Audit: City bought more pricey fuel in ‘13

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Saturday, June 21, 2014

STATE auditors want the Cebu City Government to explain why the fuel it purchased for its vehicles in 2013 was more expensive than what was recorded in the Department of Energy's (DOE) Visayas pump price monitoring.

Since the fuel that the City Government bought was priced higher, the local government spent P1,114,607.74 more, read the COA report.

The Cebu City Government spent P68.37 million on fuel last year. Of the P68.37 million, the City purchased P60,059,680 worth of fuel from Phoenix Petroleum Philippines Inc. while P8,319,179.85 was purchased from Evvolve Marketing Corp.


After reviewing the transaction, COA Cebu City State Auditor IV and audit team leader Cymbeline Celia Uy said the City purchased fuel from Evvolve at P46.95 per liter when DOE's rate was only P45.09.


Uy said the City would have only paid Evvolve P7,762,572 instead of P8,319,179.85. The City paid an excess of P556,607.74 to the supplier, she said.

As for Phoenix, Uy said the City purchased fuel at P42.29 per liters when DOE's rate was only P42.14.

The City would have only paid the supplier P59,501,680 instead of P60,059,680. The City paid an excess of P558,000 to the supplier, Uy said.

Uy said the City's purchase of fuel is considered an “excessive expenditure.”

Under COA Circular 2012-003, excessive expenditure signifies unreasonable expenses incurred at an immoderate quantity and exorbitant price.

“It also includes expenses that exceed what is usual or proper as well as expenses which are unreasonably high, and beyond just measure or amount. They also include expenses in reasonable limits,” Uy said.

In the audit report, COA incorporated City Hall's comment on why they gave a “reasonable mark-up” to their price than DOE.

The City told COA that one of the reasons for the higher rate was the City's batching plant, which is located in the mountain barangay of Budlaan.

The difficult terrain to the batching plant required that the delivery of fuel had to be done by special tankers and double-axle tankers. Overhead pump trucks for the elevated diesel storage of the plant were also needed.

“Deliveries were also done in staggered basis due to limited storage tank in our plant. And depending on the request of the end-user, deliveries are done even during Saturdays, Sundays and holidays,” the City added.

Because processing of payments took time, prices were raised to entice suppliers.

However, COA said the delay in the processing of payment cannot be a valid reason. It said the City Government come up with a system that cut short processing of payments.

COA recommended that city officials require employees responsible for the transaction to explain the excessive cost of fuel.

If the reason is not tenable, COA said, the expenses would be disallowed and persons who were liable should be required to refund the excessive amount.

Published in the Sun.Star Cebu newspaper on June 21, 2014.

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