DOE seeks EO to suspend coal import duty
By Myrna M. Velasco – March 8, 2022, 4:14 PM
from Manila Bulletin
The Department of Energy (DOE) is batting for the issuance of an Executive Order (EO) by President Rodrigo Duterte to suspend the 7.0 percent import duty on coal imports that will be utilized for power generation, so consumers will not be saddled with exorbitant electricity rates.
In a briefing with reporters, Energy Secretary Alfonso G. Cusi stated that the tax or duty to be suspended is in line with the ASEAN-India Free Trade Area (AIFTA), which is a framework agreement between the government of India and the ASEAN countries, including the Philippines.
The schedule of tariffs or duties to be imposed on the export and importation of goods under the AIFTA had been spread from years 2017 to 2022 wherein signatory-countries seeking preferential tariffs need to file for an advance written notice with the Tariff Commission.
“We are requesting the President for issuance to suspend it (7.0-percent tariff), so we can get coal from other countries aside from Indonesia,” the energy chief said.
On the proposed oil excise tax suspension, Cusi indicated that the Department of Energy (DOE) does not have any luck yet into convincing the Department of Finance (DOF) to pull the plug on that policy even for an interim period.
“We, at DOE, pushed and recommended that, but we understand the DOF’s position that they are not in favor of suspending it because they’re looking at the big picture,” Cusi explained.
He qualified that the stance of the finance department, instead of suspending excise taxes enforcement, would be to increase subsidy as an alternative.
The appeal for excise tax suspension was put forward by the Philippine Independent Power Producers Association Inc. (PIPPA) as they raised concern about electricity rate spikes that will torment consumers, particularly in the high demand-months of summer.
Power firms sounded off alarm that “due to the current crisis involving Russia and Ukraine, the Philippines is experiencing an alarming increase in fuel costs which is felt by every consumer.”
PIPPA emphasized that “the increase in fuel/coal prices is not only an issue of electricity price, but also in making sure that investments will not falter.”
Given such predicament in the industry, the power generation companies similarly pleaded for the suspension of the secondary price cap (SCP) at the Wholesale Electricity Spot Market (WESM), with them arguing that the SCP “only distorts the true cost and is not reflective of the real situation of the energy sector.”
PIPPA thus asked the DOE and the Energy Regulatory Commission (ERC) to re-examine the spot market’s secondary price cap, noting that the Ukraine-Russia war is a geopolitical event beyond their control.
