1-month extension of 1% tariff cut on oil imports mulled
The Philippine Star
06/20/2006
The country’s economic managers are looking into the possibility of extending the implementation of the one percent tariff cut on petroleum imports up to next month, a ranking energy official said.
Department of Energy (DOE) director Zenaida Monsada said the impact of the tariff reduction on imported fuels would be felt up to the end of this month only.
"The economic managers (led by Department of Finance and DOE) are reviewing the trigger levels for the tariff reduction. We are now checking if there is still a possibility of lowering the rates, and yet remain revenue neutral (for the government) – the triggers that we have are based on what the DOF wants. We are still haggling if it can be lowered and yet still be revenue neutral," Monsada said.
Every one percent cut on tariff on imported fuel products results to about P2.5 billion in estimated foregone revenues for the government monthly. The revenue impact would also depend on the volume of oil that the oil firms will import.
Monsada said the tariff reduction is among the mitigating measures being implemented by the government to cushion the impact of rising crude prices on the consuming public, as the tariff cut is one thing directly affecting public transport.
"It’s actually the economic managers that proposed the review, as they want to mitigate the high and increasing oil prices, but the tariff rate is just one of the schemes – which are focused on the public transport, apart from the "Tindahan Natin," school feeding program, among others," she said.
President Arroyo announced last week that the price of diesel will not increase this month because of the lowering of the tariff on petroleum products by one percent.
But Monsada noted that with the rate the price of crude is moving in the international market at the moment, there is a possibility that the one percent tariff cut would be lifted anytime soon based on the trigger level set by the DOF.
"We are now looking if we can lower the trigger to maintain the one percent discount. It is possible that diesel could be lifted if we would consider the average in the first half of June," she said.
She said the review of the trigger points should be completed within the month so as not to remove the discount being enjoyed by the public transport groups.
According to the DOE official, if changes would be approved on trigger levels, it would be reflected in the guidelines. "We may have to revise the guidelines to accommodate any change, if there would be any," she said.
Dubai crude averaged at $65.38 per barrel as of June 15, while the average price of MOPS-based unleaded gasoline stood at $84.06 per barrel. The average price of MOPS-based diesel as of June 15 was at $88.47 per barrel.
Consistent with the Executive Order 527 signed by President Arroyo last month, trigger prices were set as part of the guidelines for the implementation of the new EO.
Based on the guidelines, one percent tariff rates shall be imposed on crude and petroleum products should the average price of both Dubai crude and Mean of Platts Singapore (MOPS) – based diesel in the last two weeks reach $75 per barrel and $88 per barrel, respectively.
On the other hand, the two percent tariff rates shall be imposed on crude and petroleum products should the average price of both Dubai crude and MOPS – based diesel in the last two weeks reach $66 per barrel and $88 per barrel, respectively.
Zero tariff rates, meanwhile, shall be levied on crude and petroleum products should the average price for both Dubai crude and MOPS – based diesel in the last two weeks reached $85 per barrel and $88 barrel, respectively.
The tariff adjustments will only be implemented upon certification issued by DOE to the DOF and the Bureau of Customs that the trigger prices for both crude and diesel have been met.
06/20/2006
The country’s economic managers are looking into the possibility of extending the implementation of the one percent tariff cut on petroleum imports up to next month, a ranking energy official said.
Department of Energy (DOE) director Zenaida Monsada said the impact of the tariff reduction on imported fuels would be felt up to the end of this month only.
"The economic managers (led by Department of Finance and DOE) are reviewing the trigger levels for the tariff reduction. We are now checking if there is still a possibility of lowering the rates, and yet remain revenue neutral (for the government) – the triggers that we have are based on what the DOF wants. We are still haggling if it can be lowered and yet still be revenue neutral," Monsada said.
Every one percent cut on tariff on imported fuel products results to about P2.5 billion in estimated foregone revenues for the government monthly. The revenue impact would also depend on the volume of oil that the oil firms will import.
Monsada said the tariff reduction is among the mitigating measures being implemented by the government to cushion the impact of rising crude prices on the consuming public, as the tariff cut is one thing directly affecting public transport.
"It’s actually the economic managers that proposed the review, as they want to mitigate the high and increasing oil prices, but the tariff rate is just one of the schemes – which are focused on the public transport, apart from the "Tindahan Natin," school feeding program, among others," she said.
President Arroyo announced last week that the price of diesel will not increase this month because of the lowering of the tariff on petroleum products by one percent.
But Monsada noted that with the rate the price of crude is moving in the international market at the moment, there is a possibility that the one percent tariff cut would be lifted anytime soon based on the trigger level set by the DOF.
"We are now looking if we can lower the trigger to maintain the one percent discount. It is possible that diesel could be lifted if we would consider the average in the first half of June," she said.
She said the review of the trigger points should be completed within the month so as not to remove the discount being enjoyed by the public transport groups.
According to the DOE official, if changes would be approved on trigger levels, it would be reflected in the guidelines. "We may have to revise the guidelines to accommodate any change, if there would be any," she said.
Dubai crude averaged at $65.38 per barrel as of June 15, while the average price of MOPS-based unleaded gasoline stood at $84.06 per barrel. The average price of MOPS-based diesel as of June 15 was at $88.47 per barrel.
Consistent with the Executive Order 527 signed by President Arroyo last month, trigger prices were set as part of the guidelines for the implementation of the new EO.
Based on the guidelines, one percent tariff rates shall be imposed on crude and petroleum products should the average price of both Dubai crude and Mean of Platts Singapore (MOPS) – based diesel in the last two weeks reach $75 per barrel and $88 per barrel, respectively.
On the other hand, the two percent tariff rates shall be imposed on crude and petroleum products should the average price of both Dubai crude and MOPS – based diesel in the last two weeks reach $66 per barrel and $88 per barrel, respectively.
Zero tariff rates, meanwhile, shall be levied on crude and petroleum products should the average price for both Dubai crude and MOPS – based diesel in the last two weeks reached $85 per barrel and $88 barrel, respectively.
The tariff adjustments will only be implemented upon certification issued by DOE to the DOF and the Bureau of Customs that the trigger prices for both crude and diesel have been met.
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