The estimated P0.70 per liter reduction on petroleum products arising from the zero tariff schedule effective January 1 this year under Executive Order 850 will be applicable only to oil importers, as the policy starkly throws bias on refiners which are sourcing their crude supply outside the Asean region.

Energy secretary Angelo T. Reyes projected the pump price cut next week in view of the tariff reduction sanctioned by the Asean Trade in Goods Agreement (ATIGA).

Despite the energy chief’s pronouncements on cost calculations though, oil industry players noted that the estimated price reduction may not be fully realized at the pumps if the uptrend in international prices will continue in this week’s trading. Domestic pump price movements are anchored on the average of weekly swings in international prices.

On the part of refiners Petron Corporation and Pilipinas Shell Petroleum Corporation, the zero tariff is not applicable to their crude imports since they are not sourcing supply from Asean countries.

Hence, the cost reduction may exert pressure on them especially since market forces may definitely compel them to follow price trends.

For purposes of parity of treatment, Petron and Shell have petitioned the Tariff Commission to also align crude imports to the ATIGA-hinged tariff reduction – invoking most-favored nation (MFN) rates prescribed in trade bloc agreements as legal ground.

However, the tariff body indicated that policy stipulation on that regard must be done through “a separate EO and it requires recommendation from the NEDA (National Economic and Development Authority) Board.”

EO 850 stipulated that the tariff rate reduction/elimination for specified goods, including those for petroleum products, is in line with the common effective preferential tariff (CEPT) scheme of the ATIGA.

Amid volatile oil price movements, Reyes already advanced word on the price cuts, noting that the public “should see the effect next week.”

The Downstream Oil Industry Deregulation Act explicitly prescribed a tax application parity, which entails a uniform tariff rate for both imported raw and finished petroleum products.

The local refiners argued that the policy track set forth under ATIGA unduly discriminates them – given that resource constraint compels them to procure crude oil from producing countries outside the region.