Philippines allows for lower oil import tariff amid rising prices

Singapore (Platts)--17May2006

The Philippine government has put in place a mechanism whereby crude and
oil product import tariff rates will be automatically lowered from the current
3% level should the price of Dubai crude and gasoil prices in Singapore, based
on Platts assessments, reach certain levels, the Department of Energy said
Wednesday.

The decision, which will be in effect for the next six months, is aimed
at mitigating the impact of soaring international oil prices on domestic
consumers. The Philippines relies on imports to meet all of its crude demand
of around 300,000 b/d.

The oil import tariff will be lowered to 2% should the average price of
Dubai over a two-week period reach $66/barrel and of gasoil reach $88/barrel,
the DOE said.

The tariff will be lowered further to 1% if the average price of Dubai
reaches $75/barrel and gasoil $88/barrel and to zero if Dubai is $85/barrel
and gasoil $88/barrel.
Similarly, the tariff would be automatically restored as international
oil prices move down based on the same trigger prices indexed to oil prices in
the world market.
According to Platts data, Dubai averaged at $66.03/barrel over the last
two weeks while 0.5% gasoil averaged at $84.49/barrel.
Meanwhile, the DOE has stressed that oil companies must reflect the
corresponding reduction in pump prices of gasoil sold to the public transport
sector.
"We would like to assure the public transport sector that the
corresponding tariff reduction will be accordingly reflected in the pump
prices of diesel fuel for public transport to mitigate the inflationary impact
of rising oil prices in the world market," energy secretary Raphael P.M.
Lotilla said.

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