Duterte hikes tariff on imported oil, refined petroleum

MANILA, Philippines — The government will impose an additional 10 percent duty on crude oil and refined petroleum products to raise funds for its response efforts to fight the coronavirus disease 2019 (COVID-19). 

The modification of import duties is contained in Executive Order No. 113 signed by President Duterte on May 2, two days before Congress resumed session.

Under the Customs Modernization and Tariff Act, the President, upon recommendation of the National Economic and Development Authority (NEDA), may increase, reduce, or remove existing rates of import duty including any necessary change in classification. The power delegated to the President shall be exercised only when Congress is not in session.

The executive order was in line with the Bayanihan Act, which cited the urgent need to undertake a program for recovery and rehabilitation, provide safety nets to all affected sectors, and ensure there are enough funds to implement them. 

“There is an urgent need to augment the government’s resources to sufficiently finance the programs and measures to mitigate the effects of the COVID-19 situation, and launch the country towards recovery and rehabilitation,” Duterte said in the order. 

The NEDA Board approved the temporary imposition of an additional 10 percent duty on imported crude oil and refined petroleum products last April 8.

The articles covered by the order shall be subject to a temporary additional import duty of 10 percent on top of their existing Most Favored Nation and preferential import duties. 

The modified rates shall immediately revert to zero percent if international oil prices increase based on trigger prices indexed to oil prices in the world market and upon a certification by the energy department that a trigger price has been reached. 

This developed as oil companies are raising gasoline prices but are reducing diesel and kerosene prices today.

Gasoline prices would be increased by P0.75 per liter while diesel would be rolled back by P0.10 per liter, and kerosene by P0.60 per liter.

In separate advisories, Petro Gazz, Phoenix Petroleum Philippines Inc., Pilipinas Shell Petroleum Corp., PTT Philippines Inc., Seaoil Philippines and Unioil said their price adjustments would take effect 6 a.m.

Prior to this week’s price movement, year-to-date adjustments stand at a net decrease of P15.27 per liter for gasoline, P16.89 per liter for diesel and P21.90 per liter for kerosene.

In the past week, global oil prices recovered towards close of trade, marking their first weekly gain in four weeks.

Reuters reported that oil prices jumped on Wednesday after US stockpiles rose less than expected and gasoline stocks fell, fueling hopes that demand will improve as economies open up.

It also said the plan of Organization of the Petroleum Exporting Countries (OPEC) and its allies to embark on record output cuts to tackle a supply glut due to the coronavirus crisis also kept prices higher until the end of the trading week.

Meanwhile, independent oil firms are supporting the executive order signed by Duterte yesterday.

EO 113 subjects crude petroleum oil and refined petroleum products to a temporary additional import duty of 10 percent to augment government funds for COVID-19 efforts.

In a text message, Independent Philippine Petroleum Companies Association (IPPCA) president Fernando Martinez said the imposition of additional duties on crude petroleum oil and refined petroleum products is expected.

The products that will be subjected to 10 percent additional duty include petroleum oil and oils obtained from bituminous minerals – crude petroleum oils and condensates.

Also covered are oils obtained from bituminous minerals other than crude; preparations not elsewhere specified or included, containing by weight 70 percent or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; and waste oils. 

Products under this category that will be subjected to additional duty are light oils and preparations including leaded motor spirit of RON 97 and above, RON 90 and above but below RON 97, and other RON; unleaded motor spirit of RON 97 and above that are unblended, blended with ethanol, and others; unleaded motor spirits of RON 90 and above but below RON 97 that are unblended, blended with ethanol and others; and unleaded motor spirit of other RON that are unblended, blended with ethanol and others. 

Also covered by the order are naphtha, reformates and other preparations of a kind used for blending into motor spirits alpha olefins, other petroleum spirit having a flashpoint of less than  23 degrees Celsius; lubricating oil feedstock, lubricating oils for aircraft engines, other lubircating oils and lubricating greases automotive diesel fuel, other diesel fuels, fuel oils, jet fuel having a flash point of 23 degrees Celsius or more, jet fuel having a flashpoint of less than 23 degrees Celsius, other kerosene, and other medium oils and preparations.

Other products that will be subjected to additional duty are petroleum gases and other gaseous hydrocarbons namely liquefied natural gas, propane, buranes, ethylene, propylene, butylene and butadiene, ethylene; natural gas in gaseous state used as a motor fuel and other types. 

The energy department, in coordination with the finance and trade departments, NEDA, and customs bureau will promulgate implementing guidelines of the order.  – With Danessa Rivera