Geothermal firm seeks lower royalty payments to government

The Philippine Geothermal Inc. (PGI), one of the country’s largest geothermal power developers, is pushing for the reduction in the royalty paid by geothermal contractors to the government to 1 1/2 percent of gross revenues.

PGI president Stephen Pye said at present, geothermal operators pay royalties as much as 60 percent of net revenues to the government which is higher compared to other neighboring countries.

Pye said in Indonesia, geothermal operators pay only 34 percent, or 50 percent lower than the royalties paid in the Philippines.

According to Pye, there is a need to level the playing field to allow further development to take place in the geothermal energy sector.

He noted that the geothermal operators pay the highest tax per kilowatt hour compared to other sources of energy.

Pye said geothermal operators pay about P0.482 tax per kWh as against natural gas of only P0.40, diesel of P0.037 and fuel oil of P0.028.

So far, he said the use of geothermal energy resulted in a $4.25-billion foreign exchange savings for the Philippines for the period 1977 to 2000.

Aside from PGI, a wholly-owned subsidiary of Unocal Corp. of US, the other major geothermal developer is the state-owned Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC).

A 30-year industry, he said the country’s geothermal power industry is among the largest in the world, next to the United States and has a potential to produce some 4,000 megawatts of electricity.

Under a service contract (established in 1971) with the state-run National Power Corp. (Napocor), PGI develops the geothermal resources at the Tiwi (Albay) and Makban (Laguna) contract areas.

These steam fields provide energy to Napocor’s power plants capable of producing an aggregate 756 MW of electricity.

The Tiwi and Mak-Ban geothermal power plants currently supply 15 percent of Luzon’s power electricity requirements.

PGI is a technical and financial service provider for the operation of geothermal steam fields of its service areas.