Duterte Coal Tax Will Make Costly Philippines Power Even Pricier
(Bloomberg) -- Electricity prices in the Philippines, already among the highest in Southeast Asia, will probably rise after President Rodrigo Duterte signs legislation next week boosting taxes on coal, the nation’s main fuel for power plants.
Semirara Mining and Power Corp., a power generator that’s also the country’s largest coal producer, expects electricity rates to jump 3 centavos per kilowatt-hour next year, when the tax plan’s provision for a 50 peso ($1) per metric ton excise tax takes effect, Chief Executive Officer Isidro Consunji said by phone.
The Senate and the House of Representatives ratified the tax bill Wednesday night, resolving last-minute issues with a plan that will remove the excise-tax exemption for local producers and boost the levy next year from the current 10 pesos. The new tax doubles to 100 pesos per metric ton in 2019 and rises to 150 pesos in 2020.
Consunji at Semirara said that by the third year the increase to electricity prices would total about 12 centavos, an amount he called “minimal” considering costs are already at least 8 pesos per kilowatt-hour.
Aboitiz Power Corp., which imports all of its coal, is forecasting an increase of as much as 7 centavos per kilowatt-hour for every 100-peso increase in the coal tax, President Antonio Moraza said in a phone message.
The plan seeks to bolster state revenue by raising levies on fuel, sugar drinks, mining and automobiles while cutting income taxes for 99 percent of workers to help fund Duterte’s $180 billion infrastructure program. The new taxes will generate at least $1.8 billion in additional revenue, taking into account revisions made by both houses of Congress, Manila Bulletin reported Thursday.
The tax plan “wouldn’t be neutral on the power industry because you’re taxing coal while giving incentives on other fuel like solar, wind and hydro,” said Consunji, whose firm accounts for 90 percent of total Philippine coal production. He said Semirara doesn’t object to the new taxes, which he said wouldn’t hurt earnings because costs are passed through to consumers.
Shares of Semirara fell 2.1 percent in Manila trading, while Aboitiz Power rose 0.4 percent. The benchmark Philippine stock index gained 0.3 percent.
Coal-fired power plants accounted for 48 percent of total power generation in 2016, at 43,303 gigawatt hours, followed by renewable energy at 24 percent and gas-fired plants at 21 percent, according to Department of Energy data. In terms of installed capacity, coal plants account for 35 percent, with renewable energy at 32.5 percent.
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