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.