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Higher oil import tax temporary, Energy chief says
Bernardette S. Sto. Domingo and Anna Barbara L. Lorenzo, Business World (27 Jul 2004)

MANILA, PHILIPPINES: The higher oil import tax ordered by the Malacañan presidential palace last Friday is temporary, and will be collected only when world prices are down, Energy Secretary Vincent S. Perez, Jr. assured in a statement yesterday.

He also said the higher oil tariff of 5%, from 3% previously, should raise fuel pump prices by an average of only 25 centavos per liter.

Moreover, the higher oil tariff will be cancelled once Congress approves the additional excise tax on fuel of PhP2 per liter.

"The idea is that [the executive Order on a higher oil tariff] will be a temporary revenue mechanism until an [additional] excise tax is decided by Congress," Mr. Perez said.

The Energy secretary noted that the executive Order would trigger the 2% additional tariff on petroleum products only when world prices were down, to limit its impact on pump prices.

"The EO is signed and we'll just wait for an opportune time to implement it. It is effective, but it will be implemented only once we see that it can be triggered," Mr. Perez said.

The Cabinet's Tariff and Related Matters (TRM) Committee last week approved the Department of Energy proposal to raise the oil tariff rate to 5% from 3%.

The departments of Energy, and Trade and Industry, and the National Economic and Development Authority were tasked to draft implementing guidelines that would trigger the higher tariff, which was forecast to raise some PhP4.4 billion in additional government revenues yearly.

Oil firms earlier said that any additional duty on oil imports would be passed on to consumers.

Mr. Perez said the Legislative-Executive Advisory Council would also discuss the "merits and demerits" of the proposed PhP2 per liter increase in the oil excise tax.


Meanwhile, the Civil Aeronautics Board (CAB) approved the petitions of three foreign airlines for a fuel surcharge of $5-$6 per passenger per flight.

Singapore Airlines started collecting an additional $5 from each passenger since July 14, while Malaysian Airlines has started charging an additional $6 to cover fuel losses since June 28.

Royal Brunei Airlines is also collecting an additional $5 for flights from Manila to Bandar Seri Begawan, and another $2.50 for flights beyond Brunei's capital.

"We inquired in to the petitions and the basis for the surcharge. We found that the petitions are well-taken. We had no other recourse but to grant it," CAB Deputy executive director Carmelo Arcilla said in an interview.

Since last month CAB has been swamped with petitions for fuel surcharge as world oil prices climbed following terrorist attacks in Saudi Arabia.

Jet fuel accounts for about 15% to 20% of an airline's operating cost, and is the second biggest operating expense next to labor.

Twelve foreign carriers still await CAB decision on their respective petitions for fuel surcharge. These include airlines from oil-producing countries like Qatar and Saudi Arabia.

CAB is also scheduled to hear this week the petitions of Korean Airlines (for a $7 fuel surcharge), KLM Royal Dutch Airlines ($10), and Kuwait Airlines ($5), and next month, Silk Air ($5).

Early this month, CAB also approved the joint petition of Philippine Airlines and Cebu Pacific Air for a $6 surcharge per flight.

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