By
BusinessMirror- August 26, 2018 By Butch Fernandez & Lenie Lectura
The Duterte
administration was asked over the weekend to front-load energy sector reforms
to quickly mitigate mounting consumer outrage against skyrocketing electric
bills.
Sen. Sherwin T.
Gatchalian on Sunday cited a recent Pulse Asia Survey affirming that 60 percent
of Filipinos were “dissatisfied with current electricity prices.”
Gatchalian, who chairs
the Senate Committee on Energy, noted the survey finding that Metro Manila
residents recorded the highest dissatisfaction rate, with 84 percent expressing
discontent.
The senator stressed
that “the people need immediate respite from all these back-breaking commodity
price increases, especially when it comes to their monthly electricity bills.”
He prodded the Duterte
administration to “act quickly to institute pro-consumer reforms that will
produce energy savings for Filipino households.”
Gatchalian listed three
primary reasons electricity rates in the country are among the highest across
the region: bureaucratic inefficiencies that drives away potential investors;
the lack of competition and transparency in power-supply contracting; and
rising stranded contract costs and stranded debt left behind by the National
Power Corp.
The Senator suggested
that Congress can help solve these issues promptly, urging members of the
Senate and the House of Representatives to expedite passage of three energy-related
measures to save consumers as much as P1.85 per kilowatt hour if they are
enacted into law. Computing this would result in overall savings of P370 per
month and P4,440 per year for a household consuming 200 kWh per month.
According to Gatchalian,
the first measure, the Energy Virtual One Stop Shop (EVOSS) Act of 2017 (Senate
Bill 1439), aims to cut pervasive red tape in the permitting process of new
power generation projects. EVOSS, however, remains pending in the House of
Representatives even as the Senate already passed it on third reading last
year.
In addition, Gatchalian
cited the Murang Kuryente Act, authored by Senate President Pro Tempore Ralph
G. Recto, allowing the government to tap the P207-billion Malampaya Fund to pay
the “stranded contract costs and stranded debt of Napocor.”
Since these obligations
are passed on to consumers through the universal charge in the monthly electric
bill, Gatchalian said applying the fund to pay these debts could save consumers
more than P0.55 per kWh. He is set to sponsor the measure when the Senate
reconvenes plenary session on Tuesday.
As a companion measure,
Gatchalian filed Senate Bill 1653, to be known as the Competitive Selection
Process (CSP) Act which aims to foster “transparency and competition” in
power-supply contracting by requiring all generation contracts to undergo open
bidding.
“Through this, it would
be possible to discover the real cost of electricity in order to get the lowest
price for the benefit of the consumers,” Gatchalian said of the proposal now
under plenary consideration.
He added that early
passage of the measure is expected to “provide relief to power consumers who
have been burdened by exorbitantly high electricity rates for far too long.”
Warning
Consumer advocacy group
Laban Konsyumer Inc. (LKI) warned the Department of Finance (DOF) of higher
power rates with the second package of the Tax Reform for Acceleration and
Inclusion (TRAIN) Act.
“We are monitoring the
removal of incentives in the power sector under the Train 2, particularly
in the renewable-energy [RE] industry. Everything will be subjected to
12-percent value-added tax,” LKI President and former Trade Undersecretary
Victorio A. Dimagiba said.
Under Section 15 (g) of
Republic Act 9513, or the Renewable Energy Act, “the sale of fuel or power
generated from renewable sources of energy, such as but not limited to,
biomass, solar, wind, hydropower, geothermal, ocean energy and other emerging
energy resources such as fuel cells and hydrogen fuels, shall be subject to zero-percent
value-added tax [VAT].”
Dimagiba said the TRAIN
2, which is being pushed by Finance Secretary Carlos G. Dominguez III, is an
additional burden to the consumers still reeling from the impact of TRAIN 1.
The DOF earlier
admitted during the Senate hearing that it did not compute the indirect effect
of TRAIN 1 on inflation.
Bangko Sentral ng
Pilipinas Deputy Governor Diwa C. Guinigundo said only 0.7 percentage point of
the 5.7-percent July inflation rate can be attributed to the tax-reform law.
According to Ibon
Foundation, TRAIN 1 is among the biggest factors driving inflation rate and
further inflationary surges are likely to happen in 2019 and 2020 when the next
two rounds of additional taxes on oil products take effect.
“The price increases
from TRAIN are very permanent and even if inflation rates moderate this does
not mean that prices will be lower. It is grossly deceitful for economic
managers to give the impression or claim otherwise,” Ibon said.
“Prices will continue
to rise for the poor from TRAIN’s new and higher taxes unless the government
says that the inflation rate will turn negative, which is unlikely,” the think
tank added.
Ibon said that, among
all the major factors driving high prices, the government has the most control
over the taxes it charges.
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