MANILA, Philippines?To ensure that prices of electricity are accurate and fair, the Department of Energy is now urging investors to reflect the actual costs of their power projects, rather than to benchmark costs on the prices of oil and petroleum products in the international market.

?We would like to take full advantage of our indigenous resources. If we are to link costs with the international price of oil, we wouldn?t be able to maximize the benefits of our own resources,? said Jesus Tamang, director of the DOE?s energy policy and planning bureau. ?But if (costs are to be) based on other mode of pricing, for example, actual mode, actual cost of delivery?meaning actual production?actual transmission cost, then we can have better and more optimal pricing.?

This move is also meant to reduce the country?s vulnerability to sudden and hefty surges in oil prices abroad, which are consequently reflected locally through increases in the prices of petroleum products, such as gasoline, diesel, kerosene and liquefied petroleum gas.

Tamang cited as an example the case of investors interested in liquefied natural gas projects. According to him, the government will be asking these proponents to submit, as part of their permit requirements, their pricing formula or models.
?The government cannot always impose, but we can influence. On the many discussions we?ve had, the trend is to move away from international pricing,? Tamang said.

?Also, businessmen themselves are aware that, at one point, there will be depletion of oil resources, and towards depletion, the only trend that you can see may be increasing oil prices. So why would you agree to link your costs with international oil when you know that the natural tendency of prices would be to go up?? he added.