The country’s smaller oil companies have slammed oil refiners for allegedly lobbying for the removal of the most favored nation (MFN) import duty on crude and finished petroleum products saying this would translate to estimated P10 billion in foregone government revenues.

The Independent Philippine Petroleum Companies Association (IPPCA) said that the position papers submitted by Petron Corp. and Pilipinas Shell Petroleum Corp. to the Tariff Commission strongly argued for this policy direction.

Both argued that giving the privilege of a zero duty to just one segment of the industry would undermine the industry’s competitive form; hence, their bid also to be covered with the same perks.

IPPCA alleged that it was Petron which strongly batted for such policy direction, noting that refiners do not have much choice but to take crude imports from sources such as Middle East.

The oil refiners, however, said that their bid for zero MFN duty rate from three percent is the most appropriate step to level the playing field, which is just the right environment to be promoted under a competitive set-up.

The small oil importers have been scheduled to enjoy zero tariff for their product purchases from Asean countries this year on the strength of the Asean Trade in Goods Agreement (ATIGA), which took effect January 1 this year, and also underpinned by the ASEAN-Korea Free Trade Agreement.

IPPCA chairman Fernando L. Martinez opined that extending zero tariff privilege to the oil refiners might “send a wrong signal to the industry” and may violate provisions of the Oil Deregulation Law.

Martinez even went as far as asking President Arroyo to hold off approval of the proposed zero tariff for refiners; “and leave the decision to the next administration.”

He stressed that “the government should have taken the time to study the issue before deciding to lift  the tariff on crude oil and refined petroleum products import.”

Martinez added that even with the zero tariff proposition for Asean-sourced products, there are very rigid requirements that they would need to comply with just to avail of such reduced import duty.