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Arroyo bares energy independence, savings reform package
JPM, Sun Star Manila (7 Aug 2004)

*Villar wants gov't to postpone plan to impose tariff on oil imports

MANILA, PHILIPPINES: PRESIDENT Arroyo Friday said government will convert inactive power plants such as the mothballed Bataan Nuclear Power Plant (BNPP) into gas-fired plants to augment the power supply in Luzon by 2008.

The use of the inactive plants is part of the five-point reform package on energy independence and savings, which Arroyo bared in her speech at the 25th anniversary of the Philippine Rural Electric Cooperatives Association (Philreca) at the Philippine Trade Training Center (PTTC).

The package seeks to attain 60 per cent energy self-sufficiency for the Philippines by 2010.

"Inactive power plants such as Sucat, Limay, Malaya and the Bataan Nuclear Plant should also be converted into gas-fired plants in 2005 to ensure that additional capacity will be in place in Luzon by 2008. Certainly, by the time I step down in 2010," she said.

She said studies from the Asian Development Bank (ADB) and financial and technical advisers showed that the Philippines will need 6,000-megawatt additional generating capacity over the next 10 years to avoid shortages.

But the same studies showed that the country will need P400 billion to finance the power plants and their transmission and distribution systems.

She said government must act now because it takes three years lead-time from planning to construction to operation to establish a power plant.

Arroyo said the power sector must be reformed because the country cannot afford to be saddled by the billions of debts that has been incurred and continues to be incurred by the National Power Corp. (Napocor).

She said the country needs an energy reform package "because we've always been dependent on imported energy and therefore vulnerable of vagaries of global politics and economics, particularly events bearing on oil supply such as war, terrorism and currency fluctuations. We should not be held hostage to these conditions."

She said the Power Sector Assets and Liabilities Management Corp. (Psalm) and the Department of Energy (DOE) will speed up the privatization of at least 70 per cent of the generating assets in Luzon and the Visayas by 2005. She said she would like the opening of at least 10 island provinces to private sector participation.

Arroyo's five-point reform package on energy independence and savings involve:

  • Increasing reserves of indigenous oil and gas through more intense exploration so that the country could become the number one producer of geothermal energy in the region and in the world.

She said several major Japanese companies have expressed interest in investing on 10 geothermal fields in the country.

She said the Philippine National Oil Company (PNOC) Energy Development Corp. (EDC) will be upgraded to improve success rates in discovering new oil and gas reserves. The PNOC-Petrochemical Company will revive the mid-stream petrochemical industry and eventually establish a naphtha cracker plant. PNOC shipping will modernize its fleet through strategic alliances with the private sector to ensure that petroleum products will be delivered to the remotest islands.

  • Aggressively develop renewable energy potentials such as biomass, solar, wind and ocean resources.
  • Increase the use of alternative fuels such as compressed natural gas (CNG) in public transport. Buses powered by natural gas will start plying the major routes of Metro Manila up to Calamba, Laguna by 2005 and 60 per cent of the 1,500 buses plying the route will run on CNG in 2010.

She said the use of coco-diesel as alternative vehicle fuel will be accelerated. Government vehicles will use a one to five per cent coco diesel blend in their diesel requirements in 2006-2014, which will lower imported fuel dependency by three per cent.

She said new taxes on petroleum products should allocate a portion for the development of alternative transport fuel. She said the private sector should avail of the environment loan window in the Development Bank of the Philippines (DBP).

  • Strengthening strategic alliances with energy partners like Saudi Arabia, Southeast Asian countries, China and Russia.

She said she and Thai Prime Minister Thaksin Shinawatra will discuss the updates on the arrangement for the use of the Subic fuel storage facility as a regional facility when they meet at the International Conference on Asia and Political Parties in Beijing in September 3 to 5.

  • Implementing strong efficiency and conservation programs. She directed the DOE to spearhead a nationwide energy efficiency and conservation program.

Arroyo also asked the three party-list representatives of the Association of Philippine Electric Cooperatives (Apec) to support the bill granting a franchise to the Transmission Corp. to help plug the public sector deficit.

She asked the electric cooperatives to go for a single-digit systems loss percentage by 2010 to make them globally competitive. "I know you can do it," she said.

Malacañang admitted that the government cannot do anything to keep the prices of oil products from going up because it is influenced by global concerns.

Presidential spokesman Ignacio Bunye also said a transport strike will not affect global crude prices.

Bunye and Finance Secretary Juanita Amatong said government can only mitigate the effects of price increases through safety nets or incentives packages such as assistance to transport groups to open their own gasoline stations.

Economic Planning Secretary Romulo Neri said government cannot prevent oil prices from rising because it is caused by the Iraq situation and the growing demand for oil by countries such as China.

Amatong said government is also appealing to oil firms to temper the increases in the price of diesel, which is mostly used by public transport.

But she said government still has to implement new tax measures in order to give quality services to the people.

Meanwhile, Sen. Manuel Villar Friday urged the government to postpone its plan of imposing tariff duties on oil imports following the continued increase of crude prices in the international market.

Villar, chairman of the Senate committee on finance, said increasing the petroleum tariff from three to five percent would allow the oil companies to further increase domestic oil prices.

"The government should reconsider any plans of imposing new tariffs on oil imports at this time when crude prices are at their highest levels,"

Oil companies have estimated that a two-percentage points increase in petroleum tariffs may translate to an increase of about 19 centavos to 36 centavos per liter of oil products such as gasoline, diesel, kerosene and fuel oil.

Based on reports, Dubai crude oil has increased to US$34.62 per barrel from US$33.42 per barrel last month.

Some analysts have projected that world crude prices would continue to increase due to tension in the Middle East and increasing demand.

On the other hand, Villar has called on DOE officials to be vigilant and constantly check the movements in domestic oil prices to protect consumers from unscrupulous businessmen who has the habit of jacking up the prices of basic goods.

The senator warned that continued surge in the prices of oil could derail slightly the country's economic growth and would weaken the consumer's purchasing power.

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