More on the looming LPG supply crisis

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WE once again join our voice to that of Rep. Arnel Ty—who is a deputy minority leader in the House of Representatives and represents the LPG Marketers’ Association (LPG-MA) in Congress—in calling for urgent action by Energy Secretary Jericho Petilla to forestall the looming cooking fuel supply crisis.

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The price of LPG is sure to shoot up even higher than it is now if the supply crisis, which is sure to happen if the immediate solution Rep.Ty has proposed—is not given by the government through Sec. Petilla.

This solution is for the government to take over—TEMPORARILY—private-sector owned facilities that the owners have closed down.

We wish to state here that this position we have taken does not mean we have turned our back on two of our advocacies. One, the supremacy of private enterprise over government ownership. Two, the need for government to be small to be effective, less prone to graft and more conducive to the individual and social development of the Filipino people. Both of these advocacies, two of about a dozen we cherish, follow the unassailable principle of subsidiarity.

Why there is an LPG supply crisis
The main reason there is a supply problem now and there will be a crisis soon is, in Rep. Ty’s words, is “the ill-timed decommis-sioning of the country’s largest cooking fuel depot in Tabangao, Batangas.”

Last September, Pilipinas Shell permanently closed its LPG import terminal in Tabangao, Batangas. This month the scheduled maintenance shutdown of Pilipinas Shell’s oil refinery, also in Tabangao, will be carried out.

Shell’s Batangas refinery is reputed to produce some 10 million kilos of LPG monthly. The Shell LPG import terminal (its capacity is up to 47 million kilos of LPG) is the largest in our country. It accounts for 66 percent of Luzon’s combined LPG storage capacity of 71.8 million kilos.

Congressman Ty has warns that “the maintenance shutdown, coupled with the decommissioning of Shell’s LPG import terminal…will effectively cut down Luzon’s LPG supply by around 25 million kilos per month.”

Domestic consumption is from 100 to 110 million kilos per month. The Shell terminal therefore accounts for about 25 percent, one-fourth, of the monthly Philippine LPG supply.

“Of the 25 million kilos of LPG that used to come out of the Shell terminal every month, 15 million kilos were brought in by Shell from abroad, while the balance of 10 million kilos came from the local production of Shell’s adjacent oil refinery,” Ty said.

Shell’s LPG import terminal was the primary source of vital cooking gas for Southern Luzon—until it was closed down.

The other LPG import terminals in Luzon are all located in Luzon’s north and center. From there, they can’t do much for the impending supply deficit from Calabarzon to the Bicol Region.

With the Shell import terminal gone, the country’s available inventory of LPG will be reduced to just 10 million kilos every month – the volume produced by Shell’s oil refinery. But that’s if the refinery does not have any disruptions, apart from the scheduled maintenance shutdown now.

Shell’s sudden closure of its LPG terminal in Tabangao was a business decision of the company. It was apparently no longer profitable for Shell Pilipinas to keep it going.

The law allows the government to take over private sector facilities to prevent crises. The shortage of LPG will make Filipino families, businesses and industries suffer as much as the sudden and whooping rise in electricity prices.

Rep. Ty has urgedd DOE Sec. Petilla make use of the government’s right and power to take over the Shell LPG terminal that Shell doesn’t want to operate anymore. The takeover will only be for a specific limited period—time for more permanent solutions to be found and applied.

Meanwhile, Rep. Ty has also identified a smaller LPG terminal in Siriaya, Quezon, that is now under rehabilitation. Its owners are Nation Petroleum Corporation. Congressman Ty has also recommended to Sec. Petilla that the government temporarily take over and reactivate the Siriaya, Quezon LPG termina.

This terminal can handle 5.5 million kilos of LPG.

Secretary Petilla, please be a hero.

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