The Iran war, oil taxes, Meralco and Nordeco
March 5, 2026 | 12:00am
https://www.philstar.com/business/2026/03/05/2512050/iran-war-oil-taxes-meralco-and-nordeco
This piece will cover several topics -- from the Iran war and high world oil-gas prices, to domestic power issues.
Higher world oil, LNG, and even coal prices
Middle East countries produce and export oil and gas, no coal. Energy prices last Feb. 27 or day before the US-Israel bombings of Iran, WTI crude was $59.6/barrel, EU natural gas was euro 32/MWH, coal Newcastle was $118.5/ton. As of March 4, 11 a.m. Manila time, WTI crude was $75.3/barrel, EU natgas was euro 53.6/MWH, and coal was $138/ton.
The expectation and advocacies of many sectors is that when oil-gas prices spike high, people would demand more solar and wind for energy use, this did not happen. From Feb. 27 to March 4, solar energy index is flat at $54.6, wind energy index declined from $24.5 to $23.5. Meaning, energy companies quickly shifted to coal for power generation. Not solar or wind.
Reducing oil excise tax
The most prominent and most rational public policy discussion now in the Philippines is how to adjust to these energy price hikes. Under the TRAIN Law of 2017 (RA 10963) the President can reduce excise tax on petroleum products should Dubai crude exceed $80 per barrel for sometime. TRAIN has increased the excise tax of diesel and bunker fuel from zero to P6/liter, kerosene from zero to P5/liter, aviation gas from zero to P4/liter, regular and premium gasoline from P4 to P10/liter, LPG from zero to P3/kg and so on.
I support this move. If possible, any revision to the TRAIN law should lower the threshold for excise tax downward adjustment from $80 to $75/barrel.
Higher inflation from oil tax hikes under TRAIN law
Here are the inflation numbers in 2017, 2018 and 2019 (in percent): Singapore: 0.6, 0.4, 0.6; Malaysia: 3.8, 1.0, 0.7; Thailand: 0.7, 1.1, 0.7; Cambodia: 2.9, 2.4, 2.0; Indonesia: 3.8, 3.3, 2.8; Vietnam: 3.5, 3.5, 2.8; Philippines: 2.9, 5.3, 2.4.
Thus, of the seven ASEAN countries, only the Philippines experienced big jump in inflation in 2018 while the others have either flat or lower inflation in 2018. Despite being subjected to similar global and regional economic and energy circumstances that year. The simple reason why the Philippines has high inflation that year was the implementation of high oil taxes starting January 2018. To correct this, oil taxes should decline to be compensated by lower public spending somewhere.
Other proposals to reduce domestic oil prices
One, continue if not expand fuel subsidies for jeepneys under the Pantawid Pasada Program when global oil prices hit the $80-per-barrel threshold. No or discontinue, please. If government must subsidize public transportation, it must subsidize all including provincial and Metro Manila buses, including taxi and so on.
Two, local government should ban motorcades and caravans to save fuel. No, let people and businesses decide about their households and business needs. Bans and prohibitions are slippery slope that can lead to more bans in other sectors and sub-sectors.
Three, DOE via PNOC should build big oil storage facilities to store oil when prices are low, then release oil when prices are high. No. Let the private gas companies themselves build and maintain their own oil storage structures and facilities.
Four, accelerate energy diversification via more RE and early decommissioning of coal plants, reduce dependence on imported fossil fuels. Yes to energy diversification, No to killing of coal plants. As discussed above, the quickest adjustment by countries and companies to keep the lights and airconditioning on, is to ramp up their coal plants.
Meralco and MGEN 2025 finance and operating results
Last week, Feb. 25, I attended the Meralco presscon on their financial and operating results for 2025. Meralco’s top five officials led by chairman and CEO Manny V. Pangilinan spoke and gave briefings on the company’s good financial position.
Consolidated corporate net income (CCNI) showed 12 percent growth. Distribution utility or Meralco proper has P29.6 billion or 58 percent of CCNI, sales volume is flat at 53,997 GWH in 2024 to 54,325 GWH in 2025.
Power generation via Meralco Power Gen Corp. (MGEN) contributed P16.8 billion or 33 percent of CCNI. Sales volume increased from 15,296 GWW in 2024 to 27,289 GWH in 2025 or 78 percent increase. Rock star performance, kudos to MGEN president and CEO Manny Rubio.
The biggest contribution in MGEN’s CCNI is its 40.2 percent stake in LNGPH, the Philippines’ most expansive integrated LNG facility that supplies about 18 percent of Luzon’s electricity need, from zero in 2024 to 11,912 GWH sales in 2025.
A very useful expansion would be the Atimonan coal plant in Quezon province, 1,200 MW of high efficiency low emission (HELE) coal plant that should be operational by 2030. Then a 74-MW coal expansion in Toledo, Cebu. Visayas grid has the thinnest reserve margins compared to Luzon and Mindanao grids, and Cebu sub-grid is always under heavy pressure to produce more electricity and avoid frequent Earth Hours there.
NORDECO employees coercion
I saw one weird development posted on Facebook. Employees of Northern Davao Electric Coop (Nordeco) were ordered to use social media to protect the cooperative and oppose the takeover by Davao Light and Power Co. (DLPC) which already got the congressional franchise to also serve Davao del Norte and Davao de Oro provinces. The order dated Jan. 29, 2026 was signed by acting general manager Elvera Alngog.
Employees who cannot show enough screenshots of their social media posts and sharing are threatened with administrative sanctions based on their Code of Ethics.
This is another proof that many electric cooperatives are weak in finance and efficient service to customers but strong in politics and dirty tricks. Nordeco should shut up and follow the franchise law.
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