DOE thumbs down tax on coal-fired power plants

MANILA, Philippines–The Department of Energy (DOE) has opposed the proposed imposition of an environmental tax on coal power projects on concerns this would raise electricity rates and derail investments meant to prevent power supply deficits in the future.

“There are groups pushing for an environmental tax to make other technologies competitive to coal, which is presently cheaper. But Energy Secretary Carlos Jericho L. Petilla is concerned this will simply raise power rates for consumers and not really increase investment in power overall. So our policy now is we don’t support this new tax but we encourage coal power developers to use cleaner technologies,” Energy Undersecretary Zenaida Monsada said at the Coal Business and Policy Forum in Makati City.

The Philippines is facing a power crisis starting next year as the Luzon grid, whose power consumers contribute more than half of the country’s economic activity (Metro Manila alone accounts for 36 percent), needs at least 700 megawatts of power reserves to curb the likelihood of extended brownouts.

From 2014 to 2018, coal will contribute 75 percent of committed power projects.

“We cannot do without coal as things stand now. That is the reality. But we encourage RE (renewable technology), LNG (liquefied natural gas) and other sources,” Monsada said.

The DOE expects to award new coal exploration contracts under the Philippine Energy Contracting Round 5 (PECR) to interested investors by Dec. 18. The DOE said that December was also energy consciousness month.

The department offered 15 coal areas for exploration and development under PECR 5 as part of the government’s drive to develop indigenous energy resources. Nine applications (from five companies) were filed for seven areas offered under PECR 5 for coal, but only eight passed the preliminary assessment.

For Area 2 (located in Tago and Tandag, Surigao del Sur province), Coalblack Mining Corp. and TQGT Minerals Resources passed the preliminary assessment.

Area 4 (Butuan City, Agusan del Norte and Sibagat, Agusan del Sur) was being targeted by Sahi Mining Corp. Area 5 (Butuan City, Agusan del Norte and Sibagat, Agusan del Sur) was applied for by Sahi Mining. Area 6 (Bunawan, Agusan del Sur) and Area 7 (Bunawan and Torento in Agusan del Sur) were sought by Philsaga Mining Corp. Areas 10 and 11 (Godod, Zamboanga del Norte and Kabasalan, Zamboanga Sibugay) were applied for by Sahi Mining.

On the RE side, the government is implementing the feed-in-tariff (FIT) incentive program on a first-come, first-served basis to encourage faster development of solar, wind and other qualified projects.

DOE director Mario Marasigan said in a text message that Lopez-led Energy Development Corp.’s (EDC) 150-megawatt (MW) Burgos wind project has been nominated to the Energy Regulatory Commission for eligibility under FIT, which consumers will start paying as a new line item in monthly power bills starting January 2015. The DOE has also nominated Ayala-led NorthWind Power Development Corp.’s 18.9-MW expansion of the 33-MW Bangui Bay wind farm in Ilocos Norte.