SICPA-SGS submits masterplan for fuel marking program

MANILA, Philippines — The joint venture of Switzerland-based SICPA SA and SGS Philippines has submitted a masterplan to set the government’s fuel marking program in motion, according to the Department of Finance (DOF).

In addition, Finance Undersecretary Mark Dennis Joven said in a recent DOF executive committee meeting that the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) have already drafted the implementing rules and regulations (IRR) for the program, which will be matched with the masterplan drawn up by the chosen fuel marker provider.

Finance Undersecretary Karl Kendrick Chua said the masterplan would set the schedule for the implementation of the fuel marking program, which is targeted for early next year.

“We’re not yet precise on the date. But early next year is the target. They have a marker already that they have prepared,” Chua said.

As the fuel marking provider, SICPA SA and SGS Philippines are expected to provide a unique chemical marker capable of being embedded at a molecular level in petroleum products such as gasoline, diesel, and kerosene.

Their contract also covers services and equipment necessary to administer and inject the marker to the fuel and the administration of confirmatory tests, both in the field and in laboratories.

The BOC, for its part, will be the lead agency on the implementation of the fuel marking program, as mandated under the Tax Reform for Acceleration and Inclusion Act (TRAIN).

Finance Secretary Carlos Dominguez has directed DOF officials involved in the implementation of fuel marking to bring newly-appointed Customs commissioner Rey Leonardo Guerrero up to speed on the program.

“I expect that the commissioner is fully briefed on that,” Dominguez said during the meeting, the first attended by Guerrero since taking position as customs chief.

The fuel marking program is expected to plug leakages caused by oil smuggling.

In 2016 alone, the revenue loss—including value-added tax and excise taxes—due to smuggled or misdeclared fuel was estimated at P26.87 billion, according to the DOF.

However, the Asian Development Bank (ADB) has pegged the annual loss at a higher figure of P37.5 billion, while a study commissioned by the local oil industry estimated foregone revenues at a much higher amount of P43.8 billion a year.

The Institute for Development and Econometric Analysis (IDEA) estimated that smuggled gasoline accounted for an average of 23 percent of gasoline consumption from 2000 to 2006, while smuggled diesel accounted for an average of six percent.

Ian Ralby, a non-resident senior fellow of the Atlantic Council’s Global Energy Center, had said earlier that oil smuggling not only leads to billions of pesos in lost revenues, but could also be the second largest source of funding for criminal operations, next to narcotics trafficking.

Ralby said the Philippines’ fuel marking system could serve as an instructive model for other countries and encourage them to address the worsening problem of oil smuggling across the globe.