Department Circular
No. 2002-05-001
AMENDING SECTION 14 OF
DEPARTMENT CIRCULAR NO. 98-03-004 ENTITLED “RULES AND
REGULATIONS IMPLEMENTING
REPUBLIC ACT 8479, DOWNSTREAM OIL
INDUSTRY DEREGULATION ACT OF 1998”
Pursuant to Chapter VII, Section 23 of
Republic
Act No. 8479 “Downstream Oil Industry Deregulation Act of 1998,” Section 14
of
Department Circular No. 98-03-004 is hereby
amended to read as follows:
“SECTION 14. Promotion of Retail Competition
To achieve
the social policy objective of fair prices and facilitate the attainment of a
truly competitive petroleum product market in the retail level, the
DOE shall promote and encourage by way of
information dissemination, networking and management/skills training, the
active and direct participation of the private sector and cooperatives in the
retailing of petroleum products through joint venture/supply agreements with
new industry participants for the establishment and operation of gasoline
stations; Provided, That the training
herein shall include LPG retailing.
a. Recipients of Preferential Treatment
New industry participants shall be given
preference in the formulation and implementation of a two-fold program on
management and skills training for the establishment, operation, management and
maintenance of gasoline stations. They
shall likewise be given preferential treatment in the grant of gasoline station
training and loan fund provided in Section 10 of
R.A. 8479
to serve as capital for the establishment and operation of gasoline stations.
New industry participants refer to new participants in a particular sub-sector
of the downstream oil industry with investments made and initial business
operations commenced after 1 January 1994 as provided under Section 4(k) of
R.A. 8479.
The private sector and cooperatives may enter into joint venture/supply
agreements with new industry participants for the establishment, management and
operation of gasoline stations.
In no case shall the investment of a new industry participant in the joint
venture agreement be lower that 90% of the total investment in the joint
venture.
b. Training Program for New Industry
Participants
The
Department
of Energy (DOE) shall, in cooperation with the
Technology and Livelihood Resource Center (TLRC)
and
Technical Education and Skills
Development Authority (TESDA) and other training agencies recognized by the
DOE, with expertise in conducting training
for would-be gasoline station dealers, coordinate with new industry
participants and existing petroleum dealer associations in the formulation and
implementation of a two-fold program on management and skills training for the
establishment, operation, management and maintenance of gasoline stations. The
DOE
shall approve the training program, obtained through competitive bidding, for
which it shall have proprietary rights to the training curriculum design.
The two-fold program on management and skills training shall also cover the
retail of all petroleum products including LPG retailing and shall be conducted
as often as necessary at the discretion of the
DOE. The
DOE
shall collect minimal fees to cover materials and other administrative expenses
in the conduct of the training.
c. Grant of Gasoline Station Loan
The following shall be qualified to apply for a loan to serve as capital for
the establishment and operation of gasoline stations:
1. Natural persons who successfully
complete the two-fold program on management and skills training for the
establishment, operation, management and maintenance of gasoline stations; or,
2. Corporations, partnership,
cooperatives, associations, non-government organizations, joint ventures, consortia,
single proprietorships and similar parties whose owners/representatives/s
successfully complete the two-fold program on management and skills training
for the establishment, operation, management and maintenance of gasoline
stations.
Employees of the DOE and its attached agencies namely, the
National Electrification Administration,
Philippine National Oil Company and its
subsidiaries and the
National Power
Corporation are disqualified to apply for the gasoline station loan during
their employment in the said offices or entities and up to a period of one (1)
year after the time of their resignation or separation from the service of such
offices or entities. In addition,
relatives up to the fourth civil degree either by consanguinity or affinity of
members of the Executive Committee (EXCOM) of the
DOE, Chief Executive Officers and members of
the Board of Directors/Administrators of such attached agencies shall not be
qualified to apply for the gasoline station loan while said officials are in
the service of such offices/ entities up to a period of one (1) year after
their resignation or separation from the service of said offices or entities.
The
DOE shall establish a separate account
with a Government Financial Institution as the depository bank under a Memorandum
of Agreement (MOA) to be executed for the administration and management of the
loan fund to be provided by the
Philippine
Amusement and Gaming Corporation (PAGCOR).
Any qualified person or entity who applies for the gasoline station loan shall
be entitled to an amount equivalent to fifty percent (50%) of the total project
cost but not exceeding Five Million Pesos (P 5,000,000.00) with an interest
rate of six percent (6%) per annum payable in a period of no more than seven
(7) years. There shall be no
fees/penalty for fast-track payments.
The loan proceeds shall be used in activities enumerated in Annex “A.”
The terms and conditions of the loan including interest payments shall be
provided in a Loan Agreement to be entered into among the
DOE, the Government Financial Institution
(GFI) and the applicant.
All applications for a gasoline station loan shall be submitted to the
DOE with the following papers or documents:
i. Certificate of Completion of the
two-fold training program;
ii. Application Form stating the name of
the applicant, address, telephone number cellular phone number, FAX number,
e-mail address, amount applied for and other pertinent information;
iii.
DTI/SEC Registration and Articles of Incorporation,
if applicable;
iv. Feasibility study for the gasoline
station to be put up, including the location of the proposed gasoline station
or proposed suppliers and other similar information;
v. Manpower complement.
The
DOE
shall act upon said application within fifteen (15) working days from receipt
thereof. It is understood that any
application not acted upon within the said period shall be deemed automatically
endorsed for processing by the GFI.
The grantee shall not assign or transfer the operation of the gasoline station
without the written consent of the
DOE within the period of the Loan
Agreement.
d. Mechanics for the Loan
Disbursement
The disbursement of loan will follow the process described in Annex “B.”
e. Annexes
Annexes are integral part of this Circular.
f. Standards of Quality
The construction and operation of the gasoline station shall be in accordance
with international standards of quality.
Only products meeting the Philippine National Standard (PNS) shall be
dispensed at the stations.
g. Reportorial Requirements and
Visitation Rights
The grantee of the loan shall submit to the
DOE
a monthly status report on the construction and operation of the gasoline
station starting from the notice of approval of the loan. Contents of the report is described in Annex
“C.” The
DOE
has the right to counter-check the report submitted by inspecting the said
station.
h. Sanctions, Cancellation and
Administrative Fines
The corresponding sanctions described in Annex “D” hereof shall be imposed upon
violation of any provision of this Circular.
i. Repealing Clause
Any Department Order or Circular inconsistent with the provisions of this
Circular is hereby repealed or modified accordingly.
j. Separability Clause
If, for any reason or reasons, any part of this Circular is declared
unconstitutional or invalid, no other parts or provisions hereof shall be
affected thereby.
k. Effectivity
This Department Circular No. 2002-05-001 shall take effect upon its
complete publication in at least two (2) newspapers of general circulation.
VINCENT S. PEREZ, JR.
Secretary
May 6,
2002
ANNEX A
ELIGIBLE PROJECT EXPENDITURES
1.
Payment
for the purchase of equipment to be used for the operation of a gasoline station
(i.e., dispensing pumps, underground tanks, lifter, compressor, etc.)
2.
Payment
for the purchase of equipment related to safety and environment protection such
as fire extinguisher, water tank
3.
Payment
of actual installation costs of equipment
4.
Payment
of construction and concreting of pump island/s
5.
Payment
for the initial purchase of petroleum products but not to exceed P 1 M
6.
Payment
for the purchase of brand new LPG cylinders (not to exceed 40 cylinders)
ANNEX B
MECHANICS FOR LOAN DISBURSEMENT
Disbursement by the GFI
of the approved loan shall be made upon endorsement by the
DOE, based on the following:
CIVIL WORKS
1.
Progressive
disbursement – Loan releases will be in two (2) tranches based on the development
of the civil works.
a.
First
Release – 20% of the approved loan for civil works upon 20% completion of the
same
b.
Second
Release – balance of the amount approved for civil works upon 100% completion
of the same
EQUIPMENT
Release for the payment of the
equipment to be installed shall be made upon submission to the
DOE of the purchase order.
FUEL REQUIREMENTS
Release for the payment of the
equipment to be installed shall be made upon submission to the
DOE of the fuel supply purchase order.
ANNEX C
MONITORING REPORTS
1.
Pre-Construction
Report – report for the period covering approval of loan up to start of
construction
Contents:
Status of negotiations with civil works contractor, equipment provider, fuel
supplier
2.
Progress
Report – to be submitted in accordance with the mechanics of loan disbursement
(Annex B)
3.
Monthly
Report – from start of commercial operation onwards to be submitted fifteen
(15) days after the end of the preceding month
Contents:
volume of sales, records of petroleum products deliveries (by product, by
supplier)
ANNEX D
SANCTIONS
1.
Non-compliance
with the reportorial requirements
a.
first
offense – reprimand
b.
two
(2) weeks after notice –
a.
cancellation
of loan agreement for pre-construction period
b.
withhold
release of succeeding loan tranch
c.
penalty
provided under the Loan Agreement
2.
Non-conformity
with quality standards for fuel, facilities and practices.
Penalty
pursuant to
DOE regulations.
3.
Late/Non-payment
of monthly amortization.
Penalty
provided under the Loan Agreement.
4.
Transfer
of operation of the gasoline station without consent of the
DOE.
Penalty
– cancellation of the Loan Agreement
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