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Electrifying Charges
The Energy Regulatory Commission (ERC) approved the new generation charge of National Power Corporation (NPC) in the Luzon, Visayas, and Mindanao grids because of the upsurge in oil prices in the international market in June and the vulnerability of the Philippine peso against the US dollar. The new generation charge for Luzon will be P2.2802 per kilowatt-hour (kWh) from P2.1435/kWh, while for Visayas, it will now be P2.5283/kWh from P2.2907/kWh. The new generation charge for Mindanao will be P1.5101/kWh from P1.1283/kWh.
Accordingly, the Manila Electric Company (Meralco) has increased its generation charge by P0.1327 per kilowatt-hour effective on its June 2004 billing period. The new generation rate of Meralco is P3.3213/kWh from the previous rate of P3.1886/kWh. The adjustment was made through the Generation Rate Adjustment Mechanism (GRAM) which is a mechanism designed to reflect the changes of operating costs due to the upward and downward movements in oil prices.
The electric generation and distribution companies are expected to further hike their rates in the coming months. Meralco still has a pending petition with the ERC for a P0.136 rate increase. On the other hand, NPC has also filed a petition with the ERC to increase the rates it charges power distributors by an average of P1.87/kWh nationwide. NPC also asked to be allowed to use a new methodology for billing – the time of use concept. The time of use concept will do away with the current flat rate, which, in turn, would further increase power rates.
Fares Up!
Public utility jeepneys and buses went ahead with fare increases a month after the elections. From P4 for the first four kilometers, jeepney fares have increased to P5.50 and an additional P1 for every succeeding kilometer. For buses, fares increased from P4 to P6 for the first five kilometers and P1.25 for each succeeding kilometer.
The Metro Rail Transit (MRT) and the Light Railway Transit (LRT) are, likewise, preparing for a P10 hike as soon as the Department of Transportation and Communications’ fare board approves their petitions.
Air transportation fares followed suit, after local airlines said they already have to recover the additional cost of fuel incurred by their companies in the wake of the continuing increases in oil prices. Towards end-June this year, the Civil Aeronautics Board (CAB) approved a joint petition of Philippine Airlines (PAL) and Cebu Pacific for an increase in their overseas fare by US$6 on a one-way trip and US$12 for a round-trip. Jet fuel price has gone up from US$28.25 per barrel in May 2003 to US$45.71 a year after.
Both airlines haven’t yet decided if they will ask for a similar increase in domestic fares. Meanwhile, 14 foreign airlines have also asked the CAB for fare hikes, but action has yet to be taken.
Oil Price Hikes: the Series
The month of June has been the month of major increases in the prices of oil products due to the high demand for crude oil in the international market. The first week of June marked the sixth increase in gasoline prices this year and the fifth for the prices of diesel. The average increase in the prices of gasoline and diesel products of oil companies for the month of June is P0.9 per liter. Roughly two weeks after, the oil companies have increased the prices of their Liquefied Petroleum Gas (LPG) products for the fifth time this year at an average of about P1 per kilogram.
In totality, the price of gasoline products has increased by P4.2 per liter while that of diesel products has increased by P2.7 per liter in the first six months of this year alone. The total increase in the price of LPG products is P2.5 per kilogram for the first half of the year. In comparison, the increase in the prices of gasoline products in the first half of 2003 is only P1.44 per liter while it is only P0.58 per liter for diesel products.
While Pilipinas Shell Petroleum Corporation and Caltex Philippines Inc. have recently cut the prices of their LPG prices by P1 per kilogram in response to the fall of the international contract price of LPG, a rollback in the prices of gasoline and diesel is not expected as oil companies said that they would still have to recover expenses from the rise in cost of crude oil abroad.
Infotext Increase
Globe Telecom Inc. also imposed a 50-centavo rate increase on its infotext service for postpaid subscribers in mid-June. Infotext allows subscribers to get, via text messaging, information like news, movie schedules, and horoscope details, among others.
Starting July, each infotext inquiry from postpaid subscribers would be charged P2.50, from the current P2. Since Globe began offering infotext as one of its value-added services in 1999, it has not raised the cost for postpaid subscribers. Of Globe’s 9.5 million subscribers as of end-April, only about 685,000 are postpaid subscribers. Globe said it raised the cost of postpaid infotext to “align it with the prepaid and industry rate.”
Globe also assured its subscribers that it would keep the cost of sending regular text messages over a cellular phone’s short messaging system at 50 centavos to a peso each, depending on the plan. The telco firm issued this statement when it was swamped with complaints after a rumor spread that Globe would increase the cost of SMS to P2.50 each.
Toll Surprise
The Philippine National Construction Corporation pulled a surprise on the public when, on 5 July, they implemented toll fee adjustments at the North Luzon Expressway (NLEx) and the South Luzon Expressway (SLEx).
NLEx toll fees increased from 33 to 52 centavos per kilometer for private vehicles, from 66.5 centavos to P1.04 per kilometer for public utility vehicles, and from 99.8 centavos to P1.55 per kilometer for trucks. SLEx toll fees, meanwhile, increased from 33 to 72 centavos per kilometer for private vehicles, from 66.5 centavos to P1.44 per kilometer for public utility vehicles, and from 99.8 centavos to P2.16 per kilometer for trucks.
The Toll Regulatory Board (TRB) claimed PNCC’s move to raise as much in the toll fees did not get a go-signal from the five-member board, which the PNCC contested. PNCC said it has filed the necessary reports and has complied with the publication requirements as early as September and November 2003, respectively. The deliberation, which lasted for a week, showed that based on the computations from both the TRB and the PNCC, the toll rate adjustment should have been only 47 centavos.
A week after the implementation of the increase, the TRB, PNCC, and the Department of Transportation and Communications finally compromised on a lower toll adjustment rate. Effective 13 July, the toll for both the SLEx and NLEx will be a uniform minimum rate of 52 centavos per kilometer for cars and jeeps – following the rate effected at the NLEx on 5 July. Transportation Undersecretary Arturo Valdez said the new toll rate means a P15 increase for the entire stretch of both highways for cars and jeeps, P30 for light trucks and vans, and P45 for heavy trucks.
Motorists plying the SLEx who kept their toll receipts since 5 July can demand for refunds.
Pisong Pandesal No More
Pandesal, a breakfast staple for many Filipinos, might soon join the wave of post election price increases. Local bakers and bakery operators belonging to the Philippine Federation of Bakers Association Inc. reveals that they are considering increasing their prices as baking ingredients and cooking gas have earlier become more expensive.
From the current P1 per 25 gram pandesal, bakers are yet to determine the actual price hike for pandesal. There is also the option of adjusting the standard weight of the bread. Government, however, is suggesting that bakers increase the price of other bakery products instead, but should try to maintain the price of pandesal.
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More Pay, But Not Enough
he National Capital Region’s Regional Tripartite Wages and Productivity Board (NCR-RTWPB) has increased minimum wage by P20 effective 10 July 2004. This brings to P300 the daily minimum wage in Metro Manila from the previous P280. The increase was applied to the emergency cost of living allowance (ECOLA) and not in the basic pay, thus, it will not have any bearing on the overtime pay, 13th month pay, and bonuses of NCR minimum wage earners.
The Trade Union Congress of the Philippines (TUCP), the largest alliance of labor unions in the country, has signified its plan to appeal the NCR wage hike which the group believes to be “very low and illegal.” TUCP’s appeal will reportedly include an across-the-board wage increase approximating the amount in its previous petition ranging from P65 to P75.
Small Cars As Solution to Oil Price Hikes
Amid soaring oil prices, the government through the Department of Trade and Industry (DTI) is wont to encourage car assemblers to raise production of passenger cars with smaller engines – lower than 1,000 cc – to improve fuel efficiency. One thing that augurs well for this development is that most of the car assemblers in the country are from Japan. Small cars or “smart cars” with engine sizes as small as 650 cc are very popular in Japan.
Aside from being more energy efficient, these cars are less pollutive, easier to park, and sell at one-third less the price of ordinary cars. DTI Secretary Cesar Purisima points out that this type of car can be a better alternative to used cars which are less environment-friendly.
Signals
- The country’s inflation rate using the 1994 base year rose for four straight months, unexpectedly surging to a 31-month high of 5.1 percent in June on account of rising fuel prices, the transport fare hike, a typhoon, and the opening of classes. On the other hand, the core inflation rate accelerated even higher than the headline inflation rate to 5.4 percent in June from 4.7 percent in May. The cost of services has increased in the past three months, rising 8.3 percent, compared to 5.3 percent a month ago. Fuel, light and water prices stepped up to 6.1 percent, from 3.5 percent in the previous month. The cost of housing and repairs also rose to 3.7 percent from 3.4 percent in May. On the other hand, inflation for food, beverages and tobacco eased down to 5.0 percent from 5.2 percent a month earlier. Prices of clothing also increased at a slower pace of 2.1 percent from 2.3 percent. On a month-on-month basis, the June inflation jumped to a 65-month high of 1.5 percent. In the second quarter, the country’s average inflation rate jumped to 4.6 percent from 3.0 percent a year ago. Still on track with the government’s full year average inflation target of 4.0-5.0 percent, the average headline inflation rate in the first semester rose to 4.1 percent from 2.9 percent a year ago
- As inflows of OFW remittances started to slow down, the average peso-dollar reference rate depreciated 0.2 percent to P55.985/US$ in June from P55.846/US$ in May. At the Philippine Dealing System, the peso closed weaker at P56.125/US$ in end-June from P55.755/US$ in end-May. Last 18 June, the exchange rate plunged to its lowest closing level of P56.43/US$ on account of uncertainties over the slow canvassing of election results for the president and the vice-president of the country. In the second quarter, the average peso-dollar rate depreciated 5.7 percent to P55.912/US$ from P52.904/US$ in the same quarter a year ago. In the first six months, the average peso-dollar reference rate fell 4.6 percent to P55.939/US$ from P53.490/US$ a year ago.
- The Bureau of Customs continued to outperform with preliminary revenue collections of P60.2 billion in the first six months, 13.0 percent above its P53.3 billion target in the first semester, and 13.4 percent more than its P53.0 billion performance in the same period last year. In June, the agency collected P10.0 billion, 2.3 percent more than its P9.8 billion goal for the month and 7.5 percent more than the P9.3 billion it collected in the same month a year ago. Thus, the bureau remains on track with its full year collection target of P112 billion.
- Driven by a strong cyclical demand for electronics products abroad and the recovery in garments, exports jumped 15.3 percent in May to US$3.3 billion from US$2.8 billion in the same month a year ago. In the first five months, exports also rose 8.6 percent to US$15.4 billion from US$14.2 billion. Exports of electronics components grew 8.1 percent to US$10.3 billion in the first semester from US$9.5 billion in the same semester a year ago.
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