agencies, academe,
energy industry and other stakeholders on matters related to the above
enumerated functions
o Performs AD HOC functions as may be assigned
Geothermal Section
23
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o Processes and analyzes waters, geothermal gases, soil, pocks and related
materials as well as environmental samples in accordance with international
standards
o Synthesizes, correlates and interprets analytical data
o Conducts research and methods studies on geothermal geochemistry
o Conducts fields investigations
o Conducts on-the-job training/orientation programs in support of the academe and
the energy industry
o Coordinates with DOE units and concerned government agencies, academe,
energy industry and other stakeholders on matters related to the above
enumerated functions
o Performs AD HOC functions as may be assigned
Petroleum Section
o Processes and analyzes oil, gas, source rocks samples as well as environmental
samples in accordance with international standards
o Synthesizes, correlates and interprets analytical data
o Conducts research and methods studies on petroleum and natural gas
geochemistry
o Conducts fields investigations
o Conducts on-the-job training/orientation programs in support of the academe and
the energy industry
o Coordinates with DOE units and concerned government agencies, academe,
energy industry and other stakeholders on matters related to the above
enumerated functions
o Performs AD HOC functions as may be assigned
24
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Appliance/Equipment Section
formulates energy standards for lighting and other household electrica; products
undertakes testing of lighting componenets and related products to:
o provide database on energy performance in aid of formulating policy
recommendations
o implement energy standards and labelling
conducts research and studies to improve efficiency of lighting and other
household electrical products
provides consultancy and technical assistance on lighting and related products
conducts on-the-job training/orientation programs in support of the academe and
the energy sector
coordinates with various DOE units and concerned government agencies,
academe, energy industry and other stakeholders on matters related to the above-
enumerated functions
performs ad hoc functions as may be assigned
25
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26
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Formulates, updates, monitors and evaluates national and local energy plans, policies, programs and
projects, and provides a comprehensive assessment of demand scenarios and supply options as well as
studies the impacts of international commitments on energy policies, economy and impacts of
international commitments on energy policies, economy and environment
Planning Division
PLANNING DIVISION
Formulates and updates national and regional energy plans and programs consistent
with the medium-term Philippine development and investment plans
o Prepared energy demand and supply models in support of pep formulation and
other energy policy studies
o Undertakes studies with the view to developing and maintaining in the long term
applicable energy models for the philippines
o Conducts research and data collection on energy sector developments to be used
as inputs to the above-enumerated activities
o Analyzes and synthesizes modelling results with the view to generating energy
forecasts, targets and projections to support policy thrusts and directions
o Coordinates with various government agencies, industry participants, consumers
ETC. (E.G., PNOC, NEDA, NEA, ERC, NPC, PSALM, TRANSCO, VARIOUS
IPPs, MERALCO, ECs) to facilitate the exchange of pertinent information
necessary in the execution of the sections`s functions
28
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o Designs and undertakes periodic and special surveys in aid of energy policy
formulation and planning purposes
o Monitors and analyzes the changing patterns in primary energy consumption
By FUEL
By SECTOR
By END-USE
o Processes and evaluates results of surveys undertaken
o Undertakes short-term sectoral energy supply and demand forecasts consistent
with national growth targets and policies
o Prepares DOE`s statistical programs for submission to NSCB & other gov`t.
agencies, academe and professional groups
o Prepares and updates reports on annual energy balance and energy mix
o Develops and updates techno-economic and sectoral energy database and energy
related information
o Coordinates with various government agencies, industry participants, consumers
ETC. (E.G., DOF, NEDA, NEA, ERC, NPC, PSALM, TRANSCO, VARIOUS
IPPs, MERALCO, ECs) to facilitate the exchange of pertinent information
necessary in the execution of the sections`s functions
o Establishes institutional linkages to strengthen information/data exchange
between and among government agencies necessary in the execution of the
department`s mandate
o Performs AD HOC functions as may be assigned
o Evaluates and monitors ongoing and proposed projects both foreign and locally
funded
o Conducts research on projects areas/facilities/ guidelines in support of the
department`s policies, plans and programs
o Develops criteria and guidelines in the preparation of projects proposals,
evaluation and management
o Recommends prioritization of energy projects for funding purposes
o Assists in the negotiation of terms and conditions of loans and grants for the
department with foreign funding institutions
29
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30
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Formulates and implements government policies, programs and regulations relating to the exploration,
development and production of indigenous petroleum, coal and geothermal energy resources, and
related product and market development thereof
Petroleum Division
Formulates and implements policies, plans, programs and regulations relating to the exploration and
development of petroleum resources
Petroleum Geology
Petroleum Geophysics
31
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Petroleum Engineering
Formulates and implements policies, plans, programs and regulations relating to exploration,
development, exploitation and market development of geothermal and coal resources
formulates policy recommendations, plans and programs on geothermal and coal resource
exploration
implements policies, plans and programs on geothermal and coal resources
conducts research and studies on geothermal and coal resources
evaluates service contract/permit applications relative to the merits of work programs and other
technical qualifications relating to exploration
evaluates and ensures compliance with regulations and work commitments of service
contractors and permitees relating to geoscientific activities with due regard to safety, health,
environment and security
maintains a computerized database on geothermal and coal resources
coordinates with various DOE units and concerned government agencies, industry participants,
academe and other stakeholders on matters related to the above-enumerated functions
performs ad hoc functions as may be assigned
32
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evaluates service contract/permit applications relative to the merits of work programs and other
technical qualifications relating to development and exploitation of geothermal and coal
resources
ensures compliance of service contractors/permitees with work regulations and commitments
relating to development and exploitation of geothermal and coal resources
coordinates with varios DOE units and concerned government agencies, industry participants,
academe an dother stakeholders on matters related the above-enumerated functions
performs ad hoc functions as may be assigned
ENERGY UTILIZATION AND MANAGEMENT BUREAU
Formulates and implements policies, plans, programs and regulations on new energy technologies,
alternative fuels and the efficient, economical transformation, marketing and distribution of
conventional and renewable energy resources, and ensures efficient and judicious utilization of
conventional and renewable energy resources
alternative fuels and energy technology program development and management section
alternative fuels and energy technology evaluation and promotion section
Formulates policies, plans and programs related to alternative fuels and new and advanced energy
technologies (NAETs) development towards a socially and environmentally responsive and effective
utilization of energy resources
conducts studies, develops and implements policies, palsn and programs for the effective utilization
Formulates and Implements polices, plans, programs and regulations on the downstream oil industry,
including the importation, exportation, stockpiling, storage, shipping, transportation, refining,
processing, marketing and distribution of petroleum crude oils, products and by products, and monitors
developments in the downstream oil industry
33
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Formulates policies, plans and programs related to national standards and environmental regulations
affecting quality of fuel and fuel additives, and facilities in the downstream oil industry and ensures
effective implementation thereof
Formulates policy recommendations and implements policies, plans and programs relating to
standards for petroleum products
Reviews, formulates, and develops standards for petroleum fuels and petroleum related
products
Evaluates application for fuel additive registration for endorsement to DENR
Issues recommendation for registration of fuel additives
Conducts research and studies relating to fuel quality and its impact on oil supply security,
environment ETC.
Undertakes product sampling and marker dye testing at bulk facilities to ensure compliance to
national fuel quality standards.
Recommends the initiation of legal proceedings against violators of pertinent provisions of
R.As. 8479 and 8749
Coordinates the conduct of information and education campaign relative to the quality and
standards of petroleum products
Coordinates with various DOE Units and concerned government agencies and other entities,
(E.G., DENR, DOST, BPS, OIL Companies, vehicle manufacturer, ETC.) relative to fuel
quality and standards
Provides secretariat support to the technical committee on petroleum products and additives
Performs AD HOC functions as may be assigned
Formulates policy recommendations and implements policies, plans and programs relating to
standards for facilities, processes and technology application
Reviews, formulates, and develops standards for facilities & processes with emphasis with
clean and safe technologies.
Conducts research and studies relating to standards for facilities and processes and their
impacts on oil supply security, environment, etc.
Undertakes inspection of downstream oil facilities to ensure compliance with national and/or
internationally accepted standards
Provides inputs in the preparation of the Philippine energy plan
Recommends the initiation of legal proceeding against violators of pertinent provisions of R.As.
8479 and 8749
Coordinates the conduct of information and education campaign relating to facilities and
processes standards
Coordinates with various DOE Units and concerned government agencies and other entities
(E.G., DENR.DOST, BPS, OIL COMPANIES, OIL PROCESSING COMPANIES Etc.)
Provides secretariat support to the technical committee on petroleum facilities and processes.
34
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Formulates policy recommendations and implements policies, plans and programs relating to
downstream oil industry environmental standards and coordinates with the DENR thereon
Conducts research and studies relating to environmental practices for fuel handling,
distribution, storage and utilization with the view to adopting best industry practices
Participates in the investigation of oil spills and similar incidences in the downstream oil
industry
Prepares and updates DOE oil spill contingency plan for the downstream oil industry
Provides inputs as requested by the civil liability convention (CLC) and the international oil
pollution convention (IOPC)
Monitors the collection and recycling of used oil
provides inputs in the preparation of the Philppine energy plan
Coordinates the conduct of information and education campaign relating to environmental
concerns of the downstream oil industry
Coordinates with various DOE units and concerned goverment agencies and other entities,
(E.G., DENR, PCG, BPS, OIL Companies, NGOs, ETC.) to determine sector's compliance to
the CAA and other environmental regulations and recommends appropriate action
Performs AD HOC functions as may be assigned.
Formulates and implements policies, plans and programs to encourage activities relating to the
downstream oil industry particularly on supply, logistics, marketing, distribution & pricing
o Formulates policy recommendations and implements policies, plans and programs relating to
oil supply
o Monitoring compliance of industry players on prior notice and reportorial requirements on
importation and exportation of crude oil and petroleum products including lubes/ specialty
products as mandated under R.A. 8479
o Monitors submission of periodic reports on importation, exportation, inventory, crude run and
refinery production of crude oil and petroleum products including lubes/specialty products, as
well as refinery process facilities and shutdowns/turnarounds
o Recommends the initiation of legal proceedings against noncompliance to the pertinent
reportorial requirements
o Evaluates notices filed by downstream oil industry players particularly on importation/
exportation of crude oil and petroleum products including lubes/specialty products, and issues
acknowledgements thereof
o Evaluates applications for availment of petroleum products export incentives for endorsement
of the DOE
o Conducts inspection of petroleum product supply storage facilities, and product sampling
o Assists in the development of as well as maintains and updates database relative to crude
oil and petroleum products including lubes/specialty products importation, exportation,
inventory, production, & crude run including refinery process facilities and
shutdowns/turnarounds
o Evaluates refinery operations and their implications on oil supply
o Conducts research and studies relative to oil supply
o Provides inputs in the preparation of the Philippine Energy Plan, particularly on the oil supply
aspect
o Coordinates the conducts of information and education campaign relative to oil supply
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o Coordinates with various DOE units and concerned government agencies and other entities,
(E.G., BOC, BIR, SEC, OIL Companies, special Economics Zones) on crude oil/petroleum
product importation/exportation, inventory and oil refinery production
o Performs AD HOC functions as may be assigned
Formulates policy recommendations and implements policies, plans and programs relating to
oil demand and market competition
Monitoring compliance of industry players on prior notice and reportorial requirements as
mandated under R.A. 8479
Monitors submission of sales reports on petroleum products as inputs to oil demand and market
competition analysis
Recommends the initiation of legal proceedings against noncompliance to the pertinent
reportorial requirements
Evaluates notices filed by downstream oil industry players on their engagement in the
downstream oil industry (bulk supply/marketing) and issues acknowledgements thereof
Evaluates applications for petroleum tanker chartering/utilization, importation, local
construction and conversion of service for endorsement to maritime industry authority
(MARINA).
Evaluates applications for registration & availment of incentives of downstream oil industry
players for endorsement to the board of investments (BOI)
Conducts inspection of petroleum product marketing and distribution facilities and undertakes
product sampling
Maintains a computerized database relative to oil industry sales and market share of players,
investments of all players, thruput of bulkplants, oil distribution facilities and tanker utilization
Conducts research and studies relative to storage, marketing and distribution of oil products
(E.G., oil depot relocation, logistics, de-bottlenecking, ETC.)
Provides inputs in the preparation of the Philippine Energy Plan, particularly on marketing and
distribution activities of the downstream oil industry players
Assists in the conduct of information and education campaigns relative to the downstream oil
industry players.
Coordinates with various DOE units and concerned government agencies and other entities,
(E.G. MARINA, BOI, SEC, OIL Companies) particularly on downstream oil industry
investments and activities.
Performs AD HOC functions as may be assigned
o Formulates policy recommendations and implements policies, plans and programs relating to
oil pricing (E.G., TAXATION REVIEW, IPO, ETC.)
o Monitors international prices of crude oil and petroleum products.
o Simulates the impact of international petroleum products pricing on domestic pricing of
petroleum products
o Determines the reasonableness of price adjustments in local market VIS-A-VIS global market
conditions
o Conducts research and studies relative to the downstream oil industry affecting pricing of
petroleum products
o Maintains and updates database relative to oil pricing
o Conducts inspection of petroleum product supply, marketing and distribution facilities.
o Provides technical support to the DOE-DOJ task force on anti-trust safeguards
o Provides inputs in the preparation of the Philippine energy plan, particularly on the pricing
aspect
o Coordinates the conduct of information and education campaign relative to oil pricing
36
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o Coordinates with various DOE units and concerned government agencies and other entities,
(E.G., DOE, BIR, BOC, SEC, OIL Companies, ETC.) relative to petroleum product pricing,
taxation, among others
o Perfoms AD HOC functions as may be assigned
Formulates and Implements Policies, Plans, Programs and Regulations on the Development and
Promotion of Downstream Natural Gas as well as Undertakes Product and Market Development
Activities
o Formulates policy recommendations and implements policies, plans and programs on natural
gas market development
o Promotes and monitors the use of natural gas in power and other demand sectors
o Evaluates emerging trends in the use of natural gas and its impact on other fuels and the
economy
o Evaluates available and emerging technologies for end-use in the natural gas industry
o Reviews and updates natural gas industry performance, trends and developments
o Maintains computerized database on natural gas utilization, market development, etc.
o Coordinates with various DOE units, concerned government agencies, private sector and other
stakeholders on matters related to the above-enumerated functions
o Performs Ad Hoc functions as may be assigned
o Formulates policy recommendations and implements policies, plans, programs and standards
on the development of natural gas infrastructure
o Formulates, reviews and implements the natural gas infrastructure development program
o Prepares and updates the natural gas pipeline and facilities development plan and programs
o Evaluates potential sites for natural gas pipelines and other natural gas facilities
o Performs licensing/permitting functions
o Monitors and ensures compliance with applicable rules and regulations on standards on
pipelines, facilities, gas plants, etc.
o Conducts inspections and investigations of natural gas facilities, with due regard to production,
safety, health, environment and security
o Coordinates with various DOE units, concerned government agencies, private sector and other
stakeholders on matters related to the above-enumerated functions
o Performs Ad Hoc functions as may be assigned
Formulates policies, plans and programs related to the oil retail market and other special concerns
affecting oil industry administration and ensures effective implementation thereof
Liquid Fuels
o Formulates policy recommendations and implements policies, plans and programs relating to
the retail marketing and hauling of liquid fuels
o Monitors compliance of industry players on prior notice and reportorial requirements on the
retail marketing and hauling of liquid fuels as mandated under R.A.8479
o Monitors submission of periodic reports on the retail marketing and hauling of liquid fuels
37
B. Distura
o Conducts routine and on-the-spot inspection of gasoline stations and liquid fuels haulers to
ensure compliance with DOE regulations
o Conducts investigations on consumer complaints relative to liquid fuels with the view to
recommend measures
o Conducts preliminary random testing on the quality of liquid fuels sold in gasoline station/retail
outlets (E.G., Marker Dye Test, Adulteration Test)
o Recommends the initiation of legal proceedings against violators of regulations on liquid fuels
o Monitors wholesale and retail prices of liquid fuels and provides inputs to the price monitoring
and evaluation section
o Maintains a computerized database relative to industry players engaged in the liquid fuels
retailing and hauling
o Conducts research and studies relative to the retailing of liquid fuels in aid of policy formulation
o Coordinates with various DOE units and concerned government agencies (E.G., DTI, DOST
LGU) relative to the above-enumerated functions
o Coordinates the conduct of information and education campaign relative to the liquid fuels
sector
o Provides inputs in the preparation of the Philippine energy plan
o Represents the department in the liquid fuels task force
o Provides secretariat support to the technical committees in this regards
o Performs AD HOC functions as may be assigned
LPG
o Formulates policy recommendations and implements policies, plans and programs relating to
the retail marketing and hauling of liquefied petroleum gas (LPG)
o Monitors compliance of industry players on prior notice and reportorial requirements on the
retail marketing and hauling of LPG as mandated under R.A. 8479
o Monitors submission of periodic reports on the retail marketing and hauling of LPG
o Conducts routine and on-the-spot inspection of LPG refillers, haulers, marketers, dealers and
retail outlets to ensure compliance with DOE regulations
o Conducts investigations on consumer complaints relative to LPG with the view to recommend
measures thereon
o Recommends the initiation of legal proceeding against violators of regulations on LPG
o Monitors retail prices of retail LPG and provides inputs to the price monitoring and evaluation
section
o Maintains a computerized database relative to industry players engaged in the LPG refilling,
retailing and hauling
o Coordinates with various DOE units and concerned government agencies (E.G., DTI, DOST,
LGU) relative to the above-enumerated functions
o Coordinates the conduct of information and education campaign relative to the liquid fuels
sector
o Conducts studies and research relative to the refilling, hauling and retailing of LPG
o Provides inputs in the preparation of the Philippine energy plan
o Represents the department in the LPG task force
o Provide secretariats support to the technical committees in this regard
o Performs AD HOC functions as may be assigned
Special Concerns
o Coordinates the conduct of skills and management training funded under the gasoline station
training and loan fund (GSTLF) program for the establishment and operation of new and
expansion of existing gasoline stations of new players
o Evaluates loan applications under the GSTLF program for endorsement to the government
financing institutions (GFis) and recommends approval thereof
38
B. Distura
Formulates policies, plans and programs related to generation, transmission, distribution and supply of
electricity and ensures effective implementation thereof.
o Prepares and updates annually the Philippine Power Development Plan (PDP).
o Evaluates individual plans of
Generation companies
National transmission company or its buyer/concessionaire
Distribution utilities
Suppliers of electricity; and
Other entities engaged in the delivery of electricity services
o Prepares indicative supply and demand options based on economics and technologies with the
view to ensuring greater private sector participation.
o Undertakes long-term national, regional and sectoral electricity demand forecasts.
39
B. Distura
o Evaluates and recommends approval of the Transmission Development Plan (TDP) of Transco
or its buyer/concessionaire.
o Formulates policy recommendations on transmission expansions.
o Represents the department in the following:
o Evaluates and updates annually the Missionary Electrification Development Plan (MEDP).
o Formulates policy recommendations on sufficiency of supply of electricity in off-grid areas.
o Prepares indicative supply and demand options based on economics and technologies in off-
grid areas.
o Formulates policy recommendations on missionary electrification and off-grid connections.
o Coordinates the planning of missionary electrification projects.
o Evaluates the missionary electrification projects of NPC-Small Power Utilities Group (NPC-
SPUG) and other parties operating in off-grid areas.
o Provides power sector inputs to the Philippine Energy Plan (PEP), Regional Energy Plans
(REPs) and Sectoral Energy Plans (SEPs).
o Coordinates with various government agencies, electric power industry participants, consumer
groups, etc. (e.g. DOF, NEDA, NEA, ERC, NPC, PSALM, Transco, various IPPs, Meralco,
ECs) on matters related to the above-enumerated functions.
o Provides secretariat support to various activities relating to missionary electrification.
o Performs AdHoc functions as may be assigned.
Formulates Policies, plans and programs related to the development of Philippine power market and
ensures the effective and sustainable operation of a competitive national and regional electricity markets
40
B. Distura
o Oversees and implements the Philippine Wholesale electricity spot market (WESM)
o Formulates policy recommendations relating to sustainable electricity market transformation
o Evaluates and monitors performance of the electricity market
o Undertakes research and studies to further develop and strengthen the Philippine electricity
market
o Implements and facilitates technical assistance projects related to the WESM
o Represents the department in the ff. inter- agency committees:
1. WESM technical working groups
2. NEDA technical working committees relating to power (NEED BASIS)
o Provides secretariat support to the WESM technical working groups
o Coordinates with various government agencies, electric power industry participants, consumer
groups, ETC. (E.G., DOF, NEDA, NEA, ERC, NPC, PSALM, TRANSCO, VARIOUS IPPs,
MERALCO, ECs) on matters related to the above enumerated functions
o Performs AD HOC functions as may be assigned
o Evaluates and monitors EPIRA implementation and compliance of electric power industry
participants (government and private sector entities)
o Evaluates submissions of various agencies relating to the reportorial requirements of the joint
congressional power commission (JCPC)
o Prepares BI-annual reports to the JCPC on EPIRA implementation and compliance
o Formulates policy recommendations to ensure effective implementation of the restructuring
objectives
o Implements and facilitates technical assistance projects related to EPIRA
o Coordinates with various government agencies, electric power industry participants, consumer
groups, ETC. (E.G., DOF, NEDA, NEA, ERC, NPC, PSALM, TRANSCO, VARIOUS IPPs,
MERALCO, ECs) on matters related to the above enumerated functions
o Provides secretariat support to the EPIRA implementation steering committee and JCPC
meetings
o Performs AD HOC functions as may be assigned
Formulates policies, plans and programs related to the department's thrust to total energization of the
country and provision of financial benefits to host communities and ensures effective implementation
thereof.
41
B. Distura
Formulate and implement policies, plans and programs related to the accelerated development,
transformation, utilization and commercialization of renewable energy resources including emerging
energy technologies
Provide support to the operations of the national renewable energy board and will serve as a one-step
shop for RE
Formulate and implement policies, plans and programs related to the accelerated development,
transformation, utilization and commercialization of biomass energy resources including emerging
energy technologies
42
B. Distura
Formulate and implement policies, plans and programs related to the accelerated development,
transformation, utilization and commercialization of hydropower and ocean energy resources including
emerging energy technologies
Formulate and implement policies, plans and programs related to the accelerated development,
transformation, utilization and commercialization of geothermal energy resources
Formulate and implement policies, plans and programs related to the accelerated development,
transformation, utilization and commercialization of solar and wind energy resources
o Develop, formulate and implement solar and wind (S & W) policies, plans and programs, as
part of the NREP, to accelerate the development, transformation, utilization and
commercialization of SW resources and technologies;
o Monitors and evaluates the implementation of the S & W plans, programs, projects, activities,
laws, regulations and similar issuances;
o Assists in administering the implementation of existing S & W laws, regulations and similar
issuances;
o Coordinates with various government agencies, LGUs, academe, NGOs, private sector and
other stakeholders on matters related to the development and implementation of S & W policy,
plans and programs;
o Conduct energy technology and policy research and development activities for the development
of sustainable S & W systems;
o Develops and spearheads the implementation of local and/or foreign-assisted S & W projects
and activities;
o Operates and maintains a computerized national S & W energy database;
o Conducts S & W energy resource assessment and mapping; and
o Performs AdHoc functions as maybe assigned.
o Develop and implement an SW promotion and commercialization policies, plans and sub-
programs, as part of the SW program, to promote the commercialization/application of SW
resources and technologies;
o Monitors and evaluates the commercial operation of S & W power and non-power facilities and
projects;
o Spearheads in administering the implementation of existing S & W laws, regulations and
similar issuances;
o Coordinates with various government agencies, LGUs, academe, NGOs, private sector and
other stakeholders on matters related to the S & W promotion and commercialization program;
o Conduct research and development activities on the economic and financial efficiencies and
effectiveness of SW systems;
o Assists in the implementation of local and/or foreign-assisted S & W projects and activities;
o Operates and maintains a computerized national S & W energy database; and
43
B. Distura
o Formulate, develop and evaluate programs and policies that will enhance the technical and
economic competitiveness of geothermal technologies including technology innovations;
o Conduct hydrologic, geological, topographic, oceanographic and economic survey, feasibility
studies and research programs to assess the country's geothermal resource potentials;
o Maintain a database inventory of geothermal potential and update regularly for
commercialization and utilization purposes (e.g. maps, matrix and ranking of ocean and
hydropower sites);
o Conduct socio-economic and environmental impact studies on geothermal development and
recommend mitigating measures to lessen harmful effects to the environment;
o Provide technical assistance and sustainable solutions in relation to development and operation
of geothermal facilities;
o Conduct seminars, training courses, technical briefing, fora, workshops, focus group
discussions and tri-media campaigns to facilitate information dissemination and capacity
building to geothermal technologies; and
o Perform ADHOC functions as maybe assigned.
o Formulate policies and oversee the implementation of policies, guidelines and standards that
will govern the geothermal development thrust of the government including enhancement of
private sector participation;
o Supervise and monitor activities of government and private institutions on geothermal projects
and provide guidance for better understanding of government's regulatory functions, policies
and programs in relation to utilization and commercialization of geothermal resources;
o Maintain a database inventory of geothermal facilities for monitoring and developing
geothermal generation statistics (e.g. energy mix, generation mix, etc.);
o Conduct socio-economic and environmental impact studies on operation of geothermal system
and recommend mitigating measures to lessen harmful effects to the environment;
o Issue registration and accreditation of RE equipment manufacturers, fabricators and suppliers;
o Coordinate with various government agencies, LGUs, Academe, NGOs, private sector and
other stakeholders on matters related to the above enumerated functions;
o Conduct seminars, training courses, technical briefings, fora, workshops, focus group
discussions and tri-media campaigns to facilitate information dissemination and capacity
building to geothermal technologies; and
o Perform ADHOC functions as maybe assigned.
o Formulate policy recommendations and implement plans and programs for the effective
utilization, promotion and commercialization of biomass including biofuels energy
technologies;
o Undertake policy research and studies for the development and application of new and
emerging biomass/biofuels energy technologies;
o Design, recommend and implement institutional, legislative and economic incentive packages
to support sustainability of biomass/biofuels programs;
44
B. Distura
o Formulate, develop and evaluate programs and policies that will enhance the technical and
economic competitiveness of ocean and hydropower technologies including technology
innovations;
o Conduct hydrologic, geological, topographic, oceanographic and economic surveys, feasibility
studies and research programs to assess the country's ocean and hydropower resource
potentials;
o Maintain a database inventory of ocean and hydropower potential and update regularly for
commercialization and utilization purposes (e.g. maps, matrix and ranking of ocean and
hydropower sites);
o Conducts socio-economic and environmental impact studies on ocean and hydropower
development and recommend mitigating measures to lessen harmful effects to the environment;
o Provide technical assistance and sustainable solutions in relation to development and operation
of ocean and hydropower facilities;
45
B. Distura
o Conduct seminars, training courses, technical briefing, fora, workshops, focus group
discussions and tri0-media campaigns to facilitate information dissemination and capacity
building to ocean and hydropower technologies; and
o Perform ADHOC functions as maybe assigned;
o Formulate policies and oversee the implementation of policies, guidelines and standards that
will govern the ocean and hydropower development thrust of the government including
enhancement of private sector participation;
o Supervise and monitor activities of government and private institutions on ocean and
hydropower projects and provide guidance for better understanding of government's regulatory
functions, policies and programs in relation to utilization and commercialization of ocean and
hydropower resources;
o Maintain a database inventory of ocean and hydropower facilities for monitoring and
developing ocean and hydropower generation statistics (e.g. energy mix, generation mix, etc.);
o Conduct socio-economic and environmental impact studies on operation of ocean and
hydropower system and recommend mitigating measures to lessen harmful effects to the
environment;
o Issue registration and accreditation of RE equipment manufacturers, fabricators ans suppliers;
o Coordinate with various government agencies, LGUs, Academe, NGOs, private sector and
other stakeholders on matters related to the above enumerated functions;
o Conducts seminars, training courses, technical briefings, fora, workshops, focus group
discussions and tri-media campaigns to facilitate information dissemination and capacity
building to ocean and hydropower technologies; and
o Perform ADHOC functions as maybe assigned;
Administrative Section
Arrange special and/or periodic meetings of the National Renewable Energy Board (NREB) by
sending invitations to NREB members, resource persons and parties concerned to ensure
quorum and/or attendance.
Prepare minutes and proceedings including the recording of documents and various issues
raised during board deliberation for reference and information;
Review of RPS Rules and makes appropriate recommendations in line with the objectives of
R.A. 9513;
Monitor the implementation of and compliance by industry participants with RPS Rules
promulgated by the DOE;
46
B. Distura
Implements regional policies, plans, programs, and regulations of the department relating to energy
resources exploration and development, its judicious and efficient utilization, ensures adequate,
efficient, and reliable supply of electricity and monitors the development in the downstream oil industry,
development and utilization of renewable energy (RE) resources such as geothermal, hydro, ocean,
biomass, solar, and wind with due regard to the environment and sustainable development in Luzon.
Implements policies, plans, programs, and regulations relative to the development and utilization of
energy resources in Luzon.
o Conducts initial / preliminary inspection and investigation on oil, natural gas, coal, geothermal,
hydro, ocean, biomass, solar, and wind operations as appropriate, with due regard to production,
safety, health, environment and security
o Conducts preliminary investigation of reported occurences on oil, natural gas, coal, and re
resources.
o Conducts resource assessment and mapping of renewable energy resources in the region
o Develops and maintains regional database on oil, natural gas, coal, geothermal, hydro, ocean,
biomass, solar, and wind energy resources, energy conservation programs, alternative fuels,
and the development and application of new and advanced energy technologies (naets) for
planning purposes
o Provides technical assistance and energy advisory services to the various stakeholders and the
public on coal, oil, natural gas, renewable energy, efficient utilization of energy, alternative
fuels and naets
o Implements programs and regulations on geothermal, hydro, ocean, biomass, solar, and wind
energy resources, energy conservation, alternative fuels and naets
o Conducts the following activities in coordination with the DOE head office:
a. Researches and studies on oil, natural gas, coal, geothermal, hydro, ocean, biomass,
solar, wind energy resources, energy conservation, alternative fuels and naets
b. Implements government projects on non-renewable and renewable energy resources
c. Develops and implements projects on oil, natural gas, coal, geothermal, hydro, ocean,
biomass, solar, and wind energy resources, alternative fuels, energy conservation, and
naets
d. Monitors project of service contractors / permitees on renewable and non-renewable
energy resources exploration, development, and utilization
e. Facilitates in the field evaluation of non-renewable and renewable energy resources
o Coordinates with the various doe units and concerned government agencies, local government
units, the academe, and other stakeholders on the above-enumerated functions
o Performs ad hoc functions as may be assigned
Implements policies, plans, programs, and regulations relative to the electric power and downstream oil
industries in Luzon
o Implements policies, plans, programs, and regulations relative to downstream oil and electric
power industries including its environmental concerns
o Conducts preliminary random testing on the quality of liquid fuels sold in gasoline stations/
retail outlets (e.g.market dye/ adulteration tests)
47
B. Distura
o Conducts routine and on-the-spot inspection on oil depots, gasoline stations, liquid fuels
haulers, lpg refillers, marketers, dealers, and retail outlets to ensure compliance with doe
regulations
o Conducts preliminary inspection on the proposed projects for funding under rule 29 of R.A
9136 implementing rules and regulations (ER 1-94)
o Monitors implementation of projects funded under rule 29 of R.A 9136 implementing rules and
regulations (ER 1-94)
o Conducts investigation on consumer complaints relative to liquid fuels and LPG and
recommends appropriate action thereon
o Recommends initiation of legal action involving violators of regulations on liquid fuels and
LPG, and non-compliance with R.A. 8479 and R.A. 8749
o Participates in the investigation of oil spills and other environment-related incidents in the
downstream oil industry
o Maintains a computerized database relative to downstream oil and electric power industries
o Organizes the following activities in coordination with the doe head office:
a. Researches and studies relative to the downstream oil industry (i.e. supply, distribution,
marketing, logistics, storage, etc.) And electric power industry
b. Monitors industry players compliance pursuant to R.A. 8479 and R.A. 8749 (e.g. prior notice,
reportorial requirements, regional retail prices, etc) and performances of the electricity power
industry
c. Performs product sampling, preliminary quality testing, facility inspection and marker dye
testing of bulk facilities to ensure compliance with national standards
d. Conducts information, education campaign relative to the activities on downstream oil industry
and electricity power industry reform act of 2001 (R.A. 9136)
e. Administers activities relative to the gasoline station training and loan funds (GSLTF)
Implements regional policies, plans, programs and regulations of the department relating to energy
resource exploration and development, judicious and efficient utilization of energy resource ensures
adequate, efficient and reliable supply of electricity, and monitors development in the downstream oil
industry with due regard to the environment and sustainable energy development in the visayas
o Petroleum unit
o Geothermal Coal unit
o Renewable unit
o Energy Efficiency & Alternative fuels unit
o Electricity unit
48
B. Distura
o LPG unit
o Gasoline unit
Formulates and Implements policies, plans, programs and regulation relative to energy resource
development and utilization in the Visayas
o Formulates policy recommendations on geothermal, coal, oil and natural gas resources in the
Visayas
o Conducts initial/preliminary inspection and investigation of geothermal, coal, oil and natural
gas operations as appropriate, with due regard to production, safety, health, environment and
security in the Visayas
o Conducts preliminary investigation of reported occurences of geothermal, coal, oil and natural
gas resources
o Develops and Maintains regional database on geothermal, coal, oil and natural gas resources
for planning purposes
o Provides technical assistance and energy advisory services to the various stakeholders and the
public on geothermal, coal, oil and natural gas resources
o Conducts the following in coordination with the doe head office:
o Research and studies on geothermal, coal, oil and natural gas resource exploration and
development including market development of geothermal and coal resource
o Implementation of government projects on geothermal, coal, oil and natural gas
resources
o Development and Implementation of project proposals on geothermal, coal, oil and
natural gas resources
o Monitoring of projects of service contractors/permitees on geothermal, coal, oil and
natural gas resource exploration and development
o Field evaluation of geothermal, coal, oil and natural gas resources
o Coordinates with the various DOE Units and concerned government agencies, local
government units, the academe, and other stakeholders on the above-enumerated fuctions
o Performs AD HOC functions as may be assigned
49
B. Distura
o technical and economics evaluation of alternative fuels and NAETs for local
applications
o Research and development studies for the effective utilization and commercialization
of renewable system, energy efficiency and conservation technologies, alternative fuels
and NAETs
o Implementation of government projects on renewable energy technologies and
resource, alternative fuels and NAETs, and energy efficiency and conservation in the
Visayas
o Monitoring of projects on renewable energy, energy efficiency and conservation,
alternative fuels and NAETs
o Coordinates with the various DOE units and concerned governments agencies, local
government units, the academe, and other stakeholders on the above enumerated functions
o Performs AD HOC functions as may be assigned
ENERGY INDUSTRY MANAGEMENT DIVISION
o Formulates policy recommendations and implements policies,plans and programs relating to
the electric power industry activities in the Visayas
o Provides inputs in the preparation of the Philippine Energy Plan (PEP), Philippine Power
Development Plan (PDP), Transmission Development Plan (TDP), Missionary Electrification
Development Plan (MEDP), Regional Energy Plans (REPs) and sectoral energy plans (SEPs)
o Maintains a computerized regional database relative to the electric power industry in the
Visayas
o conducts preliminary inspection of proposed projects for funding under rule 29 of R.A. 9136
implementing rules and regulations (ER 1-94)
o Monitors implementation of projects funded under rule 29 of R.A. 9136 implementing rules
and regulations (ER- 1-94)
o Conducts the following activities in coordination with the DOE Head Office
*Information Education campaign relative to the electric power industry reform act 2001 (R.A. 9136)
*Monitoring of performance of the electricity market and compliance with the provision of R.A. 9136
by the electric power industry stakeholders
*Evaluation of the individual plans of generation companies, Transco and its buyer/concessionaire,
distribution utilities, suppliers of electricity services
o Coordinates with various DOE units and concerned government agencies, electric power
industry participants, consumer groups, etc. on matters related to the above-enumerated
functions
o Performs AD HOC functions as may be assigned
o Formulates policy recommendations and implements policies, plans and programs relating to
downstream oil industry activities in the Visayas including environmental concerns
o Conducts preliminary random testing on the quality of liquid fuels sold in Gasoline
stations/retail outlets (E.G., Market Dye Test, Adulteration Test)
50
B. Distura
o Conducts routine and on-the-spot inspections of depots, Gasoline stations, liquid fuels haulers
and LPG Refillers, marketers, dealers and retail outlets to ensure compliance with DOE
regulations.
o Conducts investigations on consumers complaints relative to liquid FUELS and LPG and
recommends appropriate actions thereon
o Recommends initiation of legal action involving violators of regulations on liquid FUELS and
LPG, and non-compliance with R.A. 8479 and R.A. 8749
o Participates in the investigation of OIL spill and other environment-related incidents in the
downstream oil industry
o Maintains a computerized database relative to downstream oil industry activities
o Conducts the following in coordination with the DOE Head Office:
*Research and studies relative to downstream oil industry activities (E.G., Supply, Distribution,
Marketing, Logistics, Storage, ETC.)
*Monitoring of industry players compliance pursuant to R.A. 8479 and R.A. 8749 (E.G., Prior notice,
Reportorial requirements, regional retail prices, ETC.)
*Product sampling, preliminary quality testing, facility inspection and Marker Dye Testing at bulk
facilities to ensure compliance with national standards
*Activities related to the Gasoline station training and loan fund (GSTLF)
o Coordinates with various DOE units and concerned government agencies (E.G., DTI, DOST,
LGUs)
o Performs AD HOC functions as may be Assigned
51
B. Distura
Implements regional policies, plans, programs and regulations of the department relating to energy
resource exploration and development, judicious and efficient utilization of energy resource, ensures
adequate, efficient and reliable supply of electricity, and monitors development in the downstream oil
industry with due regard to the environment and sustainable energy development in Mindanao
o Petroleum Unit
o Geothermal Unit
o Renewable Unit
o Energy Efficiency & Alternative Fuels Unit
o Electricity Unit
o Rural Electrification Unit
o LPG Unit
o Gasoline Unit
Formulates and implements policies, plans, programs and regulations relative to energy resource
development and utilization in Mindanao
o Formulates policy recommendations on geothermal, oil and natural gas resources in Mindanao
o Conducts initial/preliminary inspection and investigation of geothermal, oil and natural gas
operations as appropriate, with due regard to production, safety, health, environment and
security in Mindanao
o Conducts preliminary investigation of reported occurences of geothermal, oil and natural gas
resources
o Develops and maintains regional database on geothermal, oil and natural gas resources for
planning purposes
o Provides technical assistance and energy advisory services to the various stakeholders and the
public on geothermal, oil and natural gas resources
o Conducts the following in coordination with the DOE Head Office:
o Research and studies on geothermal, oil and natural gas resource exploration and
development including market development of geothermal and coal resources
o Implementation of government projects on geothermal, oil and natural gas resources
52
B. Distura
o Technical and economic evaluation of alternative fuels and NAETs for local
applications
o Research and development studies for the effective utilization and commercialization
of renewable systems, energy efficiency and conservations technologies, alternative
fuels and NAETs
o Implementation of government projects on renewable energytechnologies and
resources, alternative fuels and NAETs, and energy efficiency and conservation in
Mindanao
o Monitoring of projects on renewable energy, energy efficiency and conservation,
alternative fuels and NAETs
o Coordinates with the various DOE units and concerned government agencies, local
governments units,the academe, and other stakeholders on the above enumerated functions
o Performs AD HOC functions as may be assigned
o Formulates policy recommendations and implements policies, plans and programs relating to
the electric power industry activities in Mindanao
o Provides inputs in the preparation of the Philippine Energy Plan (PEP), Philippine Power
Development Plan (PDP), Transmission Development Plan (TDP),
Missionary Electrification Development Plan (MEDP), Regional Energy Plans (REPs)
and Sectoral Energy Plans (SEPs)
o Maintains a computerized regional database relative to the electric power industry in Mindanao
o Conducts preliminary inspection of proposed projects for funding under rule 29 of R.A. 9136
Implementing Rules and Regulations (ER 1-94)
o Monitors implementing of projects funded under rule 29 of R.A. 9136 Implementing Rules and
Regulations (ER 1-94)
53
B. Distura
o Conducts the following activities in coordination with the DOE head office
o Information Education campaign relative to the electric power industry reform act 2001
(R.A. 9136)
o Evaluation and Endorsement of qualified Non-Electrification projects (E.G.,
Development,livelihood projects, reforestation,watershed management, health and/or
environment enhancement projects) pursuant to rule 29 of R.A. 9136 implementing
rules and regulations (ER 1-94)
o Monitoring of performance of the electricity market and compliance with the provision
of R.A. 9136 by the electric power industry stakeholders
o Implementation of foreign-assisted and locally-funded electrification projects in the
Visayas
o Evaluation of the individual plans of generation companies, Transco and its
buyer/concessionaire, distribution utilities, suppliers of electricity services
o Coordinates with various DOE units and concerned government agencies, electric power
industry participants, consumer groups, etc. on matters related to the above-enumerated
functions
o Performs AD HOC functions as may be assigned
o Formulates policy recommendations and implements policies, plans and programs relating to
downstream oil industry activities in the Visayas including environmental concerns
o Conducts preliminary random testing on the quality of liquid fuels sold in Gasoline
stations/retail outlets (E.G., Market Dye Test, Adulteration Test)
o Conducts routine and on-the-spot inspections of depots, Gasoline stations, liquid fuels haulers
and LPG Refillers, marketers, dealers and retail outlets to ensure compliance with DOE
regulations.
o Conducts investigations on consumers complaints relative to liquid FUELS and LPG and
recommends appropriate actions thereon
o Recommends initiation of legal action involving violators of regulations on liquid FUELS and
LPG, and non-compliance with R.A. 8479 and R.A. 8749
o Participates in the investigation of OIL spill and other environment-related incidents in the
downstream oil industry
o Maintains a computerized database relative to downstream oil industry activities
o Conducts the following in coordination with the DOE Head Office:
o Research and studies relative to downstream oil industry activities (E.G., Supply,
Distribution, Marketing, Logistics, Storage, ETC.)
o Monitoring of industry players compliance pursuant to R.A. 8479 and R.A. 8749 (E.G.,
Prior notice, Reportorial requirements, regional retail prices, ETC.)
o Product sampling, preliminary quality testing, facility inspection and Marker Dye
Testing at bulk facilities to ensure compliance with national standards
o Information education campaign relative to downstream oil industry activities
o Activities related to the Gasoline station training and loan fund (GSTLF)
o Coordinates with various DOE units and concerned government agencies (E.G., DTI, DOST,
LGUs)
54
B. Distura
55
B. Distura
45
Service Guide Manual
(https://www.doe.gov.ph/sites/default/files/pdf/downloads/service_guide_manual.pdf)
56
B. Distura
Energy storage technology is a system that absorbs energy and stores it for a period of
time before releasing it to supply energy or power services. Advances in this technology are
important to optimize energy systems and allow the integration of renewable energy systems.
As the materials, technologies, and deployment applications for storing energy are created,
ensuring safety and minimizing the risk of failure and losses become crucial.48
Based on the strategic framework, there are four major strategies for the infrastructure
sector: (a) increase spending on public infrastructure; (b) implement strategic infrastructure
for the various infrastructure subsectors; (c) ensure asset preservation; and (d) intensify
R&D on technologies that are cost-effective over the whole project life-cycle. These strategies
46
PHILIPPINE ENERGY PLAN (https://www.doe.gov.ph/pep/)
47
PDP, 2017-2022, p. 25
48
OECD. Science, Technology and Innovation Outlook 2016
57
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are vital towards achieving the overall sectoral objective for the infrastructure sector and the
corresponding targets set over the medium-term.49
Energy50
The government will support the required massive investments and fast track the
implementation of infrastructure projects to improve power generation. In particular, it will:
f. Harmonize the transmission development plan with renewable energy targets, and
address potential grid reliability concerns with the scaling of variable renewable energy
resources
Competition will be encouraged to drive down electricity costs. Thus, the government
will:
a. Accelerate the evaluation of retail electricity supplier license application to broaden the
list of suppliers in the market
49
PDP, 2017-2022, p. 299
50
Ibid, pp. 305-308
58
B. Distura
b. Accelerate the privatization of the power plant assets of the Power Sector Assets and
Liabilities Management Corporation, which include the contracted capacity of
generating plants and independent power producer plants
Resolution No. 17, s. 2013 adopting and approving the rules and procedures to
govern the monitoring of reliability performance of generating units and the
transmission system
Resolution No. 04, s. 2015 adopting the procedure in the reporting by generation
companies of outage events affecting their generating facilities
Joint Resolution No. 03, s. 2015 setting the offer price cap and offer floor price
in the WESM
The government will also explore the expanded utilization of the Malampaya funds to
cover universal charges for stranded contract cost and stranded debts, rehabilitation of
government energy infrastructure, aside from financing the energy resource development
programs and projects of the government.
The government will pursue the development of the natural gas industry. The creation
of an enabling legal and regulatory framework for the natural gas industry will be prioritized
to set the directions for the formulation of a natural gas development plan to guide investments
in the sector. In pursuit of the APG and TAGP, the 121 km Batangas-to-Manila gas pipeline
project is proposed to be the first natural gas pipeline in the country. It is expected to supply
natural gas to targeted market areas situated in the high growth areas of Batangas, Laguna,
Cavite, and Metro Manila. Moreover, liquefied natural gas terminals will be constructed in
Quezon, Batangas, and Bataan. New oil and gas fields to replace the depleting Malampaya
natural gas reservoir will be explored.
The government will ensure that the needed transmission facilities are implemented on
time to efficiently transmit electricity to various load centers and interconnect the entire grid.
For Luzon, the transmission network will be improved to support power generation capacity
additions in the Quezon, Bataan, and Zambales areas. They will complement the establishment
of a transmission loop with additional drawdown substations within Metro Manila.
Furthermore, the power grid in the island of Mindoro will be interconnected to the Luzon grid
through Batangas. For Visayas, the three-stage implementation of transmission backbone from
Cebu to Panay Island will ensure full dispatch of both conventional and renewable energy-
based power plants. In addition, the interconnection of the Cebu-Bohol grids will increase the
transmission capacity as well as improve the reliability of supply to Bohol Island. For
Mindanao, the 230 kilovolt Mindanao backbone from Lanao del Sur in the north to Davao del
Sur in the south will be fast-tracked. The Visayas-Mindanao interconnection will be prioritized
59
B. Distura
to increase the reliability of the Mindanao power systems and harness and enable capacity
sharing of reserves and exchange or delivery of energy during periods of shortfall or surplus in
power supply between grids.
The government will prioritize the provision of electricity services to the remaining
unelectrified off-grid, island, remote, and last-mile communities to achieve total household
electrification by 2022. To achieve universal access to electricity, the government will
endeavor to:
c. Provide technical and financial support to NEA and electric cooperatives in total
electrification
c. Revisit the rules and regulations on cross-ownership between retail electricity suppliers
and generation companies or distribution utilities to foster transparency and promote
fair competition in the implementation of the retail competition and open access
d. Restudy Section 43(f) of Republic Act 9136 (Electric Power Industry Reform Act) on
the pricing methodology
f. Foster a more conducive business and regulatory environment to allow the entry of
more power generation investors
To improve energy efficiency, the government will continue the implementation of the
EEC program that is aimed to support economic growth and environment protection. To
achieve this, the government needs to do the following:
a. Push for the enactment of the EEC bill to promote demand-side management and
incentivize energy efficiency projects
60
B. Distura
d. Implement the 2016-2020 EEC Action Plan and the Alternative Fuels Roadmap to
provide incentives for the implementation of energy efficiency projects
The mandated biofuels blending will be reviewed with due consideration to the impact
on prices, farmer incomes and environmental protection. Several undertakings under the
Alternative Fuels Program, (such as the Auto-LPG Program and the Natural Gas Vehicle
Program for Public Transport), will also be continued.
There are problems in the OIL INDUSTRY. One is oil smuggling and second, fuel
fraud. And these two are intimately connected so much so that criminals smuggle adulterated
and diluted fuels.
1. OIL SMUGGLING
According to ADB report, he Philippines, due to fuel smuggling, has adulterated fuel
products in its supply chain. According to experts, this costs the country as much as $750
million annually in tax revenue.51
The report further disclosed that oil smuggling is a global phenomenon and the global
financial losses are significant amounting to tens of billions of dollars every year.52
How is this oil smuggling done? Countries that subsidize their fuels are susceptible to
losses due to their low-priced fuels exiting to other countries with fuel prices aligned with
international market prices.53
For example:
1. Countries with fuel subsidies such as Bangladesh, Indonesia, and Malaysia are
particularly vulnerable to financial losses due to their relatively low diesel prices.
Their low-priced fuels are smuggled to countries that charge international market
prices, depriving governments of the intended benefits of providing subsidized
fuel.54
2. The Kingdom of Saudi Arabia, where diesel sells for approximately $0.06 per
liter, compared to more than 15 times that price in the neighboring United Arab
Emirates (UAE). Smugglers cross the Saudi border into the UAE with documents
showing they are carrying legal loads of hydraulics and used oil. However, their
fuel tankers are often loaded with a mixture of legal oil products and illicit diesel,
51
ADB, Fuel-Marking Programs: Helping Governments Raise Revenue, Combat Smuggling, and
Improve the Environment, Governance Brief, Issue 24, 2015, p. 1.
52
Ibid.
53
Ibid.
54
Ibid.
61
B. Distura
2. FUEL FRAUD
Another problem faced by the oil industry is what we FUEL FRAUD. What
Constitutes Fuel Fraud? There are two: 1) Fuel adulteration, and 2) Fuel dilution.
55
Id. p. 2.
56
Ibid.
57
http://news.bbc.co.uk/2/hi/business/3086941.stm
58
Ibid.
59
http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/8389523.stm
60
http://oceanoptics.com/authentication-fuel/
61
Ibid.
62
The process of making impure by adding inferior materials or elements.
(http://www.dictionary.com/browse/adulterate)
63
ADB, Fuel-Marking Programs, p. 2.
64
http://www.tracerco.com/product-assurance/fuel
62
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example, fuel launderers evade taxes by removing dye from red diesel, which is cheaper than
regular diesel and is intended only for off-road agricultural use.65Launderers become smugglers
also by transporting adulterated fuels across national borders into countries with less favorable
subsidization programs.66
ii. The diversion of the subsidized fuel benefits criminals, rather than the targeted beneficiaries,
resulting in wasted government spending.72
iii. Causes harm to the environment by replacing quality fuel with adulterants or waste
byproducts, resulting in73:
1. Increased fuel consumption hence increased fuel emissions
2. Increased greenhouse gas emissions that worsen air pollution.
3. Illegal fuel-laundering plants often indiscriminately dump waste products in the countryside,
causing additional environmental damage.74
iv. Diminishing engine performance and lifespan, leading to increased spending on vehicle
maintenance.75 Substandard fuels even have the potential to reduce engine efficiency and
65
http://www.bbc.com/news/uk-northern-ireland-30104476
66
http://www.tracerco.com/product-assurance/fuel
67
ADB, Fuel-Marking Programs, p. 2.
68
2015 Deputy Finance Minister of Greece Policy Statement
69
2013 Bloomberg Report
70
2014 Polish Organization of Industry & Trade Report
71
2013 Grant Thornton Illicit Trade in Ireland Study
72
ADB, Fuel-Marking Programs, p. 2.
73
Ibid.
74
Fuel laundering not only results in lost revenue for the state, but also damages the environment, as
toxic waste is often dumped in rural areas, leaving local authorities to pick up the bill for waste removal.
(http://www.bbc.com/news/uk-northern-ireland-30104476). "Indiscriminate dumping of the by-products from the
laundering process can cause severe damage to arable land and our water systems, as well as taxpayers and local
ratepayers having to pay for the cleanup and disposal costs."
(http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/8389523.stm)
75
ADB, Fuel-Marking Programs, p. 2.
63
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cause engine damage.76 For instance, when launderers filter the fuel through chemicals or
acids to remove the government marker, the chemicals and acids remain in the fuel and
damage fuel pumps in diesel cars.77
v. Oil and gas companies also feel the effects of fuel fraud and smuggling in the form of reduced
profits, increased liability issues and brand erosion.78
THE SOLUTION
Given those identified problems that beset the oil industry, what solution/s can be put
in order to remedy such challenge.
a. To combat fuel fraud, governments use a variety of fuel markers and dyes to
differentiate subsidized or tax-exempt fuel. Many countries require the addition
of specific dyes to subsidized fuels by law, allowing questionable fuel to be
rapidly tested for adulteration or dilution with subsidized fuel. The test often
involves extraction with an acidic aqueous solution resulting in a characteristic
color change, and is effective down to concentrations of a few percent.
Fluorescent dyes are also used as a more covert method of fuel marking. They
are not obvious to the human eye, can be added in even lower concentrations,
and often require a specialized spectrophotometric detection system.
While these methods may prevent the amateur from committing fuel fraud, they
do not deter the more serious criminal. Fuel dyes can be removed or degraded
through chemical processing, heating or the addition of an adsorbent material.
The laundered fuel is then sold on the black market or via mobile pumps at a
significant profit.
Laundered fuel may not show a color change that is obvious to the human eye,
but measurement with a spectrometer can often detect residual dyes. The greater
sensitivity of spectroscopic detection also enables the use of lower
concentrations of markers, reducing the cost to government and increasing the
difficulty of effective fuel laundering.79
Traditional fuel dyes offer a front-line defense against fuel fraud, but better
techniques are needed to assist governments in pinpointing its origin. Thats
where fuel markers come in., fuel marking technology has been developed.
Once the markers are added to the fuel, the markers are highly resistant to
removal by criminals and they can be detected using analyser technology like
the gas chromatographymass spectrometry (GCMS). By using this advanced
technology of molecular markers and sophisticated management systems, it will
76
http://oceanoptics.com/authentication-fuel/
77
https://www.gov.uk/government/news/new-marker-to-tackle-fuel-fraud
78
Ibid.
79
http://oceanoptics.com/authentication-fuel/
64
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If added at the refinery and tested at multiple points on its route to the consumer
within a comprehensive fuel monitoring system, fuel markers can be used to
trace the movement of fuel and pinpoint the location within the supply chain at
which fuel fraud occurs. When fuel retailers are held accountable for the
authenticity of the fuel they sell through litigation or de-branding, the rate of
fraud drops and illegal traders can begin to be identified. When border officials
have an effective means of validating the authenticity and integrity of non-
subsidized fuels, they can reduce the prevalence of smuggling.
SENATE BILL 1408 (17th Congress) (Senate Version of CTRP/TRAIN authored by Sen.
Pimentel) provides for the mandatory marking, to wit:
a. Reveal the quality and condition of the downstream fuel supply chain by
examining its every stage, beginning with81
i. the countrys refineries or fuel depots
ii. wholesale depots
iii. the transport network (including trucking firms and pipelines)
iv. how petroleum products are sold at the retail level.
80
ADB, Fuel-Marking Programs
81
ADB, Fuel-Marking Programs
65
B. Distura
82
ADB, Fuel-Marking Programs
83
NB. every fuel-marking program is different e.g. a country may choose to deploy a national marker
program, indicating that all taxes have been fully paid on fuels. Fuel marker serves as a chemical tax stamp. But
how secure is the marker to be resistant launder?
84
In the event of a failed field screening, this allows for a subsequent sample to be taken to a laboratory
for further forensic analysis, which can definitively identify the existence of the fuel marker. This assures full
compliance with the higher standards of admissible evidence required by most legal systems.
85
ADB, Fuel-Marking Programs
66
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iii. What should be done to cushion the impact of this price hike? Offset by
targeted subsidy programs especially the poor.
86
Email sent by Mr. Fischl to the author.
87
http://thestandard.com.ph/business/214056/govt-studying-plan-to-give-fuel-subsidy.html
67
B. Distura
Prior to RA 847989, the Energy Regulatory Board took into account the dollar cost of
imported crude oil and the foreign exchange rate, and fixed prices of petroleum products. A
budgetary allocation maintained by the national government called the Oil Price Stabilization
Fund (OPSF) automatically absorbed any price change incurred by the oil companies in
importing crude oil, which is not reflected in the selling price.90
1. OPSF deficit bloated the public sector deficit and public debt
2. Government provided P17.6B in subsidies to OPSF from 1990 to 1997
3. Oil subsidy displaced more important government expenditures which could have been
spent equivalent to:
a. Free rice for 17.6 months to the poorest 30% of the population below poverty
line
b. 62,241 schoolhouses
c. 5,280 kms of rural roads
d. 146,080 deep wells for drinking water or
e. 2 light rail transit lines
88
Oil Price Stabilization Fund (OPSF) for the purpose of minimizing frequent price changes brought
about by exchange rate adjustments and/or changes in the world market prices of crude oil and imported petroleum
products. The Fund herein created shall be used for the following: 1) To reimburse the oil companies for costs
increases in crude oil and imported petroleum products resulting from exchange rate adjustment and/or increase
in world market prices of crude oil; 2) To reimburse the oil companies for possible cost underrecovery incurred
as a result of the reduction of domestic prices of petroleum products. (EXECUTIVE ORDER NO. 137, January
24, 1986)
89
An Act Deregulating the Downstream Oil Industry and for Other Purposes (February 10, 1998)
90
Ms. Ma. Teresa D. Caparas, Oil Deregulation, PIDS, Economic Issue of the Day, Feb. 2000, issue no.
2. http://dirp4.pids.gov.ph/ris/pdf/pidseid0002-feb.pdf
91
Ibid
92
Cross product subsidization means that the price of premium gasoline was higher than warranted in
order to keep the price of diesel lower. Implicitly, regulation favors diesel product over gasoline
93
USec. Gil S. Beltran, Petroleum subsidies in the Philippines [PowerPoint Presentation]
https://www.iisd.org/gsi/sites/default/files/ffs_gsibali_sess3_beltran.pdf
68
B. Distura
4. Shifted petroleum price increases from direct heavy consumers to ordinary taxpayers
5. Provided more subsidy to the highest income groups and middle class with cars and air
conditioning (92.8%) compared with lowest quintile (7.2%)
6. Poorest of the poor who walked to work got none
7. From 1991 to 1995, contributed to:
a. 26% of the 60% rise in traffic volume
b. 33 M liters increase in gasoline consumption annually (Pushed up imports of
crude oil by 15% equivalent to an estimated 7M barrels amounting to
US$100M. This amount should have been used to purchase capital goods for
new factories that would have generated 34,650 new jobs)
c. Additional 78,000 tons of carbon dioxide emissions annually
d. Additional 1,100 tons of nitrogen oxide emissions annually
e. Congestion and slow traffic in Manila streets
The deregulation of the local oil industry was done in two phases: partial and full
deregulation.
In the partial deregulation phase, oil importation was liberalized and the automatic
pricing mechanism was implemented. In the full deregulation phase, controls on oil price
setting were similarly lifted, the foreign exchange cover was removed, and the OPSF was
abolished.
There are four major reasons why the oil industry was deregulated:96
1. To stabilize and provide reasonable prices,
2. To encourage competition,
3. To encourage investments, and
4. To remove cross product subsidies.
94
Republic Act 8479 entitled Downstream Oil Industry Deregulation Act of 1998 approved on
February 10, 1998, the Philippine government effectively reduced its control on oil-related pricing activity and
trade restrictions.
95
http://dirp4.pids.gov.ph/ris/pdf/pidseid0002-feb.pdf
96
Ibid.
97
USec. Gil S. Beltran, Petroleum subsidies in the Philippines [PowerPoint Presentation]
https://www.iisd.org/gsi/sites/default/files/ffs_gsibali_sess3_beltran.pdf
69
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What do we do whenever there are steep increases in petroleum prices (50% or so), we
adopt:98
- Targeted, temporary subsidies for public utilities & lifeline users of electricity
- Subsidies funded by excess revenue collection
98
Ibid.
70
B. Distura
Dispute arising from Chinas NINE-DASH LINE ( claim submitted to the United
Nations on May 07, 2009 without explanation as to its legal basis nor to its fixed coordinates
and whether the waters enclosed by it can encroach in the 200-nautical mile Exclusive
Economic Zone (EEZ) of the Philippines in the West Philippine Sea.100
Based on a 1947 map by the then Kuomintang government, the vaguely defined nine-
dash line encompasses around 90 percent of the South China Sea. It spans an area the size of
Mexico extending more than one thousand kilometers from China, and which encompasses
territory claimed by Malaysia, the Philippines, Taiwan and Vietnam.102
Sea-Trade
An estimated $5 trillion worth of goods are transported through South China Sea
shipping lanes each year, including more than half the worlds annual merchant fleet tonnage
and a third of all maritime traffic worldwide.103
99
https://www.forbes.com/sites/jeremymaxie/2016/04/25/the-south-china-sea-dispute-isnt-about-oil-at-
least-not-how-you-think/#4da6d6085c69
100
Justice Antonio T. Carpio, The South China Sea/ West Philippine Sea Dispute. Published by
Musictablet on November 04, 2015 at www.scribd.com
Quoted from Stuck in the Territorial Trap, Sassot 5 THINGS ABOUT FISHING IN THE SOUTH
101
CHINA SEA by Trefor Moss (The Wall Street Journal; The Wall Street Journal, 19 Jul. 2016; Web; 11 Dec.
2016)
102
http://nationalinterest.org/blog/5-trillion-meltdown-what-if-china-shuts-down-the-south-china-
16996
71
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Here is the "density map" displaying aggregate movements along the busiest shipping
routes (green lines) and in the busiest ports (red blobs) in and around the South China Sea:
Oil transported through the Malacca Strait from the Indian Ocean, en route to East Asia
via the South China Sea, is triple the amount that passes through the Suez Canal and fifteen
times the volume that transits the Panama Canal.104
Analysts estimate the cost of rerouting oil tankers via the Lombok Strait and east of the
Philippines at $600 million per annum for Japan, and $270 million per annum for South
Korea.106
The majority of Australian cargo travelling through the South China Sea is destined for
China; however, were China to obstruct shipping routes in the South China Sea between
Australia and its other trading partners, it could force a costly reroute of some $20 billion worth
of cargo per annum.
Food Resource
According to the United Nations Environmental Program, the fisheries in the South
China Sea account for roughly one tenth of the worlds global fish stocks. With a quarter of the
worlds population living in the surrounding littoral states, the region is a crucial foodstuff
resource.107
103
Ibid
104
Ibid
105
https://www.businessinsider.com.au/why-the-south-china-sea-is-so-crucial-2015-2
106
http://apjjf.org/2016/06/Lee.html
107
http://thediplomat.com/2015/08/diplomacy-and-the-south-china-sea/
72
B. Distura
Aside from sea trade, the South China Sea has proven oil reserves of seven (7) billion
barrels, and an estimated 900 trillion cubic feet of natural gas.
If Chinese calculations are correct that the South China Sea will ultimately yield 130
billion barrels of oil (and there is some serious doubt about these estimates), then the South
China Sea contains more oil than any area of the globe except Saudi Arabia. Some Chinese
observers have called the South China Sea the second Persian Gulf.
Chinas 2009 Note Verbale explaining the NINE-DASH LINE map: China has
indisputable sovereignty over the islands in the South China Sea and the adjacent waters and
108
https://www.businessinsider.com.au/why-the-south-china-sea-is-so-crucial-2015-2
109
Ibid
73
B. Distura
enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and
subsoil thereof.110
Chinas claims and reclamation affecting the Philippine claim under the UNCLOS111:
CH ENERGY NEEDS
Chinas total primary energy consumption reached 4.26 billion tonnes of coal
equivalent (tce), up 2.1% over 2013, and accounting for 23 percent of global energy
consumption. Since 2000, Chinas natural gas
consumption grew at a rate of 15.3 percent per
year.113 Roughly a third of Chinas
consumption was imported depending on
supplies from unstable regions such as the
Middle East and sub-Saharan Africa. In order
to reduce dependence on politically unstable
countries, states, especially China, are
beginning to look closer to home for new
reserves particularly in offshore zones in the
South China Sea, where there are predicted to
be up to 213 billion barrels of oil according to
some estimates, along with extensive natural
gas reserves. 114
110
Ibid
111
Ibid
112
Energy Resource Development Bureau - DOE
113
https://eta.lbl.gov/publications/key-china-energy-statistics-2016
114
http://thediplomat.com/2016/07/east-asias-state-led-search-for-energy-security/
74
B. Distura
PH ENERGY NEEDS
Malampaya Gas reserve has been depleted (supra). The DOE said Malampaya, which
provides fuel to major power plants in Luzon, might run out of gas by 2024.115 The ambitious
infrastructure program under BUILD BUILD BUILD needs more energy resources.
115
http://globalnation.inquirer.net/158794/energy-department-awaits-go-ahead-oil-drilling-west-
philippine-sea
116
Aileen S.P. Baviera and Jay Batongbacal, The West Philippine Sea, The Territorial and Maritime
Jurisdiction Disputes from a Filipino Perspective: A Primer, UP Diliman, 2013.
75