Oil firms roll back gas prices by
P1 a liter
10 July 2008 –Effective today, Chevron, Petron, Shell, Total, Unioil, and Flying V are slashing their gasoline prices by P1 a liter. The rollback will not make much of an impact on soaring pump prices, but after the 18 price hikes so far since January, any rollback is a welcome respite for motorists.
For now, diesel, the primary fuel used by public transport vehicles, will remain unchanged since its price was just recently raised by P2 per liter. According to petroleum companies, they can afford a rollback of gasoline prices because they have already recovered their margin as of June, unlike diesel, which still has P6 per liter of under-recoveries.
In the first week of July, Dubai crude, the benchmark of oil refiners, inched up to $137.91 a barrel from $127.82 in June and $119.50 in May.
The record-high fuel prices are forcing more people to take public transport instead of using their vehicles. The Metro Manila Development Authority claims the volume of vehicles plying EDSA has gone down by 10%, reducing congestion and pollution in the said thoroughfare.
Import tariff on diesel slashed to 1%
18 January 2008 – President Gloria Macapagal-Arroyo signed last week Executive Order 691, a directive that slashes the import tariff on diesel to 1% from 3%. For motorists, this will translate to a P1 discount for every liter of diesel starting 1 February. Diesel is the transport sector’s most widely used petroleum product. However, the importation of other petroleum products, such as unleaded gasoline, kerosene, and liquefied petroleum gas, will still be subject to a 3% tariff.
According to the EO, the 3% tariff on diesel imports will be lowered to 2% if Dubai crude hits US$83 a barrel and if the Mean of Platts Singapore-based diesel reaches US$105 a barrel. The tariff will be further slashed to 1% if crude oil hits US$92 and diesel reaches US$110. The tariff will be totally scrapped if crude hits US$103 and diesel reaches US$115.
According to the Department of Energy, in the first half of January, crude oil averaged US$89.79; diesel, US$110.99; and unleaded gas, US$103.29.
Biodiesel improves air quality
in metropolis
5 December 2007 – Judging from data produced by the Asian Institute of Petroleum Studies, the mandatory use of a 1% biodiesel blend in diesel products sold in the country beginning in May has significantly improved air quality in Metro Manila.
According to the AIPSI, the amount of total suspended particulates and particulate matters in the air in the third quarter of the year dropped 24.2% compared to the first quarter when the law was not yet in place.
In view of this, Metro Manila Development Authority chairman Bayani Fernando is now advocating the immediate implementation of a 2% biodiesel blend, much earlier than the May 2009 implementation date mandated by the Biofuels Law.
RP coal demand to rise to 12.25M metric tons in 2008
29 November 2007 – Based on the Philippine Energy Plan, the amount of coal needed to fuel the production needs of the country will reach 12.25 million metric tons next year. Of that amount, only a third will be sourced locally; the remaining two-thirds will be imported from China, Indonesia, and Australia.
Coal demand, which is expected to hit 15.28 million metric tons by 2014, will be boosted by the 13.06-million-metric-ton demand of the electricity sector and the 2.22-million-metric-ton requirement of industries.
Coal is a relatively cheap energy source, but it is less environment-friendly than natural gas and geothermal power. The untapped coal resources of the country are said to have the potential of generating 1,000–2,000 megawatts of power.
Strong peso cuts gas prices by
P2 a liter 19 November 2007 – The impressive performance of the Philippine peso against the U.S. dollar lowered the cost of gas by P2 a liter in January to October, according to the Bangko Sentral ng Pilipinas.
In October, the peso averaged at P44.39 a dollar, compared to the January average of P52.58 a dollar. Based on a BSP study, for every P1 appreciation, local pump prices become cheaper by P0.045 to P0.13 per liter. In October, the appreciation of the peso led to savings of P3.14 per liter for Dubai crude, P3.62 a liter for gasoline, and P4.00 per liter for diesel.
In an inflation-targeting simulation, a 1% peso appreciation translated to a 0.14-percentage-point cut in inflation. Since the start of the year, the peso has risen more than 14%.
Gov't won't resort to oil tariff cut
8 November 2007 – To mitigate the impact of surging world oil prices, the government will resort to long-term measures instead of oil tariff cuts. According to the Cabinet committee on tariff-related matters, the proposed oil tariff reduction would lead to a reduction in pump prices by P0.23 a liter, but the government would stand to lose P450 million in revenues.
Aside from energy conservation, the government is looking at the following measures: accelerate the Biofuels Act of 2006; fast-track the passage of the Renewable Energy Bill to lessen the country's dependence on fossil fuels; and review the Electric Power Industry Reform Act of 2001 to encourage competition in the industry.
Data from the Department of Energy show that the average price of the benchmark Dubai crude for October (as of 23 October) was at US$75.42 a barrel, up by 2.8% from US$73.36 in September.
First CNG stations open for business
24 October 2007 – Pilipinas Shell today launched the commercial run of its “mother-daughter” refilling stations for compressed natural gas extracted from its Malampaya gas-to-power project in Palawan. Shell's main CNG station is situated in Tabangao, Batangas, while the refilling station was set up in Biñan, Laguna.
CNG-powered buses will now begin plying the Laguna-Cubao/Lawton and Batangas-Cubao/Lawton routes. According to the Department of Energy, about 22 buses are expected to hit the road using the environment-friendly gas, while 178 more CNG buses are expected to arrive in six months.
Under the government's Natural Gas Vehicle Program for Public Transport, accredited bus operators will be able to buy CNG at a subsidized price of P14.52 a liter for seven years.
Belgian-led consortium is highest bidder for Calaca power plant
17 October 2007 – Calaca Holdco, a consortium led by Belgian firm Suez-Tractebel SA, has won the bidding for the National Power Corporation's 600-megawatt Calaca coal-fired power plant in Batangas with a US$786.53 million offer. The Power Sector Assets and Liabilities Management Corporation has confirmed that the Calaca Holdco offer bested the two other bids submitted by AES Corporation and First Gen Corporation.
Suez-Tractebel, one of the world's top independent power producers, operates in more than 100 countries. It set up Calaca Holdco for the bidding and operation of the Calaca plant. With its winning bid, Calaca Holdco also gains a 287-megawatt power supply contract (about 48% of the plant's rated capacity), of which 169 megawatts will be assumed by the Manila Electric Company.
PSALM is aiming to privatize 50% of the NPC's assets by the end of the year, 70% of the assets by end-2008, and 100% by 2009. The successful sale of the Calaca plant raises the privatization level up to 38%.
RP not ready for nuclear power—Greenpeace
5 October 2007 – Department of Energy secretary Angelo Reyes is considering tapping nuclear power to reduce the cost of electricity in the country and address future energy security concerns. However, the environment group Greenpeace is opposing this, arguing that building nuclear power plants is not viable and that this would only distract the DOE from pursuing its original plan to tap renewable energy sources.
Referring to a report entitled “The Economics of Nuclear Power,” Jasper Inventor of Greenpeace cites that the rising construction cost for power plants, the extended construction time, and the rising prices of nuclear elements like uranium will not make nuclear power plants economically viable.
“One of the biggest reasons we're against nuclear energy is the legacy of radioactive waste,” says Inventor. “Safety is hard to measure, hard to put a price on.” He suggested that the DOE should focus its efforts instead to pushing environment-friendly sources of energy—wind, solar, geothermal, and natural gas—to solve the country's energy problems.
Oil prices inch up P0.50 per liter anew
1 October 2007 – Effective 30 September, oil companies imposed a P0.50-per-liter price hike for diesel, gasoline, and kerosene, as well as a P0.50-a-kilogram price increase for liquefied petroleum gas. The latest increases follow last week’s P0.50-a-liter adjustment in fuel prices. Crude oil has shot up to US$82 per barrel in the world market.
According to the Department of Energy, on 30 September, the benchmark Dubai crude hit US$73.19 a barrel, a big jump from the August average price of US$67.38 a barrel. Local oil industry players are claiming that the strengthening of the peso against the U.S. dollar is not sufficient to offset the escalating world oil prices.
Power cost lowered in ecozones
18 September 2007 – Export firms operating in special economic zones in the country will be given reduced electricity rates to neutralize the adverse impact of the strengthening peso on their businesses. The National Power Corporation and the Manila Electric Company have signed a memorandum of agreement to reduce the generation fee for locators in the 11 ecozones of the Philippine Economic Zone Authority to P3.52 per kilowatt-hour from the current rate of P4.69 per kWh.
According to Ernie Santiago, executive director of the Semiconductors and Electronics Industry in the Philippines Inc., power costs eat up to 10% to 25% of an electronics firm’s total budget.
The electricity rate in the Philippines is one of the highest in Asia at US$0.40–US$0.60 per kWh, while some countries in the region charge as low as US$0.05–US$0.09 per kWh.
Oil firms cut prices by P0.50 a liter
5 September 2007 – Oil companies Petron, Shell, Chevron, Seaoil, and Eastern Petroleum today slashed gasoline and kerosene prices by P0.50 per liter. The rollback was prompted by the decline in the prices of fuel products in the international market.
Except for diesel, which is still pegged at US$84 a barrel, unleaded gasoline, kerosene, and crude oil posted significant price drops at the Mean of Platts Singapore, the bellwether for finished petroleum products in the region.
In August, unleaded gasoline averaged US$77.15 per barrel, which is significantly lower than the US$85.35 average in July. Kerosene softened to US$84.38 a barrel in August from US$87.16 the previous month, while crude oil dropped to US$67.38 per barrel from US$69.49 in July.
Land Bank to provide funding for jathropa projects
29 August 2007 – The Land Bank of the Philippines has forged an agreement with the Philippine National Oil Company–Alternative Fuels Corporation to make available P5 billion to P10 billion to assist jathropa farmers or investors who may want to go into jathropa production or set up refineries. Jathropa, known locally as tuba-tuba, contains a high level of oil in its seeds, which makes it a very potent material for biofuel.
According to PNOC-AFC president Peter Anthony Abaya, they will designate 700,000 hectares of idle land all over the country for jathropa propagation and are hoping to have some plantations operating before yearend.
PNOC-AFC is also eyeing to put up its own US$40-million refinery in Cagayan de Oro, which will have the capacity to process 200 metric tons of jathropa seeds. Should this particular refinery project turn out to be a success, the World Bank, EcoSecurities, and Mitsubishi Securities of Japan have already expressed interest to buy its carbon credits.
P1.45B set aside to complete barangay electrification program
27 August 2007 –The Department of Energy will receive a P1.45-billion budget to complete the barangay electrification program by 2010. Based on DOE data, the electrification rate as of the first quarter of 2007 was 95.26%, which means 39,955 out of the country’s 41,945 barangays already have access to electricity, including power generated from alternative energy sources.
The barangay electrification program is a government initiative supported by the Alliance for Mindanao Off-Grid Renewable Energy program, United States Agency for International Development, Mirant Philippines Foundation, and Winrock International.
By the end of 2007, some 1,106 barangays of the remaining 1,990 that still have to be electrified are expected to finally have access to power. Hence, the government is confident it will achieve 100% electrification by 2009, earlier than the 2010 target date.
Biofuels board gets P90M initial budget
24 August 2007 – The newly formed National Biofuels Board tasked to oversee the alternative fuels program of the government has been granted a P90-million budget for 2008, according to Budget Secretary Rolando Andaya Jr. The funds will be covered by the P3.6 billion proposed budget for 2008 of the Department of Energy.
The Biofuels Law created the NBB to guarantee the quantity and quality of biofuels and to recommend any increase in the blend of alternative fuels with diesel and gasoline. The law, which took effect in May, mandates at least a 1% biodiesel blend within three months of the effectivity of the law. On the other hand, gasoline must have a 5% blend of ethanol within two years of the law’s effectivity.
The NBB is composed of officials from the Departments of Energy, Finance, Trade and Industry, Agriculture, Labor and Employment, and Science and Technology. The Sugar Regulatory Administration and Philippine Coconut Authority are also represented in the board.
Gov’t to fast-track power assets sale
23 August 2007 – According to the Power Sector Assets and Liabilities Management Corp., the Philippine government is all set to meet the 50% power assets privatization target before yearend. After the successful sale of the Masinloc power plant in July, the privatization rate is now at 24.8%.
To meet the target of 50%, the government needs to sell the following plants this year: the 75-megawatt Ambuklao hydropower plant, 175-MW Binga hydropower plant, 600-MW Calaca coal-fired plant, and 688-MW Tiwi-Makban geothermal plant. Another power plant up for bidding within the last four months of the year is the 192.5-MW Palinpinon geothermal plant.
By 2008, the government hopes to achieve the 70% privatization level mandated by the Electric Power Industry Reform Act of 2001 in order to realize open-access competition and lower power rates.
Prolonged dry season endangers power supply
26 July 2007 – Contrary to earlier forecasts that the typhoon season would have an early start this year, the country is now faced with an extended dry season that is impeding the operations of hydropower plants in Angat, Magat, Pantabangan, San Roque, and Binga.
Meanwhile, the low supply of coal of coal-fired power plants is aggravating the country’s growing power supply problem. The low production of power plants has led to “zero system reserve” situation, prompting National Power Corporation’s System Operator to declare a “red alert” on 23 July.
The prolonged dry spell has forced the national government to resort to cloud seeding, especially above the water dams in Central and Northern Luzon. The Manila Electric Co. has also started to implement rotating blackouts in some parts of Metro Manila and the nearby provinces since 25 July.
Aside from the power shortage, the delayed rainy season could lead to a new red tide event, warmer air temperatures, a water shortage, bush fires, and health problems. The Philippine Atmospheric, Geophysical and Astronomical Services Administration will declare a drought should the dry spell continue until September.
Automatic power rate adjustment scheme restored
25 June 2007 – The Joint Congressional Power Commission has approved the revision of the Electric Power Industry Reform Act’s implementing rules and regulations, restoring the scheme that allows power companies to immediately reflect the adjustment of generation and foreign exchange-related costs.
“The implementation of [the] automatic recovery mechanism will shield consumers from the burden of additional cost given that consumers are often subjected to additional costs because of interests on deferred charges. This way, we will be able to balance the need for consumer protection, observance of due process, and enabling businesses to become financially viable,” said Energy Secretary Raphael Lotilla.
The Energy Regulatory Commission will be closely monitoring the modifications and will penalize offending utility distributors when necessary.
Energy savings hit P522M in 18 months
21 May 2007 – The government’s implementation of an energy management program in September 2005 has saved 68.06 million kilowatt-hours of electricity, or about P522.23 million in savings, as of February 2007. The encouraging outcome thus far was attributed to the strict compliance and cooperation of government agencies and private companies.
The same program has also saved 974,556 liters of gasoline and 1.6 million liters of diesel amounting to about P91.63 million. This has made the Philippines one of the world’s top energy cost managers in a recent survey by Grant Thornton International.
Despite the million-peso savings, however, conservation efforts cannot shield motorists and power rates from the adverse impact of escalating world oil prices.
So far, smooth implementation of biofuels law – DOE
8 May 2007 – According to the Department of Energy, the first day of the implementation of the biofuels law on 6 May proceeded quite smoothly. Oil firms kept prices unchanged in spite of the law’s mandatory blend of 1% coco-methyl ester in all diesel products.
The smooth implementation of the law backs the earlier claim of the Department of Energy that the biofuels rollout would not drive up pump prices. Independent oil firms, however, forecasted that oil prices are likely to increase by P0.30 to P0.50 per liter.
Petron Corp., the country’s largest oil refiner, said that the Biofuels Act will result in an “insignificant” increase in pump prices. Meanwhile, Pilipinas Shell and the Department of Energy believe that any adjustment in the price of diesel will be caused by various factors, such as the price of coco-methyl ester, the price of imported crude and refined oil products, and the imposition of taxes on biofuels.
Biofuels law seen to increase pump prices by 30–50 centavos a liter
24 April 2007 – The rollout of the biofuels law on 6 May could lead to an increase of 30–50 centavos per liter in pump prices. While oil firms have committed to comply with the law, they are not bound to absorb any additional costs arising from their compliance with the law. In the past, the government had pronounced that the implementation of the law would not affect the prices of diesel and gasoline.
The Biofuels Act signed last January mandates that diesel contain at least a 1% blend of biodiesel within three months from the effectivity of the law and a 2% blend within two years. On the other hand, at least 5% of bioethanol has to be blended into gasoline within two years after the law comes into effect, then this is increased to a 10% blend within four years.
NPC assures stable power supply
23 April 2007 – According to the National Power Corporation, there will be a “continuous, efficient, and reliable supply” of electricity for the Luzon grid this summer.
The state-run power firm expects electricity demand to peak at 6,500 megawatts on 27 April, 5,500 MW on 28 April, 5,300 MW on 29 April, and 6,500 MW on 30 April. The total available capacity is presently pegged at 7,390 MW.
Meanwhile, for the coming elections on 14 May, the National Transmission Corp. has reactivated Task Force Halalan to help safeguard the credibility of the polls nationwide. The energy task force “will oversee the nationwide monitoring and reporting system to maintain stable and continuous power and ensure that interruptions are immediately acted upon,” said TransCo president and CEO Arthur Aguilar.
Summer heat trips power supply
in Luzon
19 April 2007 – The National Power Corporation admits that it was unable to meet the unusual surge of energy demand yesterday, which caused two-hour power outages in several parts of Metro Manila and nearby provinces in Luzon.
“We have been projecting demand to increase by May but the rise in demand started early,” explains NPC president Cyril del Callar. The power firm was anticipating a peak demand of 6,400 megawatts in May, but as of mid-April total demand had already reached 6,630 MW.
Moreover, power supply availability was impaired because a number of independent power producers that supply Napocor—the 225-MW Bauang and 600-MW Limay power plants—bogged down.
The extreme heat that the country has been experiencing has led to a spike in consumers’ use of electric fans and air conditioning. The weather bureau recorded the highest temperature in Manila so far this year at 3 p.m. of 17 April at 36.8 Celsius.
Oil import volume declines 2.6% in 2006
16 April 2007 – Due to the surge in international prices of crude and other oil products, the net oil import volume in 2006 dropped by 2.6% to 100.8 million barrels from 103.46 MB in 2005. However, the net oil import bill increased 20% to US$6.8 billion in 2006 from US$5.7 billion the previous year, according to the Department of Energy.
The total consumption of petroleum products declined 7.4% to 101 MB in 2006 from 109 MB in 2005. Energy Secretary Raphael Lotilla attributes this decreased consumption to demand-side management programs initiated by the government. The use of alternative fuels, such as biodiesel and bioethanol, is not seen to have significantly influenced consumption in 2006 because this was before the signing into law of the Biofuels Act and alternative fuels were still being used on a voluntary basis.
SC lambastes oil firms over
depot transfer
12 April 2007 – The Supreme Court yesterday upheld again Manila City Ordinance 8027 and rejected the appeal of the Department of Energy and the oil firms Chevron, Petron, and Shell on the issue of the transfer of the oil companies’ depot from Pandacan, Manila, to another site. The high tribunal scolded the companies for their failure to search for a new depot site despite the passage of several city ordinances from as far back as 1969 ordering them to vacate the site in Pandacan.
The magistrates lambasted the defendants’ late intervention in the case, coming only after the court’s 9 March decision upholding Ordinance 8027, which reclassified Pandacan into a commercial zone and ordered the depot’s relocation within six months of the law’s effectivity. The justices accused the oil companies of having no intention to leave the vicinity.
The Supreme Court also said that it is not convinced that no lives will be lost should terrorists attack the oil depot area. A task force will be summoned to conduct a feasibility study on putting oil tanks underground instead.
DOE to SC: Oil depot cannot relocate
23 March 2007 – The Department of Energy has asked the Supreme Court to reverse its earlier decision to uphold Manila City Ordinance 8027, which ordered Chevron, Petron, and Shell to relocate their decades-old oil depot from the commercial zone of Pandacan, Manila, within six months.
The DOE pointed out that the closure of the oil depot may result in a supply shortage and oil price increase. The Pandacan oil depot provides half of the total demand of Metro Manila, including 1,800 retail stations.
The energy department is also arguing that Ordinance 8027 encroaches on the department’s function to establish and administer programs for the distribution and storage of energy resources, as mandated in Republic Act 7368, which created the DOE.
Harbour Center recommended as Pandacan oil depot relocation site
13 March 2007 – Last week, the Supreme Court issued a ruling ordering the closure of the 30-hectare oil depot in Pandacan, Manila, which is presently being utilized by Chevron (formerly Caltex), Petron, and Pilipinas Shell. As an alternative site for the depot, Manila mayor Lito Atienza is recommending the Harbour Center in Tondo.
Mayor Atienza pointed out that Harbour Center is not too far from the present site. “Harbour Center could also assure safety of the depot and safety of the residents, which are about one to two kilometers away from the area,” adds Atienza.
After the 9/11 terrorist attacks in the U.S., city officials and residents living near the decades-old Pandacan depot expressed concern about the risks of its being located so close to heavily populated residential areas. In response, the Manila city council passed Ordinance No. 8027, which reclassified portions of Pandacan and Sta. Ana as commercial zones from their previous industrial zone classification. (Harbour Center is in an industrial zone.) Ordinance No. 8027 gives the oil firms 7 years to relocate.
Should Chevron, Petron, and Shell choose not to move to Harbour Center and instead reclaim a new part of Manila Bay to set up a depot, the oil firms could spend as much as P13 billion and take five years to complete the relocation. Regardless of where the new depot site will be located, the transfer will most likely affect the oil companies’ distribution and transportation costs, which could spur an increase in pump prices.
DOE may defer biofuels law implementation
9 March 2007 – The Department of Energy may delay the 6 May rollout of the Biofuels Act of 2006 to ensure the smooth implementation of the law. According to DOE Secretary Raphael Lotilla, “people may be too distracted with the elections” and this could hinder the implementation of the law.
The Biofuels Act mandates that diesel contain at least a 1% blend of biofuel within three months from the effectivity of the law and a 2% blend within two years. On the other hand, at least 5% of bioethanol has to be blended into gasoline within two years after the law comes into effect and then increased to a 10% ethanol blend within four years.
Lotilla says that although farmers and such groups as the Philippine Coconut Authority and the Philippine Biodiesel Association have assured the sufficiency of supply of biofuels, the big oil firms need time to prepare the necessary infrastructure to take in the biofuel products.
The Independent Philippine Petroleum Companies Association believes, however, that a delay is unnecessary and will send the wrong signals to investors. The government might give the impression that it gives in to the pressures from the big oil companies.
GMA signs Biofuels Act
17 January 2007 – President Gloria Macapagal-Arroyo has signed into law the Biofuels Act of 2006, which is expected to reduce the Philippines’ 284.5-million-barrel-a-day dependence on imported fuel. The country currently imports 30% of its fuel requirements.
The Biofuels Act mandates that at least 5% of bioethanol be blended into gasoline within two years of the law’s effectivity and that the level be increased to a 10% ethanol blend within four years. On the other hand, diesel will be required to contain at least a 1% blend of biofuel upon effectivity of the law and a 2% blend in two years’ time.
According to the Department of Energy, a 1% blend of coco-diesel in diesel could save the country US$25 million, while a 10% blend of ethanol in gasoline could translate to savings of as much as US$396 million.
In 2006, the prices of biodiesel and E-10 (ethanol-blended gas) were almost at par with conventional diesel and unleaded gasoline. Biodiesel averaged at P32.63 a liter in Flying V pumping stations, compared to P32.55 per liter for conventional diesel. On the other hand, E-10, Shell’s ethanol-blended gas, was averaging P36.87 per liter, compared to P36.73 per liter for unleaded gas.
According to the Chamber of Automotive Manufacturers of the Philippines, a 1% biodiesel blend will not require any engine modifications. Meanwhile, cars, motorcycles, pump boats, and hand tractors will also be able to run on a 10% bioethanol blend without any engine modifications.
RP to fall short of water access goal
13 December 2006 – The National Water Resources Board admitted that the Philippines will not be able to meet its 2015 Millenium Development Goal of providing 87% of the population with clean and potable water. According to NWRB executive director Ramon Alikpala, the problem lies in the higher population growth.
Based on a study in 2002, only 80% of Filipinos had access to clean and potable water, and since then, access has not improved. Alikpala says that from 1990 to 2005, the government successfully extended clean water access to 23.5 million more Filipinos, but the population increased by 24.5 million.
Aside from the high population growth rate, water pollution and topography contribute to the problem of water accessibility.
Investigation finds WESM prices
were manipulated
23 November 2006 – The Philippine Electricity Market Corp., operator of the wholesale electricity spot market, reported that the government-owned Power Sector Assets Liabilities and Management Corp. had “abused market power” and inflated prices in the spot market from 26 August to 25 September. PSALM trades on behalf of plants with a cumulative capacity of 6,000 megawatts.
In the said trading period, prices at the spot market surged 74% to P4.85 per kilowatt-hour from P2.79/kWh. Had there been no manipulation, the pricing would have been closer to just P3.00/kWh. The Manila Electric Co. had purchased 50% of its supply requirements from WESM in that period.
To counter future attempts at price manipulation, PEMC recommended the transfer to private-sector IPP administrators the management and control of at least 70% of the total output of IPP contracts. The WESM started power trading operations in June with the promise of efficient distribution and competitive pricing.
Higher electricity rates to
push up food prices
2 November 2006 – Electricity rates, currently around P7.50 a kilowatt-hour (compared to P6.00/kWh two years ago) are expected to rise further due to the costlier power purchased by Manila Electric Co. from the Wholesale Electricity Spot Market. With higher electricity rates, food prices are also seen to move upward.
In October, the power generation cost, which doesn’t yet include transmission, distribution, and other costs, was at P5.73/kWh, up from P4.71/kWh in September and P4.43/kWh in August.
Given that there have been no significant changes in power demand and supply, the marked increase in WESM prices has raised suspicions of price fixing within the trading market. The temporary shutdown of First Gen Corp.’s natural gas facilities in Batangas from 18 November up to 25 December will also have an upward influence on the market’s prices.
OPEC to curb daily output by 1.2 million barrels starting November
20 October 2006 – At a meeting in Doha, Qatar, the 11-member Organization of Petroleum Exporting Countries today agreed to cut their daily oil production by 1.2 million barrels beginning 1 November in a bid to stabilize oil market prices. OPEC’s daily output will be reduced to 26.3 million barrels from 27.5 million barrels next month.
The 1.2 million-barrel reduction is equivalent to 4.3% of OPEC’s September production and is the biggest production cut since January 2002. The current output of 27.5 million barrels per day is below the organization’s official quota of 28 million bpd, and with the cut in November, OPEC’s output will remain under quota.
RP power supply enough – DOE
13 October 2006 – The Department of Energy is assuring that the country will have enough power supply over the next two to three years, contrary to the claim of Consumer and Oil Price Watch chairman Raul Concepcion. Earlier, Concepcion stated that the country will suffer from rotating brownouts beginning 2008, when it is being predicted that power supply will be 1,500 megawatts short of the demand.
According to Energy Secretary Raphael Lotilla, Luzon will actually have a surplus of more than 2,000 MW by 2010, about 25.5% of the projected demand. However, the said surplus is below the ideal 30% reserve margin. In other words, the power supply will be enough only because of the country’s ample reserves. Meanwhile, the Visayas will need an additional 200 MW by 2011, while Mindanao will require an additional 100 MW by 2009.
While new power plants are being built, Lotilla asserts that any shortage could be addressed by demand management, energy conservation, and time-of-use pricing.
Senate approves biofuels bill
12 October 2006 – The Senate has passed its version of the biofuels bill, which mandates that a minimum of 5% of bioethanol be blended with all gasoline sold in the country within two years of the enactment of the law. Within four years upon affectivity of the law, the required bioethanol blend level will go up to 10%.
According to Senate President Manuel Villar, a bicameral committee will work on reconciling the conflicting provisions of the Senate and House versions of the bioethanol bill during the coming three-week recess. The bicam committee’s goal will be to submit the final version to Malacañang for signing into law shortly after Congress resumes session on 6 November.
Energy experts claim that requiring a 10% ethanol blend could reduce the country’s gas imports by 100 million liters every year, which translates into savings of US$100 million yearly.
OPEC considering first oil output cut since 2004
6 October 2006 – The members of the Organization of Petroleum Exporting Countries are looking at reducing their production of oil by a million barrels per day as soon as possible in an effort to reverse the decline in world oil prices. This will be OPEC’s first output cut since April 2004.
In September, the nine member-countries of OPEC produced 29.47 million barrels per day. The cut will translate to a 3%–4% reduction in world oil supplies. OPEC furnishes over one-third of the world’s supply.
Gov't to restore 3% oil tariff
starting 1 October
22 September 2006 – The Department of Energy is moving to reinstate the 3% tariff on petroleum products starting 1 October now that the price of Dubai crude has gone down in the international market. Once approved by the Bureau of Customs, the tariff adjustment will mean an additional P0.30 to P0.35 per liter in the pump prices of petroleum products.
According to the DOE, from 1 to 20 September, Dubai crude was averaging at US$61.50 per barrel, while diesel was selling at an average of US$79.00 a barrel. In May, the government slashed the oil tariff down to 2% when the price of Dubai crude crossed the US$66.00-a-barrel mark, while diesel went beyond US$88.00 a barrel. The lowering of oil prices in the world market has translated to a five-week streak of pump price rollbacks.
ADB cites flaws in power data
20 September 2006 – The Asian Development Bank is calling on the government to update its methodology in forecasting power demand. Power projects are being implemented based on these demand forecasts, but because the government forecasting methodology has turned out unreliable data, there have been costly implications in the projects’ implementation.
ADB brought up the issue in its completion report on the US$200 million Power Transmission Reinforcement project, which the bank supported to the tune of US$43.3 million. “The technical design and formulation of the project had weaknesses, as they were based on inaccurate demand forecasts and underestimated right-of-way issues,” the ADB report pointed out.
It was assumed that power supply demand would increase by 10% annually in the 1997–2010 period. But according to ADB, the data used were based on the assumption that the robust growth of the Philippine economy in 1997 would continue and failed to take into account the negative impact the Asian financial crisis would have on economic growth. Based on government projections, the peak demand in 2004 would be 9,303 MW for Luzon, 1,496 MW for the Visayas, and 1,964 MW for Mindanao. However, actual peak demand that year was only 6,728MW for Luzon, 1,063MW for the Visayas, and 1,278MW for Mindanao.
Meralco to begin refund in
January 2007
15 September 2006 – In a report submitted to the Energy Regulatory Commission on 11 September, Manila Electric Co. has committed to refund its customers for three months starting January 2007. The refund may amount to between P827 million and P829 million.
The refund is in compliance with the recent Supreme Court ruling voiding Meralco’s implementation of its second Generation Rate Adjustment Mechanism. Under the GRAM, Meralco added P0.1327 per kilowatt-hour in its blended generation cost in June to August 2004. However, the Supreme Court voided the GRAM’s implementation because it did not pass through public hearings, paving the way for the refund.
DOE issues guidelines for
bioethanol program
13 September 2006 – The Department of Energy approved on 12 September the interim guidelines for participation in the country’s bioethanol program.
Department Circular No. 2006-08-0011 cites that only companies of good standing and actively engaged in the business of retailing gasoline may apply for accreditation under the program. According to Energy Secretary Raphael Lotilla, the issuance of the guidelines is in preparation for the anticipated passage of the Biofuels Act, which is currently under deliberations in Congress.
Some companies expected to put up ethanol plants include JG Summit Holdings, San Carlos Bioenergy, Southern Bukidnon Bioenergy, Biofuels 88, and Tamlang Valley Ethanol.
Oil prices rolled back anew
1 September 2006 – Local oil companies have rolled back gasoline and kerosene prices by P1.00 per liter and diesel prices by P0.50 for every liter effective 31 August. Meanwhile, prices of liquefied petroleum gas were unchanged.
According to oil firms, the price reprieve was due to the fall of the Dubai crude price to US$65.86 in 30 August from US$67.86 from 23 August.
With the price rollback implemented, gasoline now sells at P43.21 a liter, kerosene at P43.00 a liter, and diesel at P37.46 a liter.
EO556 revokes awarding of Malampaya contract to Mitra
28 August 2006 – Executive Order 556, which waives the rights of Malaysian-based Mitra Energy Ltd to participate in the exploration and development of the Camago-Malampaya gas field in Palawan, is causing much concern among the various foreign business chambers and investment groups in the Philippines.
Mitra had signed an investment deal with the Philippine National Oil Co. on 1 June, but President Gloria Macapagal-Arroyo has now revoked the contract through the EO. The EO was released on 11 August, but the order was backdated to 17 June.
According to an industry source, “Mitra won the tender fair and square, and at the stroke of a pen, it was taken away. There was no warning and no explanation.” It is believed that the sudden reversal was “understood to be due to pressure from influential Filipino business interests, which do not want the potentially lucrative projects to be awarded to a foreign company.”
Investors are saying that the revocation is an unfortunate commentary on the country’s commitment to the preservation of the sanctity of contracts.
Gas, kerosene prices slashed by P1/liter
24 August 2006- – Major oil firms Shell and Petron are reducing their gas and kerosene prices by P1.00 a liter effective today. The price cut was brought about by the cheaper crude oil the firms purchased in the world market.
The latest price adjustments do not cover diesel and liquefied petroleum gas.
Meralco customers get discount in August due to WESM
15 August 2006 – Meralco customers will enjoy a P0.95 per kilowatt-hour discount this August after the power firm was able to source cheaper electricity from the Wholesale Electricity Spot Market. By purchasing more power from WESM and less from the National Power Corporation, Meralco was able to reduce its generation charge for August by P0.79 per kWh from the previous month’s charge.
Customers that fall under the general service, small to medium industrial service, and nonindustrial service classifications will enjoy the biggest cut at P0.95 per kWh. Meanwhile, customers that use less than 200 kWh per month will get a discount of P0.89–P0.93 per kWh. Consumers of at least 10 megawatts per month will enjoy a reduction of P0.85–P0.89 per kWh, while residential consumers of more than 100 kWh a month will enjoy a P0.74-per-kWh cut.
RP oil consumption down 8% in H1
14 August 2006 – Philippine oil consumption dropped 8% in the first half of 2006, even lower than the expected 5% decline. The country’s oil consumption fell to 300,000 barrels a day, the lowest in eight years. A year ago, oil consumption was just under 315,000 barrels a day.
According to Energy Secretary Raphael Lotilla, the downward trend is likely to continue in the coming months since consumers will continue to be affected by escalating oil prices.
LPG prices up by P0.56/kg
14 August 2006 – Over the weekend, local oil companies raised the prices of liquefied petroleum gas by P0.56 a kilogram, marking the second round of LPG price increases this August. According to the Department of Energy, the international contract price for LPG has hit US$547 a metric ton in August, US$45 more than the US$502 per metric ton price in July.
Meanwhile, prices of diesel, gasoline, and kerosene were unchanged.
Power rate to be cut by P0.30/kWh
7 August 2006 – The Electric Power Industry Reform Act-mandated rate reduction scheme will impose a P0.30 per kilowatt-hour rate cut on August billings of Meralco customers who consume at least 200 kWh per month. However, only power procured from the National Power Corporation will be subject to the reduction. Electricity sourced from the Wholesale Electricity Spot Market is excluded from the rate cut since WESM rates are market-driven through trading.
However, Meralco consumers are likely to benefit from the rate cut only temporarily since the power firm now purchases 43% of its supply from WESM. Meralco sources the remaining 57% from independent power producers.
Petron to put up more autogas stations
3 August 2006 – By the end of this year, Petron Corp. plans to have at least five more autogas (liquefied petroleum gas) refilling stations in addition to its seven existing stations. Each refilling station will cost about P4 million to P5 million.
From the current several hundred who use autogas to power their vehicles, the number is expected to climb to 1,500 by 2013. Autogas has gained acceptance among motorists, especially taxi fleets, because it costs only half the price of gasoline and is environment-friendly. Converting a vehicle’s engine for compatibility with autogas costs about P30,000.
Unleaded gas seen to reach
P45 per liter in August
1 August 2006 - According to Petron, one of the country's major oil firms, fuel prices are expected to increase by 5%, or a total of P2.00 per liter, this month due to the upward surge in world oil prices. For instance, the price of unleaded gas is seen to climb to P45.00 a liter in August. The P2.00 increase is expected to be broken down to weekly hikes of P0.50 per liter.
The increase in oil prices in the world market is being attributed not only to the geopolitical conflict in the Middle East but also to refinery and supply chain disruptions brought about by typhoons.
Oil firms hike prices by 50 cents a liter
31 July 2006 - Over the weekend, oil firms raised pump prices anew by P0.50 per liter and increased the price of liquefied petroleum gas by P0.50 per kilogram. These latest price adjustments marked the second round of price increases in July.
Prices in the international market have been climbing due to the growing tension in the Middle East. According to the Department of Energy, Dubai crude averaged US$69.23 per barrel in July, compared to the June average of US$65.22 a barrel. Meanwhile, the international contract price of LPG in July surged to US$502 per metric ton from US$470 per metric ton in June.
Flying V to build P800M ethanol plant
24 July 2006 – Flying V, one of the country’s independent oil players, will build an P800 million ethanol plant in Mariveles, Bataan, to produce 60,000 liters of ethanol per day. An aggressive oil player, especially in the promotion of alternative fuels, Flying V recently applied with the Board of Investments for tax incentives for the said ethanol facility.
Flying V spokesman Macky Lopez said that the company would continue to support the government’s commitment towards energy independence. The firm currently sells E10 (a 10% ethanol-gasoline blend) in its service stations, but the ethanol additive is still imported from Brazil.
Global oil demand seen to rise 2% yearly until 2011
13 July 2006 – According to the International Energy Agency, the world’s oil demand will continue to rise at about 2% a year for the next 5 years. But members of the Organization of Petroleum Exporting Countries plan to expand production to ensure that there will be enough supply to meet the demand.
Aside from investments towards increasing crude production capacity by 10% by 2011, OPEC will also beef up natural gas production by 44%. Meanwhile, spare capacity, or the amount of oil that OPEC can supply above actual demand, is seen to reach 4 million to 6 million barrels a day by 2011, compared to 2 million barrels as of last June.
Pump prices rise for the
12th straight week
26 June 2006 – Four oil firms—Petron, Chevron, Unioil, and Total—raised their pump prices of gasoline and kerosene by P0.50 per liter over the weekend. Other oil companies are expected to follow suit within the week. These price increases marked the fourth round of price adjustments in June, and the 12th straight week of price hikes since April.
In June, the price of gasoline increased by a total of P2.00 a liter; diesel by P1.50 a liter; and liquefied petroleum gas by P0.50 a kilogram. From April to June, gasoline prices went up by a total of P6.00 per liter, while diesel rose by a total of P3.50 per liter. In that period, however, LPG prices went down by a total of P1.50 per kilogram due to the LPG price rollbacks in April.
Unfortunately, consumers cannot expect any relief from oil price hikes just yet. Oil companies claim that they still have around P1.00 to P2.00 per liter to recover due to high world oil prices.
Wholesale electricity spot market to start this month
16 June 2006 – The wholesale electricity spot market in Luzon will begin operating on 23 June, earlier than the expected opening on 6 July, because the Energy Regulatory Commission has already approved the application of the Philippine Electricity Market Corp. for its price determination and market fees.
The WESM will make it possible for big power consumers to buy their electricity needs from participating power distributors via an online bourse and give them the choice to buy from the distributor that can offer the best price.
Gas and kerosene up by
50 cents per liter
5 June 2006 - Oil companies have raised prices of gasoline and kerosene by P0.50 a liter and liquefied petroleum gas by P0.56 per kilogram, marking the first round of price adjustments in June. Diesel prices were kept unchanged to aid the public transport sector.
According to the Department of Energy, crude oil went up to US$65.22 per barrel in June from an average of US$65.00 in May. Meanwhile, the international contract price of LPG was unchanged from its May average of US$470 per metric ton.
With the said adjustments, the pump prices of unleaded gas now hover from P40.29 to P42.00 per liter, diesel at P34.70 to P37.55 per liter, kerosene at P37.00 and P40.50 per liter, and LPG at P442.16 to P491.16 per 11-kilogram tank
Local oil prices rise for fifth time in May
29 May 2006 – Pump prices went up again for the fifth time in May. Five oil firms—namely, Chevron, Petron, Shell, Total, and Unioil—today raised prices of gasoline, kerosene, and liquefied petroleum gas by P0.50 per liter (per kilogram in the case of LPG), reflecting the volatility in the world oil market. High gasoline demand and fears related to the hurricane season in the U.S. pushed world prices up.
As of 17 May, the price of crude was averaging US$65.55 per barrel, compared to US$64.14 per barrel in April. Meanwhile, based on the Mean of Platts Singapore (the price gauge of local oil importers), the price of diesel was averaging US$87.97, against US$86.66 in April, while unleaded gasoline was averaging US$87.18, compared to US$81.13 a month ago. The price of LPG rose to US$470 per metric ton from US$428 last April.
Pump prices up P0.50 per liter
22 May 2006 – Two more oil companies, Total and Unioil, today increased their pump prices for unleaded gas, diesel, and kerosene. Earlier, Chevron (formerly Caltex), Petron, and Shell had also raised their prices. Chevron announced an increase of 50 centavos per kilogram for liquefied petroleum gas as well.
The latest price adjustments marked the fourth round of oil price increases in May due to the continued climb of international oil prices. Dubai crude averaged US$65.55 per barrel as of 17 May, compared to the US$64.14 average in April. So far this month, unleaded gas has gone up to US$87.18 per barrel, as compared to US$81.13 a month ago. Diesel has averaged US$87.97 per barrel, as against US$86.66 in April. LPG prices rose to US$470 per metric ton this month from April’s US$428 average.
Should international prices of petroleum products reach US$66.00 for Dubai crude and US$88.00 for diesel, the local tariff for oil imports will be reduced to 2%, as provided for in Executive Order 527 issued by President Gloria Macapagal-Arroyo.
Tariff on oil lowered for 6 months
12 May 2006 – President Gloria Macapagal-Arroyo today signed Executive Order 527, reducing import duties on crude oil and refined products to between 0%–2% from the current 3% to cushion the impact of escalating world oil prices on the economy.
EO 527 will be in effect for 6 months, subject to government review. “The tariffs shall be automatically restored as international oil prices move down based on the same trigger prices,” the order said.
Earlier, some officials proposed removing the 12% value-added tax on oil products to give relief to consumers. However, the government backed off from this proposal since it will mean a loss of at least P6 billion in revenues monthly.
Shell now selling ethanol-blended gas
12 May 2006 – Pilipinas Shell, the country’s second-largest oil refiner, has invested P100 million to sell ethanol-blended unleaded gas for motorists in four of its pumping stations, namely, Pandacan, Pasong Tamo, Buendia, and South Triangle.
The oil firm currently offers the alternative gas at a price P0.50 lower than regular unleaded gas to encourage motorists to try it and introduce them to its advantages in mileage and combustion. Shell currently imports the blend from Australia but intends to import the mix from Brazil in the long term.
Sen. Recto proposes oil tariff
as subsidy
4 May 2006 – Instead of slashing oil import duties, Sen. Ralph Recto is proposing that the government keep the full 3% tariff on oil and then convert the revenues from these tariffs as subsidy for oil consumers. Given the increasing world oil prices, the government stands to gain at least US$220 million from tariff revenues.
Recto says the revenues from the 3% oil tariff can be used to subsidize diesel, kerosene, and liquefied petroleum gas, which are products widely used by the poor.
According to Recto, the proposal of the government’s economic team to slash oil tariffs is not a mitigating measure because this will only mean giving away revenues to oil companies. Moreover, it does not assure that there will be no oil price hikes or that it will at least cushion prices for consumers.
Opening of electricity market postponed to 2007
3 May 2006 – The Energy Regulatory Commission has postponed the launch of the open-access electricity market from July this year to 1 July 2007. According to the commission, the 5 conditions required by the Electricity Power Industry Reform Act of 2001 for the opening of the electricity market were not met.
Only the first two of the following conditions set under the EPIRA have been met so far:
l the approval of unbundled transmission and distribution wheeling charges;
l the removal of electricity cross-subsidies;
l the establishment and operation of a wholesale electricity spot market;
l the privatization of at least 70% of the National Power Corporation’s total capacity in Luzon and the Visayas; and
l the transfer of the remaining Napocor’s independent power producers contracts of NPC to IPP administrators.
The open-access scheme allows consumers of at least one megawatt to choose their own power suppliers. A public consultation on the new timetable is scheduled on 16 May 2006.
Gov’t agrees to slash import duties
on oil by 2%
27 April 2006 – To cushion the impact of surging world oil prices, the government’s economic managers have agreed to reduce the tariff on imported petroleum products for a six-month period, instead of lifting the 12% reformed value-added tax on oil.
The Department of Finance had earlier proposed a “sliding up and down oil tariff” scheme: Should the price of Dubai crude (the benchmark for Philippine oil purchases) hit US$61 a barrel, the oil tariff would be lowered to 2% from the current 3%. If the price hits US$66 a barrel, the tariff would be further lowered to 1%. And if Dubai crude surges to US$72 a barrel, the tariff would be reduced to 0%.
Since Dubai crude already reached US$66.80 a barrel as of 25 April, the government has decided to cut the tariff to 1%. The reduction will translate to a P0.50-per-liter price cut at the pump.
This tariff reduction is likely to be implemented through an issuance of an executive order by President Gloria Macapagal-Arroyo on or before 14 May.
According to the DOF, reducing the current 3% duty on imported oil will cost the government a P5 million cut in revenues, because the government stands to lose P2.5 million for every 1% cut in the oil tariff.
Gov’t prepares for escalating oil prices
19 April 2006 – With international crude prices rocketing to the US$71.00-a-barrel mark this week, the government has set some measures to cushion the effects of the escalating fuel costs. These proposed measures include the promotion of energy conservation, the acceleration of the passage of the Bio-Fuels Bill, and the review of current import tariff rates on fuel products.
According to analysts, though the current uptrend of oil prices could be temporary, there is no assurance that prices will go down in the short term. The situation could worsen if social unrest in Nigeria is not resolved and tensions over Iran’s nuclear program do not abate. The increasing global energy demand is also adding to the upward pressure on world oil prices.
Pump prices up, but LPG prices fall
17 April 2006 – Oil companies yesterday announced hikes in the pump prices of diesel, kerosene, and gasoline by P0.50 per liter to reflect their increased cost in the international market. On the other hand, prices of liquefied petroleum gas were rolled back by P1.00 per kilogram.
International oil prices have been reacting to Iran’s resumption of its nuclear program and to rebel attacks on Nigerian oil refineries. Iran is the world’s largest oil producer while Nigeria is the 12th-largest.
As for LPG, with the said price adjustment, an 11-kilogram tank now costs just P410–P480, compared to its previous above-P500 levels.
Napocor ends string of net losses
4 April 2006 – After posting consecutive net losses since 1998, government-owned National Power Corporation came up with an unaudited net income of P16 million in 2005, a big leap from the net loss of P29.9 billion in 2004.
According to the Power Sector Assets and Liabilities Management Corporation, the double-digit profit is connected to NPC’s improved fuel mix, increased fuel prices, and the increased power rates that the Energy Regulatory Commission approved in April 2005. Meanwhile, according to NPC’s finance department, one of the biggest factors for the positive recovery was the peso’s strong performance against the dollar.
Although the power firm was able to show a profit in 2005, huge loan payments are due this year. About US$500 million in loans are due in August.
Meralco agrees to
open-access scheme
3 April 2006 – Manila Electric Company, the country’s biggest power distributor, has finally agreed to put in place an open-access scheme that will allow its large customers to choose their own electricity suppliers. For a fee, the National Power Corporation or independent power producers will soon be permitted to use Meralco’s distribution lines to supply these customers’ power needs.
According to Albay Congressman Joey Salceda, who helped Meralco in presenting the plan to President Gloria Macapagal-Arroyo, big electricity users—industrial and commercial firms that consume at least 1 megawatt a month—could save P0.20 centavos per kilowatt under the scheme. However, open access will not include small power customers consuming less than 1 megawatt, such as households and small offices.
The details and mechanics of the new arrangement will be finalized within two weeks and implemented after the approval of the Energy Regulatory Commission.
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