LPG price up by P3/kg; Meralco rates to go down

MANILA, Philippines - The LPG Marketers Association (LPGMA) increased the price of their liquefied petroleum gas by P3 per kilo yesterday but the government said it would try to use moral suasion to cushion the impact of the increase, which could reach a record high of P7 per kilogram this month.

Energy Secretary Jose Rene Almendras told a press conference that the Department of Energy (DOE) would try to persuade the LPG distributors to do something about the substantial increase.

“There are proposals in both houses of Congress on how to address these issues,” he said.

Rep. Arnel Ty, LPGMA

president and party-list representative, said they have increased the price of their LPG products by another P3 per kilo, just a few days after they had jacked up the price of their products by P3.

Ty said there may be one more increase next week by P1 per kilo, cumulatively amounting to the highest increase in LPG prices for the year.

Almendras said they also expect oil prices to go up this month with some pressure coming from the substantial rise in demand in the Asian region.

“After the first P3 in Dec. 1, we have implemented another P3 today per kilo. A total of P6 has been increased for the month of December and hopefully this would be the last. But there is feedback from suppliers that there is another P1 waiting next week,” he said.

Ty said they do not have projections yet on the trend of LPG prices for next month.

“It would be based on the conversion rate of the peso-dollar and the contract price for January if it would go down. As of now there is no firm confirmation yet. As of today there are still no changes, so hopefully if this is the trend in January, it might soften international prices,” he said.

With the latest P3 per kilo increase, an 11-kg LPG tank is now priced at P640 to P650.

Almendras also admitted that oil prices may increase next week.

“The pressure is really quite high. The same with petroleum. There is a tightness in the Asian market – meaning demand in Asia is larger than anticipated. Two countries, India and Indonesia, are having draw on inventory. So this tightness naturally results in price adjustments in the international market. The reality is that as the economies start to recover and the Asian markets continue to expand significantly, the demand in Asia is quite strong,” he said.

However, the energy chief said the oil firms may be kind enough to give a break to consumers.

“It’s the season of giving. People are in a festive mood and charitable. We are hoping that oil companies may consider these in making their business decisions,” he said.

Last month, members of the LPGMA kept their prices due to lower domestic market demand.

The contract price of LPG rose to $933 per metric ton in December from $791 per MT in November.

LPGMA members include Omni Gas, Pinnacle Gas, Island Gas, Cat Gas and Nation Gas.

Power rates down

Meanwhile, customers of the Manila Electric Co. (Meralco) will enjoy a 32-centavo per kilowatt-hour (kwh) reduction in their electric bills this month.

In a statement, Meralco said the generation charge that will be reflected in the bills of their customers for the month of December will go down to P4.97 per kwh from previous month’s P5.29 per kwh.

Meralco attributed the drop in electric bills to lower prices of electricity in the wholesale electricity spot market (WESM), which went down by P4.99 per kwh this month.

WESM prices for the supply month of November was at P6.35 compared to P11.34 for the preceding supply month.

The reduction in WESM prices more than offset the slightly higher prices from other suppliers. National Power Corp. (Napocor) rates increased by 44 centavos from P4.85 to P5.29 per kWh.

Average independent power producer (IPP) rates also increased by 14 centavos from P4.23 to P4.37 per kwh, due to the weakening of the peso-dollar exchange rate and lower dispatch.

In particular, one unit of San Lorenzo was on scheduled plant maintenance from Oct. 16 to Nov. 17.

Lower dispatch from San Lorenzo is still expected next month as another unit is on maintenance starting Nov. 24 up to Dec. 19.

In percentage terms, Meralco obtained 14 percent, 41 percent and 45 percent from WESM, Napocor, and IPPs, respectively, for the supply month of November. 

The IPPs continued to be Meralco’s cheapest source of power.

Meralco reiterated that the generation charge is entirely a pass through charge and does not accrue or go to them.

The cost of power sold by the generating companies can move from month to month based on factors beyond their control like fuel prices, dispatch of the IPPs, foreign exchange rate, and WESM prices, among others.

Meralco said should there be adjustments in the cost of generation from its various suppliers, it will reflect these changes in the customers’ bills, such as this month’s reduction.

The generation charge, the electricity bill’s biggest component, averages about 60 percent of the customer’s average monthly power bill.

The charge goes directly to Meralco’s power suppliers and not to Meralco.