RP power cost highest in Asia

Published by rudy Date posted on July 1, 2009

MANILA, Philippines – The Philippines has overtaken Japan as the country with the highest electricity cost in Asia, a party-list congressman said yesterday.

Citing a recent study made by American investment bank J. P. Morgan Chase on investment competitiveness, Rep. Jonathan dela Cruz of Abakada-Guro said the Philippines now has a power cost equivalent to 14 US cents per kilowatt-hour.

Japan’s cost is only 11 cents, he said.

About a year ago, Dela Cruz said Japan had the highest electricity cost in Asia.

“No wonder many foreign businesses are moving out and relocating in countries where electricity is cheap,” he said.

He said the prohibitive cost of power in the country is apparently due to royalty taxes that the government is collecting on natural gas and other indigenous energy resources.

“Natural gas now accounts for 30 percent of the fuel that produces electricity in the country,” he added.

Dela Cruz and other lawmakers want royalty tax on natural gas from Palawan to be scrapped or substantially reduced.

The government has collected more than $2 billion in such tax since 2002.

Last week, Speaker Prospero Nograles expressed support for the two bills of Senate President Juan Ponce Enrile that aim to substantially reduce the cost of electricity to consumers.

“I would like to state on record that I fully support Senate President Enrile’s bills. I know that this will redound to lower electricity rates that will benefit not only residential electricity consumers but industries as well,” he said in a statement.

“I firmly believe that by supporting these bills, we will be able to boost our economy and provide more jobs to our people,” he said.

He said the House would consider the Enrile proposals and similar measures proposed by congressmen when Congress convenes late next month.

Enrile’s daughter-in-law, Cagayan Rep. Salvacio Ponce Enrile, has filed counterparts in the House of his electricity cost reduction proposals.

The elder Enrile, who was defense minister during martial law, won in 2004 on a campaign to reduce power rates. So far, he has not succeeded in doing so and his two bills are his first attempt at fulfilling his campaign promise.

He estimates that if his proposals become law, electricity cost could go down by as much as P2 per kilowatt-hour.

Enrile’s Bill 3147 seeks to impose a uniform three percent national franchise tax on all distribution utilities in place of all taxes, while Bill 3148 proposes to bring down government royalties on indigenous energy sources, including natural gas from Palawan.

Power distributors and producers are now subject to various taxes, including the 12-percent value added tax.

Nograles agreed with Enrile that the Philippines is the only country collecting a 60 percent royalty on indigenous fuel source.

He said in some neighboring Southeast Asian countries, taxes are not levied on indigenous sources of fuel.

He said the benefits of these twin bills far outweigh the revenues the government would lose.

“In my view, what is more important is that investors will stay and others may come to the country because of cheaper electricity costs.

Given that situation, government will be able to collect more taxes instead of what is happening now that many industries are moving out or contemplating of relocating elsewhere due to high electricity costs,” he stressed.

“What will we collect if industries move out?” he asked.

He added that reducing the cost of electricity “is really a win – win situation for both government and business.”

Not too long ago, President Arroyo decried that power rates in the country were among the highest in Asia.

One of her two congressmen-sons, Pampanga’s Juan Miguel Arroyo, who is energy committee chairman in the House of Representatives, promptly launched a high-profile investigation, but nothing much came out of it.

Among the factors that the committee discovered were contributing to the high cost of electricity were heavy taxation and royalties on energy that the country produces such as natural gas that comes from Palawan.–Jess Diaz, Philippine Star

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