Energy Affairs Department officials revealed that while the fund had "improved slightly" due to the easing of fuel prices in recent months, it was still below the state required to conduct its mandate. The latest revelations come as local fuel retailers warn that the positive fuel price environment, known as over-recovery, of the last few months is ending, bringing the possibility of sharp increases.Last week retailers told BusinessWeek that the Pula's gradual decline against the US dollar since last year was piling pressure on the department's formulas, while the threadbare NPF would be unable to absorb the necessary increases.
"During the prolonged period of under recovery, retail prices were not adjusted upwards and this negatively affected the state of the NPF as it continued to cushion prices although it was already under pressure due to the accumulated debt to oil companies," the department said in response to BusinessWeek enquiries."The NPF balance is still not at a desirable state considering the amount of debt to oil companies, and the mandate it has".Retailers last week estimated that the department owed them up to P200 million in cumulative subsidy costs stretching as far back as last June. The subsidy costs were incurred due to real fuel prices and associated costs being higher than the pump price formula government hands down to retailers. Department officials said the fuel sector had been experiencing "over-recoveries" since May with the financial benefits of these being passed on to fuel retailers to cover the accumulated debt.
