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.