RP has new oil reform law

RP has new oil reform law

MANILA (Reuters): The Philippine Senate has passed a new oil reform bill designed to free the oil industry from decades of state control, senators said yesterday.

The proposed law, approved by a 13-0 vote on Saturday night, would replace an earlier oil deregulation law which the Supreme Court last November voided as unconstitutional, saying it contained some provisions that would foster monopolies.

The House of Representatives is to vote on Monday on its own version of the proposed new law and a joint panel representing both chambers is to meet later to iron out any disparities between the Senate and Lower House versions.

The Senate version imposes a uniform three percent tariff rate on importation of crude oil and refined petroleum products.

The previous law encouraged firms to invest in refineries and imposed higher tariffs on firms that were just importing and selling finished products.

The court has said forcing firms to choose between investing huge amounts in refineries and paying higher tariffs would curb free trade.

The Senate version also provides funds to pay the 2.6 billion pesos which the government owes oil companies in dues under the Oil Price Stabilization Fund (OPSF). The payment is to be made over five years.

The OPSF is a buffer fund used to soften the impact of fluctuations in local oil prices. It ran into deficit because the government was unable to raise oil prices in the face of popular opposition.

Deregulation of the oil industry was a commitment made by the Philippines to the International Monetary Fund (IMF) before its exit, expected early this year, from more than 30 years of IMF supervision.