LNG advances amid RE push

Shell, meanwhile, revived last year its planned LNG project to be located in Batangas City. It was in 2013 when the company first informed the DOE about its LNG plans that could entail an initial investment cost of P3.5 billion.

Vires Energy, a subsidiary of A Brown Corp., said commercial operation of its P6.15-billion LNG project—a floating storage and regasification unit and the 450-MW gas plant in Batangas—is expected by 2027.

E xcelerate Energy, meanwhile, has yet to inform DOE of its updated LNG plans. Th ose that are not on the DOE’s list yet but expressed interest to also join the LNG bandwagon are Aboitiz Power Corp., Atimonan One Energy (A1E), and ACE Enexor.

A boitiz Power and Japanese partner Jera are undertaking feasibility studies for an LNG project that could be put up in the Visayas or in Luzon.

A 1E, a wholly owned subsidiary of Manila Electric Company’s power-generation arm Meralco PowerGen Corp. (MGen), is seeking approval to put up a 2,400-MW gas power plant and an LNG terminal for approximately P175 billion in Quezon province.

ACE Enexor, meanwhile, has partnered with Gen X Energy to develop a 1,100-MW plant in Batangas that is capable of using natural gas and green hydrogen as fuel.

The DOE said all these developments are positive signals reflecting the continuous interest of the private sector in investing in critical infrastructure that will allow the country to import and utilize imported LNG, and complement the available gas from the Malampaya reservoir to meet the country’s growing energy demand.

Is LNG a burden?

THE Power for People Coalition (P4P) alleged that electricity sourced from gas is expensive, more so now if they are imported.

“There is nothing to welcome except more misery for consumers,” said Gerry Arances, P4P convenor.

The energy consumer advocate said the operation of the two LNG facilities also means more tankers passing through the vulnerable Verde Island Passage, a center of maritime biodiversity on which two million Filipinos depend on for their livelihood. “Higher volume of tanker traffic means increased possibility of accidents,” according to Arances.

His group is urging the DOE to focus more on renewable energy.

“All the DOE needs to do is to give more priority to ramp up their use in the grid. It’s time for DOE to make a U-turn, abandon its LNG plans, and embrace renewable energy,” he said.

The Institute for Energy Economics and Financial Analysis (IEEFA) said the economic sustainability of LNG remains in doubt amid power deal issues and global price volatility.

IEEFA noted that the cost of the country’s first LNG cargo remains undisclosed.

But, at current LNG prices in Asia, IEEFA estimates that rates from LNG-fired power generation in the Philippines could be roughly

P9 per kilowatt hour (kWh). And based on average global LNG prices last year, LNG-fired power could cost as much as P16/kWh.

The Philippines, according to IEEFA energy finance analyst Sam Reynolds, already pays among the highest power prices in Asia due largely to over-reliance on volatile imported fossil fuels. “When global coal, oil and gas prices spike, so do consumer electricity bills,” he said.

IEEFA stressed that any upside risk to LNG prices could derail the LNG import outlook given the power sector’s inherent sensitivity to fuel price increases in combination with the government’s policy to keep electricity prices affordable for consumers.

Gas aggregation

TO help cushion the impact of a surge in imported LNG prices brought about by the Ukraine-Russia war, there is a proposal to blend the Malampaya natural gas with imported LNG.

Th is gas aggregation strategy of Razon-led Prime Infrastructure Capital Inc. (Prime Infra) and Lopez-led First Gen recently won DOE’s support.

That’s what we are trying to prevent from happening in terms of spikes in the price of imported LNG, and the plan is to blend the lower price of Malampaya natural gas with the imported LNG so that we can soften the impact or the volatilities of imported LNG,” DOE Secretary Raphael Lotilla said.

Prime Infra and First Gen are already in discussions to develop a gas aggregation framework that provides the lowest cost possible for consumers, enhanced energy security and competitive market for power generation; and complement ongoing commercial development of new indigenous natural gas fields.

The gas aggregator framework “establishes a resilient and efficient natural gas supply chain,” Prime Infra President Guillaume Lucci said in a statement.

The proposal, Lucci added, “would ensure a stable and sustainable baseload power supply.”

Prime Infra, through its subsidiary Prime Energy Resources Development B.V., is a member of the Malampaya consortium. It holds a 45-percent operating stake in the Malampaya gas-to-power project.

Malampaya extension, a key achievement

THE DOE has cited the renewal of the Malampaya service contract (SC) as one of the major accomplishments of the current administration.

The extension of SC 38 until February 22, 2039, was a key indicator of progress in the development of the natural gas industry in the Philippines, the agency said in a report.

E xtending SC 38 allows full production of the Malampaya field through full utilization of its remaining gas reserves of about 147 billion cubic feet. The DOE added that this would jump-start the exploration and development of other fields in the area believed to hold up to 210 billion cubic feet more of natural gas.

A lready, the operator of the Malampaya gas project has exceeded its target output for the months of April, May and June this year.

Gas sales in the second quarter of 2023 reached 280 million standard cubic feet per day (MMSCFD) against a target of 274 MMSCFD.

We intend to maintain a reliable supply of indigenous gas to our customers while we continue the hard work of exploring for new sources to address the natural decline of the Malampaya gas field. We remain committed to being the partner of choice in providing energy sufficiency and security to the country,” said Prime Energy General Manager Donnabel Kuizon Cruz.

L otilla explained that it was necessary to extend the service contract so that the consortium would be encouraged to drill new wells near the Malampaya field.

“

The next step to that, since the drilling facilities will already be here, is it will actually be cheaper for drilling and other exploratory activities to be conducted in nearby areas of the country as well,” said Lotilla, referring to Sulu Sea and areas in the West Philippine Sea.

“So, the coming in of LNG complements this because the gestation period for the full development of all the other alternative gas fields will take some time. The importation of LNG will therefore secure the gas supply for the Ilijan and the First Gen plants in the meantime that we don’t have sufficient natural gas supply from Malampaya,” said the energy chief.

The establishment of LNG facilities addresses the expected shortfall in the country’s power supply at least in the near and medium terms. Despite concerns raised by some groups and experts, this is one of the intervention projects that the country desperately needs to address a possible energy crisis.

PHL’s gains in Islamic banking cited at investor forum in UAE

ISLAMIC banking is an important component of the government’s financial inclusion program, a key official of the Bangko Sentral ng Pilipinas (BSP) told investors in Dubai.

BSP Assistant Governor Arifa A. Ala said Islamic banking provides financing options for both Muslims and non-Muslims. She is the BSP’s lead-advocate on Islamic banking and finance and Chairperson of the BSP-led Islamic Finance Coordination Forum (IFCF).

Ala also discussed recent milestones in the development of the Philippines’s Islamic banking and finance ecosystem to the stakeholders in the Middle East emphasizing the readiness of the country to accept new and potential Islamic banking players.

“The promotion of Islamic banking expands the BSP’s financial inclusion agenda of increasing broad and convenient access to high quality financial services for all Filipinos, including the minorities and underserved population,” Ala said during the recent Philippine Economic and Investment Summit (PEIS).

Ala said Islamic banking complements conventional banking by providing alternative forms of investments and financing options for both Muslims and non-Muslims alike.

She emphasized that Islamic finance on Shari’ah governance and risk sharing principles are seen to support the BSP’s financial stability mandate.

“The BSP remains steadfast in its commitment to support the growth of Islamic finance in the country by continuing its roles as a catalyst in re-shaping the Philippine Islamic banking landscape, an enabler of Islamic banks and Islamic banking windows, and a champion of financial inclusion and stability that meets the needs of the financially underserved population, create better opportunities and promote a high quality of life for all Filipinos,” Ala said.

Ala, participated in the 9th Annual Philippine Property and Investment Exhibition (PPIE) and inaugural PEIS held last May at Radisson Blu Hotel, Dubai, United Arab Emirates (UAE).

The PPIE is the biggest, longest-running, Philippine business and investment forum in the Middle East, which provides opportunities for businesses and investors in the UAE to explore the huge potential of the Philippine market.

The PEIS promotes business and investment opportunities in the Philippines by highlighting economic forecasts/business trends, government initiatives, investment incentives and other laws and regulations that will encourage investors to invest in the Philippines.

Islamic banking was introduced in the country in 1973 with the opening of the Philippine Amanah Bank. The latter has since become an important part of the banking industry.

In 2021, the BSP created its own Islamic Banking Supervision Group and signed a memorandum of understanding with the Philippine Economic Zone Authority on the creation of Halal economic zones.

The following year, BSP reconstituted the Inter-Agency Working Group on Islamic banking into the Islamic Finance Coordination Forum.

The BSP also created the Shari’ah Supervisory Board for the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

Official government data showed that Islam is the most predominant religion in BARMM; accounting for 4.49 million persons or 90.9 percent of the 4.94 million household population in the region in 2020.

It was followed by Region 9 (Zamboanga Peninsula) with 18.2 percent, Soccsksargen with 15.8 percent, Region 10 (Northern Mindanao) with 8.5 percent and Region 11 (Davao Region) and the Mimaropa Region with 3.5 percent each. Cai U. Ordinario

NGCP expands SIS team to boost efficiency in energy plant approvals

By Lenie Lectura

THE National Grid Corporation of the Philippines (NGCP) said Friday it has put in place key measures to address delays in the approval of system impact studies (SIS).

T he grid operator said it expanded its SIS team with the recent hiring additional manpower. The move will boost the capacity of the organization to conduct more SIS simultaneously, NGCP said.

It is also adopting a clustering approach for SIS, grouping together power plants with a common connection point or study area. This clustering strategy, NGCP said, aims to streamline the process and accelerate the evaluation of multiple projects, enhancing the overall efficiency and reducing the waiting time for potential power plant developers.

Moreover, NGCP is in the process of outsourcing some aspects of the SIS process, pending the issuance of an accreditation system by the Energy Regulatory Commission (ERC). This outsourcing initiative is anticipated to further augment the organization’s capabilities and expedite the completion of SIS for various power plant proposals.

NGCP President and Chief Executive Officer Anthony Almeda pointed out that in more developed nations like the United States and the United Kingdom, the completion of grid impact studies typically takes more than three years. “Other countries usually operate on a ‘first-come-first-served’ basis. We do it on a ‘first-ready-first-served’ basis, in order to be faster and more efficient,” he emphasized.

The measures used by the NGCP to address the SIS backlog forms part of the company’s extensive plan to meet the country’s increasing energy requirements. “Our company is a vital part of a much bigger energy landscape, with numerous roles and stakeholders. We take our functions and responsibilities very seriously, and continuously work towards a cohesive, centralized, and systematic approach to energy planning for our country,” Almeda said.

The other day, Department of Energy (DOE) Secretary Raphael Lotilla said delays range from one and a half years to two years.

T he SIS is a critical assessment that determines the capacity of the power grid to accommodate a new generator, and identifies necessary improvements such as additional transmission lines, transformers, or substations.

“We need to improve for example on system impact studies because these have to be addressed upfront rather than later. The system impact studies are rather delayed,” the energy chief said.

“ The Executive Secretary is chairing this one so by the next meeting, for example, we will be looking at how the transmission concessionaire, NGCP, is going to specify the 60-day approval of just the system impact studies,” Lotilla added.

T he NGCP said that due to the increasing demand for power generation in the country, the number of applications for SIS surged significantly. Historically, however, majority of the applicants do not push through with their initial plans, with only around 28 percent of completed SIS resulting in the establishment of actual power plants.

“Although 7 out of 10 SIS applicants will not actually pursue their power investments, we are obliged to fully evaluate each application when they are passed on to us by the DOE. Accordingly, we have taken the necessary steps to expedite the process and improve its efficiency,” Almeda added.

By Jasper Emmanuel Y. Arcalas

THE national government posted a P551.716-billion budget deficit in the first half of the year as spending outpaced revenues during the period, latest Bureau of the Treasury (BTr) data showed.

The six-month period deficit was 18.17 percent lower than the P674.2 billion shortfall registered by the national government (NG) last year owing to “higher revenue outturn.”

The latest budget deficit was 28.49 percent lower than the NG’s P771.5billion mid-year deficit program as actual expenditures fell short of target disbursements.

The NG’s first-semester revenues rose by 7.68 percent to P1.86 trillion from P1.727 trillion last year, while its expenditure inched up to P2.411 trillion from P2.401 trillion on an annual basis.

The Treasury said about 89 percent of the State’s revenue collections from January to June came from taxes, while the remaining 11 percent was from nontax collections. Collections by the Bureau of Internal Revenue (BIR) in the first half grew by 7.65 percent year-on-year to P1.219 trillion from P1.132 trillion.

Despite the increase, the BIR missed its P1.251-trillion revenue target set by the NG for the six-month period.

Meanwhile, the Bureau of Customs (BOC) collected a total of P433.4 billion for the first half, about P36.7 billion higher than its P396.7-billion revenue last year. The BOC was also able to surpass its six-month revenue target of P420.7 billion by P12.8 billion.

Earnings by the Treasury, meanwhile, declined by 10.68 percent to P93 billion from P104.1 billion.

“Nevertheless, BTr’s [Bureau of the Treasury] 6-month performance surpassed the program for the period by 92.20 percent or P44.6 billion and was already 59.52 percent [P34.7 billion] higher than the P58.3 billion full-year program driven by higher income from BSF investment, dividend remittances, as well as NG share from Pagcor profit and interest income from NG deposits,” the Treasury said.

The Treasury said revenue collections from other offices, such as those from privatization proceeds, rose to P110.2 billion in the first half, surpassing both last years’ figures and the target set by the national government. The amount was P28.1 billion higher than last year’s P82 billion and was also P28.4 billion than the programmed amount of P81.7 billion.

In terms of expenditure, the national government fell short of meeting its P2.6trillion programmed spending for the first half of the year. The national government was short by P170.5 billion to hit its P2.582trillion target expenditure for the first six months of the year.

“The lower-than-programmed Interest Payments [IP]; ongoing implementation of some social protection programs, particularly the registration and validation of beneficiaries; as well as billing concerns from suppliers/creditors, such as late submissions of billing statements and compliance with documentary requirements have affected the spending outturn for the period,” the Treasury said.

Earlier, Finance Secretary Benjamin E. Diokno attributed the NG’s higherthan-expected revenues to better tax administration, such as cracking down on fake receipts, higher privatization earnings and digitalization efforts.

However, despite the higher revenues, he flagged the slow spending by government agencies.

The finance chief noted that the government is collecting more revenues than forecasted, while government agencies are underspending, which may cause delays in infrastructure programs, thereby hampering economic development.

“We are below our deficit target. For fiscal conservatives, that is nice, but not necessarily nice for development,” he told reporters last month.

“That is not good [for us] because we are trying to pick up for the pandemic and also, a big part of our budget is really infrastructure,” he added.

Real estate prices up 10.2% in Jan-March

By Cai U. Ordinario

REAL estate has become more expensive and posted a doubledigit increase in prices in the first quarter of the year, according to the Bangko Sentral ng Pilipinas (BSP).

Based on the BSP’s Residential Real Estate Prices Index (RREPI) report, residential real estate prices posted a 10.2-percent growth in the January to March period of 2023.

BSP data showed residential real estate prices grew 5.7 percent in the first quarter of 2022 and 7.7 percent in the last quarter of 2022.

“The residential real estate prices of various types of new housing units in the Philippines continued to grow faster in Q1 [first quarter] 2023 at 10.2 percent year-on-year [YoY], but grew at a slower pace of 1.4 percent quarter-on-quarter [QoQ], compared with the Q4 [fourth quarter] 2022 results,” BSP said.

The data showed this was driven by the 11.4-percent increase in residential real estate prices in Areas Outside the National Capital Region (AONCR).

The growth of residential real estate prices in the AONCR was only at 5.1 percent in the first quarter and 4.5 percent in the fourth quarter of 2022.

Prices of residential real estate in NCR or Metro Manila, however, slowed to 7.3 percent in the first three months of 2023. This was a significant slowdown from the 16.1 percent posted in the last quarter of 2022 and 9.7 percent posted in the first quarter of last year.

“On a QoQ basis, residential property prices expanded by 4.4 percent in the AONCR, but contracted by 4.3 percent in

Marcos gives IPPs in BOT deals tax cuts, penalty condonation

By Samuel P. Medenilla

R. Marcos

Ferdinand

PRESIDENT

Jr. granted tax cuts and penalty condonation to Independent Power Producers (IPP) operating under the BuildOperate-Transfer (BOT) with governmentowned or -controlled corporations (GOCCs) to ensure their continued operations.

Under Executive Order (EO) No. 36, which was issued on Tuesday through Executive Secretary Lucas P. Bersamin, Marcos said the IPPs’ real property tax (RPT), including levies accruing to the Special Education Fund on property, machinery, and equipment used for power production under BOT and similar schemes for calendar year 2023, will be reduced.

The reduction will be equivalent to tax due if computed based on the assessment level of 15 percent of the fair market value of the said property, machinery and equipment, depreciated at the rate of 2 percent per annum, less any amount already paid by the IPPs. T he issuance also condoned all interests and penalties on such deficiency RPT liabilities.

The President said RPT payments made by the IPPs over and above the reduced amount would be applied to their RPT liabilities in succeeding years.

The issuance was in response to threats issued by some local government units (LGU) against the affected IPPs, which will result in the levy and sale, at public auction, of affected properties.

the NCR,” BSP noted. By housing type, BSP said, prices of duplex housing units, single-detached/ attached houses, townhouses, and condominium units increased the year-onyear growth in the nationwide RREPI.

The prices of duplex housing units increased by 22.1 percent; single-detached/attached houses, 17 percent; townhouses, 1.8 percent; and condominium units, 1.2 percent.

The 1.4 percent quarter-onquarter (QoQ) growth in the RREPI was attributed to the higher prices of single-detached/attached houses by 4.7 percent and townhouses by 3.8 percent.

However, prices of duplex housing units and condominium units declined by 16.4 percent and 5.1 percent QoQ, respectively.

“Various local government units have taken the position that Independent Power Producers operating in their territories are not entitled to exemptions and privileges enjoyed by government owned or controlled corporations with respect to real property taxes on their property machinery and equipment used in the generation and distribution of electric power,” Marcos said. If the IPP s are unable to settle the RPTs and are forced to shut down their operations, the Chief Executive said, it would entail substantial losses to the government, force the public to resort to more costly electric power source alternatives, and cause rotating power outages.

H e also explained a substantial portion of the RPTs from IPPs has been contractually assumed by National Grid Corporation of the Philippines/Power Sector Assets and Liabilities Management Corporation under the BOT scheme and therefore can be charged to the National Government.