The government must consider the permanent removal of tariffs on coal fuel for energy security, according to the Philippine Independent Power Producers Association (PIPPA).
Anne Estorco-Montelibano, PIPPA executive director and president, said the group supports a petition by the Foundation for Economic Freedom for the continued implementation of Executive Order (EO) 171 series of 2022 which waived duties on coal until the end of the year.
“We need to diversify imported coal sources. One, 99 percent of Philippines’ coal imports for power are sourced from Indonesia and the January event, the coal export ban, exposed significant risks due to our dependence on Indonesian coal. Second, the political and regulatory uncertainties within Indonesia pose an ongoing risk of the export ban recurring,” Montelibano told a hearing of the Tariff Commission on Wednesday.
Montelibano noted the need to explore other supply sources in lieu of increasing worldwide coal prices.
PIPPA also said the removal of tariffs even for non-Asean countries will also provide both power generators and distributors with more stability and predictability in terms of pricing.
The group said there will be no foregone revenues since coal from Indonesia is duty-free.
Citing PIPPA’s own simulation in 2019 before the pandemic, the group said a loss of 500 megawatts (MW) of electricity for five hours will be equivalent to an economic loss of P556 million.
The group added based on a simulation made on a 600 MW coal-fired power plant, every $100 per metric ton increase in the cost of coal translates to additional P1.7 per kilowatt hour in the fuel cost.
Data from the Department of Energy showed as of end-August 2022, the total installed capacity of coal-fired power plants for both on-grid and off-grid is at 11,684 MW or 42 percent of the mix. -Jed Macapagal
