Philippines has highest electric rates in Asia

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Wednesday, February 16, 2011


THE Philippines has gained a new record, that of having the most expensive electricity in the whole of Asia.

The new record was reported by the Manila Electric Company (Meralco) to the power and energy committee of the Philippine Chamber of Commerce and Industry (PCCI) chaired by Jose Alejandro during its meeting on February 3.

The Meralco member of the committee quoted a study made last October by the International Energy Consultants, an independent think-tank which allowed the power distributor to borrow the result of said study.

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The study had shown that with average retail rate of electricity of 18.1 US cents per kilowatt/hour in the Philippines, it has eased out Japan at the top of having the most expensive electricity in Asia. As of the same month last year, electric rates in Japan were at 17.9 US centers per kilowatt/hour.

Besides Japan, subjected to the study were the utility companies in Thailand, Malaysia, South Korea, Taiwan, Singapore and Indonesia.

A similar study made by Meralco using the figures in the last quarter of 2008 indicated that until that year, the Philippines was still slightly behind Japan in electric rates.

The disparity in rates between the Philippines and most countries in the rest of Asia was so big that with the exception of Japan and Singapore, what consumers pay elsewhere is just the equivalent of the generation charges that consumers in the Philippines pay. This averages P5 a kilowatt/hour.

The high cost of electricity in the Philippines was traced by the group to the fact that all costs - from producing power to distribution and taxes - are passed on to consumers. Besides, the Philippines is the only country in the region that has privatized its electric power sector and has no state subsidy on rates.

The study likewise noted that domestic natural gas coming from the Malampaya gas deposits in offshore Palawan that fuels three of the biggest power plants in Luzon have been priced so high. It has been suggested that the Philippine government renegotiate the Malampaya contract to bring down the cost of natural gas.

Reacting to the new record, Federation of Philippine Industries (FPI) chairman Menelao Carlos said that the prohibitive cost of electricity in the country must be the biggest reason why foreign investments have been shrinking in the Philippines, while it is kicking up in other countries in the region.

The study also found that household consumers in the Philippines pay highest at an average of P10 per kilowatt/hour, shouldering the biggest burden of high electric rates. In other Asian countries, rates for commercial establishments are highest.

Everywhere, electricity is cheapest in the industrial sector but Meralco reported there are now very few factories and industrial plants within its franchise area. (Abe P. Belena/Philexport)

Published in the Sun.Star Davao newspaper on February 17, 2011.

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