Cement makers to government: Bring down power rates, extend subsidies

Business Mirror

Published on Thursday, 25 April 2013 21:07

Written by Jennifer A. Ng / Reporter

Cement manufacturers belonging to the Cement Manufacturers’ Association of the Philippines (Cemap) called on the government on Thursday to cut power rates and provide industry subsidies. The twin moves, if implemented, would bring down the cost of power at par with subsidized rates in other Asian countries, the group said.

Citing a study conducted by the International Energy Consultants (IEC), Cemap said electricity rates in the Philippines are “significantly higher” at $0.199 per kilowatt-hour (kWh) compared to $0.111 charged in Malaysia, $0.105 in Thailand, $0.089 in South Korea, $0.087 in Taiwan and $0.085 in Indonesia.

Quoting IEC, Cemap said power subsidies in other Asian countries range from $0.061 per kWh to $0.101 per kWh or 30 percent to 50 percent of electricity cost in the Philippines.

“The high cost of power in the country challenges the viability of certain industries. Notable are strategic sectors such as the cement industry, which is considered a key ally of the Department of Public Works and Highways [in building infrastructure projects],” said Cemap President Ernesto Ordoñez.

“As rice is strategic to food, cement is strategic to infrastructure,” Ordoñez said.

Due to high power cost, domestic cement producers estimate that power accounts for 64 percent of their production cost.

“Although our industry has attained efficient operations supported by sustainable technology, we are severely challenged by the competition from foreign countries enjoying power subsidies while we have none. We recommend the government to take swift action to cut energy cost and promote an international level-playing field in this important area,” said Ordoñez.

To address high power cost, the Department of Energy said a study on the power rate matrix in Asia is under way. This is funded by the United States Agency for International Development and implemented by state-run University of the Philippines.

The research will be conducted for 10 months using as benchmark the Philippine 2011 power rates.   source