RP to float oil prices

RP to float oil prices

MANILA (AFP): The Philippines is to partially lift price controls on domestic oil products from Aug. 12, which should initially increase gasoline prices and reduce those for other refined products, a government statement said yesterday.

The Energy Department said an interim scheme, to be called the "automatic pricing mechanism", would be in effect for a year and adjusted every month, at the end of which daily prices would be left to market forces.

The new scheme removes a state-run subsidy called the Oil Price Stabilization Fund (OPSF) which insulates local consumers from fluctuations of crude prices in the world market.

It also introduces recently legislated specific taxes on oil products.

Under the new pricing mechanism, "the wholesale posted prices of petroleum products will change monthly based on the movements of the Singapore posted prices," the statement said.

Based on government projections, the new tax and the removal of the subsidy should lead to slight reductions next month in the price of "socially-sensitive petroleum products" like liquefied petroleum gas, kerosene, fuel oil, and aviation turbo, it said.

There will be a "minimal increase" in the price of diesel and a heftier one for gasoline, it added.