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Wednesday, June 14, 2006
Arroyo announces rollback in diesel prices
PRESIDENT Gloria Macapagal-Arroyo said Tuesday the country's three major oil companies will rollback diesel prices by 50 centavos starting Tuesday midnight due to a one percent reduction in the import duties for crude and refined oil products.
Arroyo issued the statement after an inspection of the Pandacan oil depot that the price of diesel will not go up until the end of the month. She said the increase in the price of liquefied petroleum gas (LPG) will also not push through.
She said the price of diesel was picked because public transport is most sensitive to diesel.
"The tariff reduction of one percent is the equivalent of P500 million a month, and the oil companies are committed to pass it on a total of P500 million worth of savings every month, that is the basis of their calculation of the rate reductions," she said.
The tariff rate for crude and refined petroleum products now stands at two percent. The first trigger price level of US$88 per barrel for diesel and US$66 per barrel for Mean of Platts Singapore (Mops) was reached during the first two weeks of May.
Records of the energy department showed that there have been 12 price increases for diesel from January to June 2006 totaling P6.08 and only one reduction worth 50 centavos. With the rollback starting early Wednesday morning, there will be two price reductions for diesel worth a total of P1 since January.
For LPG, there were nine price increases worth a total of P4.97 and eight rollbacks worth P8.62.
The next trigger price level is US$88 per barrel for diesel and US$75 per barrel for Dubai crude.
Finance Secretary Margarito Teves has said that government loses P3.9 billion to P4 billion for every percentage point reduction in oil tariff.
Energy Secretary Raphael Perpetuo Lotilla said he sees a "downtrend" in oil prices but "it's still very volatile in a day to day basis."
Lotilla said the three oil majors assured adequate oil supply for 60 days, both for in-country stock and those that are in transit. He said the President, energy officials, and executives from the oil majors discussed ways to encourage oil firms to raise their inventory notwithstanding the limitations that the 70 percent input value-added tax (VAT) cap is causing to oil companies.
He said the group also looked into the hazards and preparedness in the depot in case of spillage as well as the security preparations in case of an attack. He said 50 percent of all the sales in the country go through the Pandacan depot.
He said the President was assured of adequate safety measures, including walls around the tanks that can contain a spillage that is the volume of the biggest tank plus 10 percent in excess of the volume. (JMR/Sunnex)
(June 14, 2006 issue)
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