OIL companies on Thursday welcomed the government’s decision to suspend the implementation of the second tranche of increased excise taxes on fuels effective January 1, 2019.
The Philippine Institute of Petroleum (PIP), which is composed of Petron Corp., Pilipinas Shell, Chevron, PTT Philippines and Isla LPG, said this is a welcome relief to consumers.
“The government’s move to address the impact of inflation to our consumers and the general public is appreciated,” said PIP Executive Director Teddy Reyes.
The country’s economic managers recommended the suspension. Malacañang approved it on November 8, but was announced only the other day.
“It’s really a welcome development. Any additional cost is passed on to consumers. So, if it’s possible to keep prices of fuel down, then that’s much better for us. It does not mean that whenever fuel prices are up, the profit of oil firms will also go up. We just enjoy a fixed margin, and the higher cost of fuel will only mean higher capital for oil firms needed to buy the products, “ said Independent Philippine Petroleum Companies Association (Ippca) President Bong Suntay in a phone interview.
Ippca has at least 16 members composed of the country’s leading independent oil players, such as Eastern Petroleum Corp., Unioil Petroleum Philippines Inc., Seaoil Philippines, Flying V, City Oil, Pryce Gases and LPGMA, among others.
Energy Secretary Alfonso G. Cusi, in a text message, said the decision “shows the sensitivity of the administration to the needs of our people.”
Malacañang clarified that its decision only suspends the scheduled increase provided in the Republic Act 10963, more commonly known as the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The TRAIN law, which went into effect in January, increases the excise tax imposed on oil products from 2018 to 2020.
For 2019, the excise tax on fuel products will go up by another P2 per liter.
Under the law, the increase can be suspended if the three-month average price of Dubai crude oil reaches at least $80 per barrel.
“We leave it to the best decision of the government to implement the suspension irrespective of whether the conditions for suspension as provided by the TRAIN law was met,” added Reyes.
Manila Electric Co. (Meralco) President Oscar Reyes, who was present during Thursday’s K-Ligtas awards, commented that the suspension is a “very positive development that will help moderate inflation rate.”
“This is a welcome relief. In terms of rates, there will be some minor impact because it will not put pressure on our operational expenses, which is a component of overall rates,” the Meralco official said.
The government was prompted to suspend the second round of excise tax hikes on petroleum products due next year mainly because of the rise in world oil prices.
Image credits: Alysa Salen