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TO:	The Minister of Energy The Minister of the Budget The Treasurer of the Philippines

Uncertainties  in the crude supply situation brought about essentially by the disruption of supply from traditional crude oil sources have led to the unilateral imposition starting in March 1979,  by individual members of the Organization of Petroleum Exporting Countries (OPEC), of crude premium or surcharge over and above the generally-agreed crude prices set by the organization in its December 1978 meeting in Abu Dhabi.  As  approved in its subsequent meeting in June 1979 in Geneva, Switzerland,  OPEC imposed general crude price increases effective July 1, 1979 which brought the general crude prices to  134.94% of January 1,  1979 price levels.  In addition, the organization allowed the individual member countries to add premium or surcharge to their crude prices as necessitated by market conditions.

Under its orders dated March 22, 1979,  July 31, 1979 and August 14, 1979, the Board of Energy (BOE) has provided for the recovery of crude surcharges through the mechanism of a special levy on petroleum products payable to the Special Fund created pursuant to Section 8 (j) of R.A. 6173, as amended, and  the subsequent reimbursement of oil companies of actual and necessary cost increases as a result of individual country crude price and adjustments.  In line with the foregoing mechanism, the amount of P225 million was set aside from the said Special Fund by virtue of Letter of Instruction No.  842 0 reimburse oil companies  for actual crude surcharges.

To continue the implementation of the aforementioned reimbursement scheme in accordance with the foregoing BOE orders, the Ministry of Energy is hereby authorized to reimburse the oil companies for duly documented and validated crude surcharges  by means of issuance of reimbursement or certificates which are deductible from the oil companies' monthly remittances to the said Special Fund for crude equalization fund and remittances corresponding to rates as of March 21, 1979.  For this purpose, an P300 million is hereby set aside  from the said Special Fund to reimburse oil companies for actual crude surcharges.   The Ministry of Energy is further authorized to promulgate the necessary implementing rules to carry into the objective of this Letter of Instructions.

The Ministry of Energy is directed to submit to me periodic reports on reimbursement certificates actually issued to the oil companies for crude surcharges incurred.

This Letter of Instruction shell take effect immediately.

Done  in the City of Manila,  this 15th day of December, in the year of our Lord, Nineteen Hundred and Seventy-Nine.