Oil firms lament Congress move to fasttrack baseoil tariff proposal

Local oil firms have expressed concern over the speed with which a legislative proposal to impose a 20-percent tariff on imported baseoils is being handled in both Houses of Congress.

In the Upper House, Senate Bill (SB) 2203 has been scheduled for second reading at the floor which in what is perceived as merely "going through the motions." Earlier, House Bill (HB) 12268, also proposing a similar import duty, was passed.

SB 2203 was sponsored by Sen. Juan Ponce Enrile and it was passed by the Senate ways and means committee, also chaired by Enrile. The House version was sponsored by Rep. Danilo Suarez.

Oppositors expressed fears that the bills may railroaded and sent to Malacañang for signature in a matter of days. "We may not have any recourse but to go to the courts," oil companies opposed to the congressional proposal said.

They expressed dismay that the more important Electricity Reform Bill, which is touted to reduce the huge debt of the National Power Corp. (Napocor) while restructuring the energy sector, is not likely to be passed by the Senate within the year despite having been scheduled for floor deliberations months earlier.

Executives of oil companies openly opposed to the 20-percent tariff on baseoil told The STAR that they received notices for their position papers early this week. To their surprise, they learned that the proposed legislation had already passed the committee level and the bill is already scheduled for floor deliberations.

"What is the use of our position papers when the Senate is poised to pass it at the floor? We should have been given a chance at the committee level," they lamented, adding that they are left with no option but to seek judicial action.

SB 2203 seeks to encourage and develop the baseoil refining industry by limiting the importations of the crude oil byproduct. At present, government slaps a three-percent tariff on imported baseoil products of all grades.

Enrile in his explanatory note said other Asian countries slap a higher tariff to protect their national industry while imposing a zero-tariff on crude oil to encourage refining activities.

He said Thailand, which deregulated its downstream oil industry ahead of the Philippines, maintained its tariff duty for baseoils at 20 percent while imposing a zero tariff on imported crude oil.

"Encouraged by the tariff differential, two huge baseoil refineries with a total capacity of 600,000 tons were established," the solon said.

Earlier, Pilipinas Shell Petroleum Corp. (Shell), operator of the country’s only baseoil refinery, assured that prices of its product will not be increased.

The Shell baseoil refinery located in Pililia, Rizal has a maximum capacity of 1.3 million barrels for grade one baseoil. However, it has been operating at half its capacity according to Shell officials due to low demand aggravated by importations.

Total baseoil industry demand is said to reach 1.75 million barrels yearly with two-thirds coming from importations.