As Congress deepens its inquiry into the country’s energy crisis, Murang Kuryente Party-list Rep. Arthur Yap is pushing a market-based financing fix that he says could soften the blow of volatile fuel prices on consumers without resorting to subsidies.
At Monday’s continuation of the Legislative Energy Action and Development (LEAD) Joint Committee briefings, lawmakers were told that recent oil price hikes were applied immediately, even on previously purchased lower-cost inventory, because the industry follows a replacement cost pricing model. Under this system, fuel is priced based on current market rates to ensure companies can replenish supply at prevailing costs.
The discussion brought renewed attention to how global price shocks quickly ripple through the domestic market, often leaving consumers to absorb the impact almost at once.
In response, Yap proposed that government financial institutions such as Land Bank of the Philippines and the Development Bank of the Philippines step in not with subsidies, but with long-term financing that would allow oil companies to spread fuel procurement costs over several years instead of charging them upfront to the public.
He said the concept could even be expanded into a syndicated loan arrangement involving private banks, giving the industry access to a larger pool of financing while easing the need for immediate and steep price adjustments.
“Sa issue ng replacement cost for purchase of fuel supplies, hindi kaya pwedeng ang Landbank at ang DBP maghanda ng pondo para mapagamit sa mga oil companies in the concept of a long-term loan? Hindi naman kailangan na pondo lang nila—maaaring syndicated loan from the banking sector. Long-term loan po. Hilahin ng 10 years ang special loan para ma-absorb yung price shock at hindi na ipataw sa taong bayan. Commercial solution po ito. Hindi po ito subsidy or grant,” Yap said.
The proposal enters a policy debate that has increasingly centered on how far government can go in shielding the public from fuel price swings without straining public finances. While subsidies and direct assistance have often been used as short-term relief measures, critics have warned that these are difficult to sustain during prolonged periods of elevated global oil prices.
Yap argued that financing offers a more disciplined alternative by using the banking system to cushion the impact of price surges while preserving fiscal space. Rather than relying on grants or direct state support, the approach would allow fuel costs to be amortized over a longer period, potentially reducing the immediate burden on households and businesses.
The idea also echoes suggestions raised by energy sector stakeholders, including analyst Guido Delgado, who has floated a similar financing facility led by DBP and LandBank and possibly backed by private lenders. Under that framework, financing could be used directly for fuel purchases, allowing costs to be recovered gradually instead of all at once.
Some related estimates have suggested that stretching fuel-related costs over a longer horizon, such as 15 years and at moderate interest rates, could significantly reduce the size of monthly electricity price increases compared with fully passing on shocks immediately. Still, these figures remain indicative and would need to be carefully reviewed by regulators and policymakers before any scheme could be adopted.
For now, the LEAD Joint Committee continues to examine both policy and financing interventions as lawmakers search for ways to ease the energy crisis without undermining fiscal sustainability. The challenge for government, lawmakers, and industry now is whether a commercial financing solution can be designed quickly enough to protect consumers before the next round of global fuel volatility hits.