Small oil players buck lifting of 3% tariff on oil

MANILA, Philippines - The Independent Philippine Petroleum Companies Association (IPPCA) is opposing the lifting of the three percent tariff on oil products, saying it would favor the major oil players and result in foregone government revenues.

In a statement, the new oil players said the lifting of the tariff under the most favored nation (MFN) rate of duty on crude oil and refined petroleum products to zero percent is also contrary to the provisions of the oil deregulation law.

“President Arroyo should hold on the lowering of tariff and leave the decision to the next administration. Anyway, its just a month or so when a new administration takes over,” Fernando Martinez, chairman of the IPPCA, said.

Martinez said the government should have taken the time to study the issue before deciding to lift the tariff on crude oil and refined petroleum products import.

It might even result in the Philippines being penalized for violation of the Asia-Korea Free Trade Agreement (AKFTA) and the ASEAN Trade and Goods Agreement (ATIGA), which bound signatory countries to comply. The Philippines is one of the signatory countries to the treaties.

The IPPCA is composed of new or small oil players including Chemrez Technologies, Eastern Petroleum Corp., Filoil Gas Co., Filpride Energy Corp., Flying V -TWA Inc., International Engineers Phils. Inc., Oilink International Corp., Liquigaz Philippines Corp., Pryce Gases Inc., and Seaoil Philippines Inc.

Under the planned lifting of tariffs, government is estimated to lose an estimated P10 billion in taxes once the duties are lifted. It is likewise projected that losses will increase to P40 billion including rolled steel coils for galvanized iron sheets.

Earlier, Petron Corp. petitioned the Tariff Commission (TC) to lift the three percent duties imposed on imported crude oil and refined petroleum products but the TC’s interagency working group responded instead with three options.