Hiked 10% duty to raise oil prices by ₱1/liter

Published May 5, 2020, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

With the abrupt step of the government to hike oil import duty to 10-percent, it has been calculated that prices of petroleum products at the pumps would be rising by as much as ₱1.00 per liter and that is on top of the weekly price adjustments.

(MARK BALMORES / MANILA BULLETIN FILE PHOTO
(MARK BALMORES / MANILA BULLETIN FILE PHOTO

The policy was cemented by President Rodrigo Duterte via Executive Order No. 113 he issued on May 2 – and that it will be effective immediately following the mandatory publication requirements.

The oil companies said the cost of the higher import duty will be passed on to the consumers; and they concurred that this will help the government raise additional revenues to shore up cash hoard for its Covid-19 response mechanism.

Independent Philippine Petroleum Companies Association (IPPCA) President Fernando L. Martinez noted that based on their estimates, the impact will be a negligible ₱1.00 per liter, but he qualified that such shall be “a lot smaller than the ₱15 rollback since January this year.”

He asserted that from their league as players in the deregulated downstream oil sector, “the consensus of our IPPCA members is to support the EO to help in the current fund raising efforts of the government.”

Under the President’s EO, it was stipulated that the decision to hike import duty for crude and finished petroleum products had been arrived at with the recommendation of the National Economic and Development Authority (NEDA) Board that is chaired by Duterte himself.

“On April 8, 2020, the NEDA Board approved ad referendum the temporary imposition of an additional duty of 10-percent on imported crude oil and refined petroleum products,” the EO has stated.

Essentially, the price hike from the increased import duty could impact on the front-liners and the essential workers during the enhanced community quarantine, but it was reckoned that this will just be negligible added expense on their part.

To note, it is the medical front-liners and workers in essential establishments who are having greater degree of mobility because of the nature of their jobs – and they are also the segment of population currently driving consumption in the oil sector.

The country’s oil demand had so far dropped by roughly 60-percent because of the stay-at-home order of the government, and this is seen persisting while the ECQ enforcements would not be lifted yet in various parts of the country.

 
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