SEIPI renews call to use Malampaya revenues to lower power rates

The Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) has reiterated its call for government to set aside part of the Malampaya revenues to lower electricity rates.

SEIPI chairman Arthur Young said while it is also worthy to allocate portion of the proceeds from Malampaya royalties to other areas, it is also prudent to “put a portion of the funds to where it is supposed to go.”

President Arroyo earlier directed the allocation of some P4 billion from the Malampaya revenues to partly finance the country’s rice self-sufficiency program.

“We are not against the program of the President to allocate part of the Malampaya proceeds for the country’s food sufficiency program but they should also allocate funds to help continue the drive to reduce energy costs,” Young said.

Young said the group will stick to its stance to use the royalties from the Malampaya gas field as a tool to bring down power costs in the country.

He said this will not only benefit SEIPI members but all big electricity users. SEIPI is the leading and largest organization of foreign and local semiconductor and electronics companies in the Philippines. The industry accounts for about 70 percent of the country’s total exports.

Under the Electric Power Industry Reform Act of 2001, he said the government “shall reduce the royalties, returns and taxes collected for the exploitation of all indigenous sources of energy, including but not limited to, natural gas and geothermal steam, so as to effect parity of tax treatment with the existing rates for imported coal, crude oil, bunker fuel and other imported fuels.”

He said this provision also stated that “the royalties should be used to reduce the cost of electricity.”

SEIPI earlier cited a study conducted by UP professor Dante B. Canlas, a former director general of the National Economic Development Authority (NEDA).

In this study, it was noted that a reduction of the natural gas royalties to lower the cost of electricity to industrial loads would induce economic output growth on account of greater competitiveness and productivity of the Philippine industries.

“This will provide government additional tax and non-tax revenues, which would be more than sufficient to offset the foregone royalties collection in less than two years from implementation,” the study said.

Young said customers of Manila Electric Co. (Meralco) will also benefit from this.

“This is also for all people in the Meralco franchise area to get some additional cost savings,” he added.

Allocating portion of the Malampaya royalties to reducing power rates will also be very timely amid the global financial difficulties.

“We want to see some of that (Malampaya proceeds) to go to the industry especially with the global financial crisis. We believe that agriculture is very critical but government should also find ways to cut electricity prices to make industries more competitive,” he said.