TRAIN, global markets lift diesel prices by 13.45; kerosene by 14.11/liter

On the combined effect of the Tax Reform Acceleration and Inclusion (TRAIN) Act and the upswing in international oil prices, the cost of socially sensitive diesel product at the pumps will drastically climb by R3.45 per liter; while kerosene will go up by R4.11 per liter – depending on the rollout of new inventories by the oil companies which is also set this week.

For gasoline products, the total increase in prices this week will be at R3.17 per liter, as the oil companies already advised on their cost hikes effective Tuesday (January 2).

As of press time, the oil firm that already adjusted its prices, just based initially on global price movement had been Pilipinas Shell Petroleum Corporation and followed by PTT Philippines.

The price increases based on world cost swings of petroleum products had been at R0.65 per liter for diesel; R0.75 per liter for kerosene; and R0.20 per liter.

Effective January 1, the TRAINinduced excise taxes were also to raise diesel prices by R2.50 per liter plus corresponding value added tax (VAT) charge of R0.30; gasoline by R2.65 per liter with VAT of R0.32 per liter; and kerosene by R3.00 per liter with R0.036 per liter VAT charge

The energy department made exception to the anticipated hike also in LPG prices due to the enforced increases in excise taxes – but that will be coming later on at R1.00 per kilogram or R11 per cylinder at its implementation.

Relative to the tax reform-underpinned excise taxes, the DOE directed oil companies that “the new excise taxes do not apply to the old stocks of petroleum products.” The department thus directed retailers “not to charge the new excise tax to the consumers.”

The oil companies move their prices on a weekly basis based on price trends in the world market – done routinely on second day of the week at either 12:01 a.m. or 6:00 a.m., depending on the oil firms’ pricing notices to their dealers and retail networks.

For the TRAIN-underpinned price hikes, that will be a permanent imposition until the next round of escalations due in 2019; and then in year 2020.

DOE assistant Secretary Leonido Pulido III noted that the department’s Oil industry Management Bureau (OIMB) “issued an advisory to petroleum product stakeholders not to levy new excise tax rates on old stocks, with him qualifying that “excise taxes are levied upon importation and not at the point of sale to the consumers.” (MMV)