Philippines Zero tariff on oil favours importers
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Friday, 08 January 2010 |
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The estimated P0.70 per liter reduction on petroleum products arising
from the zero tariff schedule effective January 1 this year under
Executive Order 850 will be applicable only to oil importers, as the
policy starkly throws bias on refiners which are sourcing their crude
supply outside the Asean region.
Energy secretary Angelo T. Reyes projected the pump price cut next
week in view of the tariff reduction sanctioned by the Asean Trade in
Goods Agreement (ATIGA). Despite the energy chief’s
pronouncements on cost calculations though, oil industry players noted
that the estimated price reduction may not be fully realized at the
pumps if the uptrend in international prices will continue in this
week’s trading. Domestic pump price movements are anchored on the
average of weekly swings in international prices.
On the part of refiners Petron Corporation and Pilipinas Shell
Petroleum Corporation, the zero tariff is not applicable to their crude
imports since they are not sourcing supply from Asean countries.
Hence, the cost reduction may exert pressure on them especially since
market forces may definitely compel them to follow price trends.
For purposes of parity of treatment, Petron and Shell have petitioned
the Tariff Commission to align crude imports to the ATIGA-hinged tariff
reduction – invoking most-favored nation (MFN) rates prescribed in
trade bloc agreements as legal ground. However, the tariff body
indicated that policy stipulation on that regard must be done through
“a separate EO and it requires recommendation from the NEDA (National
Economic and Development Authority) Board.”
EO 850 stipulated that the tariff rate reduction/elimination for
specified goods, including those for petroleum products, is in line
with the common effective preferential tariff (CEPT) scheme of the
ATIGA. Amid volatile oil price movements, Reyes already advanced
word on the price cuts, noting that the public “should see the effect
next week.”
The Downstream Oil Industry Deregulation Act explicitly prescribed a
tax application parity, which entails a uniform tariff rate for both
imported raw and finished petroleum products. The local refiners
argued that the policy track set forth under ATIGA unduly discriminates
them – given that resource constraint compels them to procure crude oil
from producing countries outside the region.
PetrolWorld 060110 Source: Local News Agency
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