NCC Tackles Power Cost Reduction
The National Competitiveness Council (NCC) is conducting its own study to determine if the Philippine economy could generate significant benefits from possible reduction in power costs for industries despite revenue loss.
Various NCC private partners, particularly the Philippine Exporters Confederation, have been asking the government to reduce for at least four years the royalties from indigenous energy sources to immediately lower power costs in the country.
The Philippine electricity rates are among the highest in the region, one factor that has been blamed to the country's declining competitiveness.
It was found that a significant portion of high power costs are royalties or shares from earnings the government has been collecting from Malampaya natural gas project and power plants fueled by geothermal energy.
NCC director Ruy Moreno said that Finance Secretary Margarito Teves "wants to see" a thorough study of the best option.
"Because of that reduction in royalty on the government side, it means it can be passed on to the consumers or to the factories by reducing their costs by so much, thus increasing their competitiveness therefore, stimulating more demand for their products. That's what he wants to see," he said.
Moreno said "economic gains should be equal or greater to the impact of possible revenue loss" as a result royalty reduction from power plants that use local fuel.
The government generated revenues from royalties of around P4.8 billion in 2005. A power generation firm believed that if such amount is plowed back to industries, this could improve their competitiveness and enables them to create more jobs. The government's value-added tax (VAT) collections from these industries are also expected to increase. …