DOE warned: Filipinos to pay for expensive LNG

MANILA  -Relying on liquefied natural gas (LNG) to meet a growing electricity demand could mean even higher power rates for Filipinos, a US-based think tank warned, as the Department of Energy (DOE) sought to make the Philippines “a major player” in the industry despite volatile fuel prices.

The Institute for Energy Economics and Financial Analysis (IEEFA) on Monday pointed out the DOE’s draft circular prescribing the policy framework on LNG development was against the legal obligation of power utilities to procure power in the “least-cost manner,” as the fuel was “significantly more expensive than other energy sources.”

In its draft circular publicly released on Aug. 17, the DOE proposed to require distribution utilities to source a percentage of their power requirements from LNG plants. Stakeholders were asked to comment until Aug. 24.

“As LNG costs fluctuate wildly, so do the prices that Filipino end-users pay for electricity. Renewable energy sources, meanwhile, are significantly cheaper and do not depend on unpredictable imported fuel costs,” IEEFA said.

In April this year, the country imported its first shipment of LNG from the United Arab Emirates. The supply went to San Miguel Corp.’s terminal in Batangas province to power its 1,200-megawatt Ilijan plant.

According to IEEFA, the shipment cost around $51.77 million. The next shipment arrived in July at a cost of around $35.87 million.

With a projected increase in LNG demand, the total translates to an annual import bill of more than $2.5 billion, IEEFA said.

It said LNG costs could also translate to a final generation price of nearly P8 per kilowatt-hour (kWh), higher than the price of solar power at P4.4 per kWh.

DOE defended its decision, saying LNG was “crucial” for speedy energy transition.

“Promoting a wholesale expansion of LNG terminals and power plants sends the wrong signals to investors and risks binding the country to a costly, volatile energy future,” IEEFA said. INQ