Cheaper power

Published by rudy Date posted on April 16, 2009

CHEAPER POWER: After filing a bill lowering royalties on indigenous sources of energy to reduce the retail cost of electricity, Senate President Juan Ponce Enrile now wants to grant tax exemption to distribution utilities to further cut power costs.

The twin moves should be a hint to the country’s economic managers to continue looking for ways to make power more affordable for households and industrial users.

Explaining Senate Bill 3148, Enrile said that while the Philippines is endowed with abundant resources, government impositions on their use for power generation “are more burdensome than those on imported fuels.”

He said the “rates of electricity generated using indigenous resources are artificially high.” He wants to reduce royalties to three percent of net proceeds from the sale of indigenous fuels or sources of energy.

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RATE REDUCTION: Industry estimates have it that once royalties on natural gas are either reduced or scrapped and once Value-Added Tax on electricity is lowered or abolished, consumers can enjoy a rate cut of more than P3 per kilowatt-hour.

The reduction will relieve industries caught in the global financial crisis. It will also throw a lifeline to firms looking for ways to save jobs and improve productivity.

SB 3148 seeks to lower the government share in the exploration, development and production of indigenous energy resources other than those already covered by the Renewable Energy Act of 2008. It will also remove disparities in tax/royalty treatment of local energy resources and imported fuels.

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PINOYS PENALIZED: If taxes and royalties on indigenous and imported fuels are removed, as the bill intends, the cost of electricity generated using local resources will be substantially lower.

Enrile noted that Filipinos are being penalized for using local energy resources, which is “not the case with our Asian neighbors similarly endowed such as Thailand, Indonesia, Malaysia and Vietnam.”

He said that in the Meralco franchise area, a reduction of royalties will mean a rate reduction of as much as P0.50/kwh for all customers.

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