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THE
government does not yet intend to reduce or remove
royalties it is receiving for the production of natural
gas from the Malampaya site as business is asking, in
order to bring down power rates.
It wants
to be sure first such a move will not disrupt funding
for its propoor programs. Said Pampanga Rep. Juan Miguel
Arroyo, “We just want to make sure that when we remove
or cut government royalties, the propoor projects will
not be affected.”
Arroyo,
the House Committee on Energy chairman, spoke with
journalists at the sidelines of the Montalban Methane
Power Plant’s launch. “The proceeds from royalties
should be plowed to propoor projects.”
The
Semiconductor and Electronics Industries of the
Philippines Inc. (Seipi) earlier called on the
government to partially remove the royalties collected
from natural gas to help bring down power costs.
“We are
cognizant that waiving the royalties on natural gas will
mean forgoing government revenues,” said Arthur Young
Jr., Seipi chairman.
He
added, however, that while the government could lose
about $80 million in the partial removal of the P1.37
per kilowatt-hour royalty on the natural gas, the
government, on the other hand, could gain about $198
million in additional revenues from new investments
encouraged by the resulting lower power rates.
“Despite
having better quality labor, the expensive cost of power
pushes the semicon and electronics companies to
continuously move out to China and Vietnam,” said Young.
At $0.14
per kilowatt-hour (kWh), the generation cost in the
Philippines is highest in Asia, according to Young, and
remains the biggest factor why semiconductor and
electronics investors shy away from the country.
Young
said generation cost in China, Vietnam, Indonesia, and
Singapore is $0.06/kWh, $0.05/kWh in Malaysia, and
$0.07/kWh in Thailand.
Young
noted that removing price “distortion” caused by the
royalties will encourage exploration of indigenous
natural gas, which could further bring down electricity
costs.
Indonesia,
Thailand, Vietnam, and Malaysia do not tax the domestic
use of natural gas for power generation but instead
subsidize its use.
Richard
Tantoco, First Gas executive vice president and chief
operating officer, earlier said consumers are paying
more than P2 per kilowatt-hour in royalties and taxes on
electricity produced from power plants using indigenous
natural gas from the Camago-Malampaya.
“The
royalty tax per kilowatt-hour of natural gas plants is
today about P1.79/kWh, excluding the EVAT of 12-percent,
which adds another P0.21/kWh, bringing the total to over
P2/kWh,” said Tantoco. |
