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Thursday, May 18, 2006
Palace pegs 'trigger' prices for oil tariff cuts
MANILA -- Government has pegged at $88 per barrel for diesel and at $66, $75 and $85 for Dubai crude the trigger prices for the reduction of import tariffs for crude and refined petroleum products.
Finance Secretary Margarito Teves said Energy Secretary Raphael Perpetuo Lotilla has signed the implementing rules and regulations (IRR) of Executive Order (EO) 527, which lowers the import tariff.
Teves explained that once the first trigger price of $88 per barrel for diesel and $66 for Dubai crude is reached, the oil import tariff would be lowered from three percent to two percent. He said the prices for diesel and Dubai crude must be available at all times.
He said the second trigger price or stage of tariff reduction is $88 per barrel for diesel and $75 for Dubai crude while the third trigger price is $88 for diesel and $85 for Dubai crude. He said each trigger price levels would lead to a one percent tariff reduction.
Teves said the trigger price is based on a "two-week composite". He said government loses P3.9 billion to P4 billion for every percentage point reduction in oil tariff.
He said while the trigger price levels have not been reached, government would use the funds to finance socially oriented projects.
Teves said government is also looking at a "universal application", which means a reduction in the prices of all oil products, and a "focused support on low-income groups" such as additional discounts for public utilities.
He said government will also use the increase in value-added tax in crude and refined petroleum products for the focused support.
However, he said fuel prices are market-driven and it is up to the oil companies if they want to lower the prices of their socially sensitive products. He said the oil firms would also have to work out their under recoveries.
Press Secretary Ignacio Bunye said the lowering of oil import tariffs is a "temporary move to ease the adversities facing our people."
He said it must be complemented by efforts to search for alternative sources of fuel and measures to reduce dependency on crude oil and mitigate the socioeconomic pressures brought upon the public by high oil prices. (JMR/Sunnex)
(May 18, 2006 issue)
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