Executive Order No. 137
EXPANDING
THE SOURCES AND UTILIZATION OF THE OIL PRICE STABILIZATION FUND (OPSF) BY AMENDING
PRESIDENTIAL DECREE
NO. 1956
WHEREAS,
an Oil Price Stabilization Fund was created under
Section
8 of the Presidential Decree No. 1956 to be used to reimburse the oil
companies for cost increases on crude oil and imported petroleum products resulting
from exchange rate adjustments and/or increases in world market prices in the
desire to stabilize the prices of petroleum products for a longer period
despite exchange rate adjustments or world market price changes;
WHEREAS,
Letter of Instructions No. 1431 provided for the utilization of the Oil Price
Stabilization Fund to reimburse oil companies the additional costs of
importation of crude oil and petroleum products due to fluctuations in foreign
exchange rates, to assure adequate and continuous supply of petroleum products
at reasonable prices;
WHEREAS,
the spot prices of crude oil in the international market have been unstable;
WHEREAS,
it is the policy of the government to recognize immediately declines in crude oil
prices by reducing domestic petroleum product prices for the benefit of the
public;
WHEREAS,
the prevailing circumstances require the expansion of the sources and
utilization of the Oil Price Stabilization Fund to maintain stability in the
domestic prices of oil products at reasonable levels;
NOW,
THEREFORE, I, CORAZON C. AQUINO, President of the
SEC. 1.
Section 8 of Presidential Decree No. 1956 is hereby
amended to read as follows:
SEC. 8.
There is hereby created a Trust Account in the books of accounts of the
Ministry of Energy to be designated as Oil
Price Stabilization Fund (OPSF) for the purpose of
minimizing frequent price changes brought about by exchange rate adjustments
and/or changes in the world market prices of crude oil and imported petroleum
products. The Oil Price Stabilization
Fund (OPSF) may be sourced from any of the following:
(a) Any increase in the tax collection from ad valorem tax or customs duty imposed
on petroleum products subject to tax under this Decree arising from exchange
rate adjustment, as may be determined by the
Minister
of Finance in consultation with the
Board
of Energy;
(b) Any increase in the tax collection as a
result of the lifting of tax exemptions of government corporations, as may be
determined by the
Minister of Finance in
consultation with the
Board of Energy;
(c) Any additional amount to be imposed on
petroleum products to augment the resources of the Fund through an appropriate
Order that may be issued by the
Board of
Energy requiring payment by persons or companies engaged in the business of
importing, manufacturing and/or marketing petroleum products;
(d) Any resulting peso cost differentials in
case the actual peso costs paid by oil companies in the importation of crude
oil and petroleum products is less than the peso costs computed using the
reference foreign exchange rate as fixed by the
Board
of Energy.
The
Fund herein created shall be used for the following:
(1) To reimburse the oil companies for costs
increases in crude oil and imported petroleum products resulting from exchange
rate adjustment and/or increase in world market prices of crude oil;
(2) To reimburse the oil companies for
possible cost underrecovery incurred as a result of
the reduction of domestic prices of petroleum products. The magnitude of the underrecovery,
if any, shall be determined by the
Ministry of
Finance. Cost underrecovery
shall include the following:
(i) Reduction
in oil company take as directed by the
Board of Energy without the corresponding
reduction in the landed cost of oil inventories in the possession of the oil
companies at the time of the price change;
(ii) Reduction in internal ad valorem
taxes as a result of foregoing government mandated price reductions;
(iii) Other factors as may be determined by the Ministry of Finance to result in cost underrecovery.
SEC. 2. The
Minister
of Finance shall, in consultation with the
Ministry
of Energy, promulgate the necessary rules and regulations to implement this
Executive Order.
SEC. 3. All laws, orders, issuances, and rules and
regulations or parts thereof inconsistent with this Executive Order are hereby
repealed or modified accordingly.
SEC. 4. This Executive Order shall be effective starting with the domestic products price reduction authorized on January 24, 1986.
Done in the City of
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