ORMOC CITY, Leyte, July 27 (PNA) – The city government submitted its reply to the observation of the Commission on Audit (COA) particularly on the procurement and storage of fuels and lubricants.

The audit was done by Team 1 – Local Government Sector B (Leyte II and Biliran) led by supervising auditor Nelia B. Barcena and state auditor Ma. Nineveh C. Duarte.

In its observation docketed as Audit Observation Memorandum (AOM) No. 2015-001-101 dated Mar. 16, 2015, the team noted that procurement of fuel and lubricants last year totaling PHP15.45 million was not done in accordance with Republic Act 9184 or the Government Procurement Act.

City Administrator Francis Pepito confirmed that the method of procurement adopted by the city for fuels and lubricants since 2001 is direct contracting from Petron depot and not small value procurement.

“The reason given is because after repeated canvassing and requests for quotations from different gasoline retailers and dealers, it was consistently found out that Petron depot, being the sole oil depot in the city, offers the lowest price.

This practice was merely continued by the present administration especially after typhoon Yolanda in which the fuel requirement of the city skyrocketed which only Petron depot can address,” Pepito said in his letter explanation.

Pepito cited the procurement made by the city for the month of May wherein the price offered by Petron depot is PHP33.80 per liter, lower by more than PHP2 compared to the P36.74 of other fuel retailers in Ormoc.

“Please take note that the COA for a long time has never called the attention of the city regarding…its practice in procuring fuel directly from Petron depot,” he continued.

The only instance wherein the city government’s attention was called was on its failure to execute a contract or agreement with Petron as contained in COA’s AOM dated Aug. 20, 2004. But COA did not restrict the city in continuing its direct procurement from Petron depot in that AOM.

Pepito also said that the Bids and Awards Committee, which he chairs tried to hold a public bidding for the city’s fuel requirements but this was found to be impractical due to volatility of fuel prices. “Day to day fuel prices fluctuate. As such, the fuel price during the initial phase of the bidding process may no longer be the price during the end phase,” he said.

“This will definitely prejudice the city if the given budget of the contract is much higher to the actual price once the award is given. In the present setup, the city has to pay on the same day the fuel it has ordered from Petron depot, otherwise it runs the risk of its order being canceled once the price changes the next day.

“Time is of the essence in the procurement of fuel which cannot be addressed if we go through public bidding. A little delay in the procurement of fuels will bring immeasurable damage to the city’s services such as in the collection of garbage, rescue operations and public works which we cannot allow.”

The withdrawal of fuel by city government-owned vehicles from Codilla’s Petron Super Station owned by the mayor’s family was also defended.

City legal officer Ivan Verallo in an interview explains that Petron depot dispenses fuel only to retail stations and as such, it has assigned Codilla’s Petron as the depository pumping station for the city government.

Verallo stresses that Codilla’s Petron doesn’t get any pecuniary advantage and benefit from this arrangement. On the contrary, it incurs additional costs for this accommodation by hiring more personnel to service the city government vehicles and monitor the amount of fuel being discharged.

Meanwhile, the legal officer denied rumors that the city government here got adverse findings from the COA inspection made for 2014.

City legal officer Verallo clarified that what the local government unit (LGU) got from COA, is an AOM, not an adverse finding.

Verallo added that the issuance of AOM is part of COA’s regular function after auditing an LGU. All LGUs even down to the village level regularly receive AOM from COA, he adds. The AOM serves as a proof that COA conducted an audit inspection on that particular LGU.

The memorandum notifies the LGU of its documentary deficiencies and recommends actions to make transactions and procedures more transparent.

Verallo reminds the city residents that the city government is a recipient of the Seal of Good Financial Housekeeping, one of the criteria of which is compliance to accounting rules and regulations as certified by the COA.

The LGU further complies with the full disclosure policy on its annual budget, finances and expenditures, Verallo adds. “I don’t think Ormoc will be awarded the Seal if the LGU is not transparent in its transactions and if the COA came up with adverse findings,” he said. (PNA)