New oil import tariffs expected to raise P6.78 billion

new oil import tariffs expected to raise p6 78 billion - New oil import tariffs expected to raise P6.78 billion

THE government could raise P6.78 billion in 2020 from oil import tariffs imposed to help fund the coronavirus disease 2019 (COVID-19) containment effort, the Department of Energy (DoE) said Wednesday.

Executive Order No. 113, issued by President Rodrigo R. Duterte on May 2, imposed a temporary 10% hike in taxes on imported crude oil and refined petroleum products.

Energy Undersecretary Felix William B. Fuentebella told reporters that the projection covers expected oil import revenue between May and December.

The added duties will raise the price of gasoline by P0.60 per liter (L), diesel by P0.84/L, and kerosene by P0.55/L, based on the price movement in the first week of May.

May earnings are estimated at P508.61 million, the DoE said.

The DoE-Oil Industry Management Bureau (OIMB) recently reported that oil import volumes in the first quarter decreased by as much as 460 million liters from a year earlier to 3.3 billion liters.

March imports totaled 632.07 million liters.

Earlier, Bureau of Customs (BoC) Assistant Commissioner Vincent Philip C. Maronilla told BusinessWorld that the increased import duty rate might generate “substantial revenue” despite weak demand for petroleum products.

“I think there is a basis to expect that despite the low demand, a positive duty rate applied against the projected volume for the succeeding months will result in substantial revenue for the government,” the BoC spokesperson said in a Viber message.

According to Rino E. Abad, director of the DoE-OIMB, retailers saw a 50% drop in sales of petroleum products in March because of a general decline in demand due to the lockdown imposed to contain the spread of COVID-19.

At least 10% of gasoline stations nationwide have closed.

This week, most oil companies raised prices of gasoline rose by P2.00/L, diesel P1.90/L, and kerosene P1.25/L.

Mr. Abad said the price uptick followed the Organization of the Petroleum Exporting Countries’ decision to cut oil output by 9.7 million barrels per day until the end of June.

The added oil import duties will be discontinued once a trigger price is breached. The DoE set this at $64 per barrel of oil.

The effect of the additional oil import duties will be reflected in the fuel pump price movement 15 days from the date of its implementation, or around the third week of May.

To ensure the continued supply of fuel, the DoE is issuing passes to oil companies to facilitate their operations during the lockdown. — Adam J. Ang

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