Deregulation of RP oil industry ordered
Deregulation of RP oil industry ordered
MANILA (AFP): Philippine President Fidel Ramos ordered over the weekend the full deregulation of the country's oil industry from Feb. 8.
The decision ends a policy of state subsidies to the politically sensitive sector one month ahead of the original schedule for deregulation, the government said.
A copy of Ramos' executive order said deregulation was needed because a state oil subsidy fund that had served as a buffer for fluctuating world crude prices and the foreign exchange rate would run out on Feb. 7.
The document, released to reporters Wednesday, said the deregulation was timed to coincide with a decline in world crude prices and a stable exchange rate between the Philippine peso and the U.S. dollar.
"The deregulation of the industry will foster a truly competitive market which can better achieve the social policy objectives of fair prices and adequate, continuous supply of environmentally-clean and high quality petroleum products," the executive order said.
The government began a partial deregulation of the sector in the middle of 1996, gradually raising domestic petroleum prices amid protests from left-wing groups.
Before the deregulation, the domestic downstream oil industry had been dominated by three giants -- the subsidiaries of the Royal Dutch Shell Group, Caltex Petroleum Corp. and Saudi Arabian-backed Petron Corp.
A semi-official body, the Energy Regulatory Board, dictated local petroleum retail prices.
The government indirectly subsidized the costs through an Oil Price Stabilization Fund from which the oil firms drew money to cover losses resulting from changes in world crude prices and the peso-dollar rate.
Ramos, who has urged Filipinos to wean themselves away from a state welfare mentality, has deregulated industries such as banking, shipping and telecommunications, since taking office in 1992.
Deregulation and liberalization have been credited for the country's economic turnaround that saw the economy grow from near zero in 1992 to an expected 7.1 percent rise in gross national product in 1996.