* My column in BusinessWorld last November 06, 2019.
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The good news about Philippines inflation is that we have
declining rates, only 0.9% in September and 0.8% in October 2019. The bad news
is that after being the inflation valedictorian in 2018, taking the gold medal
at 5.2% (silver was Vietnam, bronze Indonesia), the country still has the third
highest inflation rate year to date (ytd), January to September/October 2019
(see Table 1).
The main culprit is the “expensive energy is beautiful”
policy under the TRAIN law, with the oil excise tax rising yearly from
2018-2020, total of P6/liter. Since the VAT also applies to the excise tax, the
effective increase by January 2020 will be P7.20/liter. The coal excise tax
also rising from P10/ton in 2017 to P150/ton by 2020.
What mitigated the continued price pressure was rice
tariffication — rice and food price indices declined in recent months and
hence, it is a good policy. It is the “expensive energy is beautiful” policy
that is anti-poor, anti-farmer, anti-fisherfolk as farming and fishing now are
becoming more mechanized and hence use lots of oil that contribute to higher
agriculture and fishery productivity.
Aside from agriculture, fishery, and transportation,
higher oil taxes also caused higher electricity prices in many islands,
including big ones like Mindoro and Palawan, that are served only by big
gensets running on diesel, from NPC-SPUG, and private generators. The people in
these provinces and islands should pay P15-25/kWh in generation charge alone,
but they only pay below P10/kWh and the balance is passed on to all consumers
in the country via the higher universal charge in our monthly electricity bill.
That universal charge, along with eight other charges
(generation, transmission, distribution, supply, system loss…) plus subsidies
to renewables (FIT-All) and taxes make the Philippines’ electricity prices
reach about P10/kWh, the 3rd highest in Asia after Japan and Singapore (see Table
2).
Note that countries with the highest electricity prices
in the world — Germany and Denmark — are also those with the highest
concentration of wind-solar, variable renewables that are intermittent,
unstable, and unreliable, dependent on the weather for power supply and
dependent on state subsidies to become “economically viable.”
During the ASEP-CELLs project launch at Xavier University
in Cagayan de Oro City last week, Senior Technical Advisor Dr. Josef Yap showed
data on comparative electricity prices among eight Asian countries from
2010-2017. His source, EnerData, showed that the Philippines has 2nd highest
prices of around 18 US cents/kWh in 2017, next to Japan’s 23 cents/kWh.
Now we read reports this week of “more than 11,000
scientists worldwide warning of a climate emergency” and that the world “must
replace fossil fuels with low-carbon renewables.”
This is just another alarmist paper as the UN FCCC
meeting is approaching, mid-December in Madrid, Spain.
Now consider the Petition Project
(www.petitionproject.org) signed by 31,487 American scientists and academics,
9,029 of whom have PhDs, explicitly declaring: “There is no convincing evidence
that human release of carbon dioxide, methane or other greenhouse gases is
causing or will, in the foreseeable future, cause catastrophic heating of the
Earth’s atmosphere and disruption of the Earth’s climate. Moreover, there is
substantial scientific evidence that increases in atmospheric carbon dioxide
produce many beneficial effects upon the natural plant and animal environment
of the Earth.”
See the result of climate and energy alarmism — Germany
having the highest electricity prices in the world, got 24.3% of its total
electricity generation in 2018 from wind-solar. In contrast, Malaysia and
Vietnam got only 0.3% and 0.2% respectively from wind-solar and they have among
the cheapest electricity prices in the world, only 1/6 of prices in Germany.
More energy issues and data will be discussed in The
Arangkada Philippines Project (TAPP) conference on Nov. 21 at the Marriot Hotel
Manila. One of the three focus sectors to be discussed in the afternoon session
is power and electricity.
We need climate and energy realism, not alarmism. We need
less politics, coercion, and legislation in power generation and pricing of
commodities, especially energy sources.
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