Pilipinas Shell Petroleum Corporation has batted for a parallel zero duty policy direction for oil products imported outside ASEAN or the so called most favored nation (MFN) duty to effect parity in tax treatment for the deregulated downstream oil industry.

According to Shell, the ATIGA-induced duty-free privilege, “effectively discriminates against local refiners who import crude as its raw materials from non-ASEAN countries, such as the Middle East, to manufacture finished petroleum products.”

The seeming parity in import tariff though roused complaints from smaller oil players which are mostly sourcing their products from ASEAN.

The Independent Philippine Petroleum Companies Association (IPPCA) is going as far as seeking Malacañang’s imprimature to thumb down the proposal citing the estimated P10 billion foregone revenues from the waived duties.

Shell particularly noted that it is amenable to the slashed MFN rate of duty on crude oil, refined petroleum products and asphalt “as this will level the playing field between oil importers and refiners, thereby ensuring local oil supply reliability.”

The oil firm’s position on the issue is similarly situated with that of Petron Corporation – as the country’s dominant oil industry player sources its crude from the Middle East. The two refiners’ supply portfolio accounts for about 60 percent of the market.

“Failure to reduce the tariff rates for imported crude oil coming from non-ASEAN countries would have adversely impacted the petroleum refining industry, as this will encourage more importation resulting to the decimation of the local refinery business,” Shell said.

On the sphere of promoting supply security, it has been noted that refinery investments will be more of an answer to that, as compared to having a market fully dependent on imported finished products. The risk exposure to pricing volatility will be higher with just having base of product importers.