Govt pegs 'trigger' prices for oil tariff cuts

The government has pegged the trigger prices, on which would be based the reduction of import tariffs for crude and refined petroleum products, at $88 per barrel for diesel and at $66, $75 and $85 for Dubai crude. Finance Secretary Margarito Teves said on Wednesday that Energy Secretary Raphael Perpetuo Lotilla signed the implementing rules and regulations of Executive Order 527 which lowers the import tariff on oil products from the fixed 3 percent down to 2 percent to zero depending on world oil price movements. President Gloria Macapagal Arroyo issued EO 527 earlier this week. Teves explained that once the first trigger price of $88 per barrel for diesel and $66 for Dubai crude is reached, the oil import tariff will be lowered from 3 percent to 2 percent. He said the second trigger price or stage of tariff reduction is $88 per barrel for diesel and $75 for Dubai crude while the third trigger price is $88 for diesel and $85 for Dubai crude. He said each trigger price level will lead to a 1 percent tariff reduction. The trigger price will be based on a “two-week composite." However, Teves said fuel prices are market-driven and it is up to the oil companies if they want to lower prices since the firms might still have to work out their under recoveries. The finance secretary said government loses P3.9 billion to P4 billion for every percentage point reduction in oil tariff. “What is probably more practical and more helpful to low-income groups, yung focused support. Unfortunately yung mechanics niyan di pa kumpleto. So in the meantime that is not yet complete, siguro mauuna diyan iyong universal application," he said. He said government will also use the increase in value added tax in crude and refined petroleum products for the focused support. Press Secretary Ignacio Bunye said the lowering of oil import tariffs is a “temporary move to ease the adversities facing our people." He said it must be complemented by efforts to search for alternative sources of fuel and measures to reduce dependency on crude oil and mitigate the socioeconomic pressures brought upon the public by high oil prices. -GMANews.TV