Caltex and Shell protest forex policy

Caltex and Shell protest forex policy

MANILA (AFP): Caltex Petroleum Corp. and Royal Dutch Shell
Petroleum Corp. subsidiaries in the Philippines yesterday
protested the abolition of a special dollar allocation for oil
imports, saying this will seriously affect operating costs and
planned investments.

Caltex (Philippines) Inc. said it would have to double to
US$80 million its monthly payment for crude oil, while Pilipinas
Shell Petroleum Corp. projected an "additional cost burden of 18
to 24 centavos per liter," for every 30-day reduction in the
"foreign exchange cover."

Earlier this week, President Fidel Ramos ordered a phaseout of
a special dollar allocation for imports of oil products as an
added measure to slow down the appreciation of the peso against
the dollar.

The measure means local oil refiners will have to buy dollars
in the open market for imports of crude. The government hopes
this will increase the demand for the currency and stem the rapid
appreciation of the peso.

To cushion the effect of the phaseout, the two firms urged the
government to grant a year-old request for increases in profit
margins. Shell has requested a 65-centavo per liter increase in
pump prices, while Caltex petitioned for a 67-centavo increase.

Both companies were granted a 33-centavo increase by
government regulators in August.

"Last year, we made less than one percent on our return on
rate base formula and that is nowhere near the kind of level that
it takes to generate investment," Caltex Philippines president
William Tiffany told AFP.