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.