City’s Fuel Could Have Been Bought at Lower Price

●The over P8M-worth of diesel obtained from Evvolve Marketing Corp. can be bought only at P7M from other suppliers, COA said.

The Commission on Audit (COA) found out that Cebu City government had purchased P68.3 milion-worth of diesel fuel from two private suppliers which costs over P1.1 million compared to the pump price based on the Department of Energy (DOE)-Visayas monitoring of petroleum products.

COA records show that the city had made several purchases of diesel products worth P60 million from Phoenix Petroleum Philippines, Inc. and another P8.3 million of fuel from Evvolve Marketing Corporation. The P8,319,179-worth of diesel purchased from Evvolve Marketing Corporation can be bought only at P7,762,572 from other private suppliers.

The P60,059,680 worth of diesel acquired from Phoenix Petroleum can also be purchased at P58,501,680 from other sources that are accredited by DOE, record stated.

COA Circular No. 2012-003 dated October 29, 2012 provides that the term “excessive expenditures” refers to unreasonable expenses incurred at an immoderate quantity and exorbitant price.

It includes expenses which exceed what is usual or proper as well as expenses which are unreasonably high, and beyond just measure or amount.

The city’s fuel budget last year was P100 million, P10 million of which was spent for lubricants.

The administration of Mayor Michael Rama demonstrated why the prices of fuel products of their private suppliers is a little bit high compared to the prices in other sources.

They explained that the high price considers the location of the asphalt batching plant that requires special double axle tankers due to its difficult terrain and an over head pump trucks for the elevated diesel storage of the plant.

They added that deliveries of fuel products were done in staggered basis due to limited storage tank in the city’s
asphalt batching plant in Barangay Budlaan.

City officials also said that the entire payment process will take several months, that is why they have provided small amount higher compared to the pump price of other suppliers. They said this is to invite and convince bidders since the city cannot immediately pay the fuel upon delivery.

However, state auditors was not satisfied with the explanation given by City Hall officials because, according to COA ,the delay in the processing of the payment cannot be a valid reason that they purchased products at higher prices. “It is advisable for the city to provide a system wherein the disbursement system entails shorter processing time instead of taking several months before a transaction is completed,” the state auditors said.