BWorld 761, PhilHealth budget tied to tobacco tax money, credit ratings upgrade

PhilHealth budget tied to tobacco tax money, credit ratings upgrade

December 3, 2024 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2024/12/03/638669/philhealth-budget-tied-to-tobacco-tax-money-credit-ratings-upgrade/

 

There are three phrases that I regularly read used in the continuing opposition by health activists and lobbyists over the excess PhilHealth (Philippine Health Insurance Corp.) funds.

 

One is “defunding PhilHealth.” “Defunding” means that a budget is slashed from xx billions to zero. This is not happening so the term is plain emotional and dishonest.

 

In 2023, PhilHealth had a budget of P100 billion, largely sourced from tobacco excise tax collections, which peaked at P176 billion in 2021. Under RA 11346 of 2018 which raised sin tax rates, 50% of excise tax revenues from tobacco, alcohol, sugar-sweetened beverages (SSB) should go to PhilHealth and the Department of Health (DoH).

 

When the tobacco tax rate increased from P50/pack in 2021 to P55/pack in 2022, tobacco smuggling and illicit trade exacerbated and tobacco tax revenues declined for the first time, down to P160 billion in 2022. The PhilHealth budget declined to P61 billion in 2024.

 

Then in 2023, the tobacco tax rate further increased to P60/pack and tobacco smuggling got even worse and government tobacco tax revenues further declined to only P135 billion, or P41 billion less than 2021’s level. In 2024, the tax rate further increased to P63/pack, the illicit tobacco trade worsened again, and the projected tobacco tax revenues will further decline to only about P122 billion.

 

The health lobbyists demanded an even higher PhilHealth budget for 2025 of up to P172 billion, even if they knew that their beloved tobacco tax money keeps declining. They did not get what they wished so now they blame the departments of Budget and Finance. This instead of blaming the high incidence of illicit trade in tobacco and the shift of smokers from legal to illegal tobacco, plus the shift to vapes from tobacco.

 

Anyway, PhilHealth will still get funding despite the declining tobacco tax money. PhilHealth will not be “defunded” in 2025 but it will receive fewer funds — P47.5 billion based on the Senate budget bill for 2025 (see Table 1).

 

The second phrase I see is “PhilHealth indirect contributors.” The indirect contribution to PhilHealth is the 50% share from excise tax revenues from tobacco and sugar-sweetened beverages. So, are the health lobbyists implying that the non-direct contributors to PhilHealth are the smokers, vapers, and sweet beverage drinkers? It does not sound logical because most patients are prohibited by their attending doctors from smoking and eating sweets.

 

The third phrase I read is “Insurance contract liabilities (ICL)… amounted to P1.128 billion.” As discussed last month in this column, “On the PEB in London, the PhilHealth funds, and the US elections” (Nov. 5), I ex-plained that “ICL is Present Value of Future Outflows minus Present Value of Future Inflows… So ICL are just estimates, not backed up by actual claims or contracts with hospitals and health professionals.”

 

Since ICL are just estimates based on certain assumptions, when the assumptions change, the ICL also changes significantly. See the fluctuation and variability of ICL estimates: P1 trillion in 2020, P0.34 trillion in 2021, P0.27 trillion in 2022, P1.15 trillion in 2023. Even that P1 trillion ICL is just hypothetical and not actual claims made by healthcare providers like hospitals.

 

One mistake that was made by the health lobbyists and activists was when they moved for the earmarking of tobacco tax revenues for PhilHealth and the DoH. They are happy when there are more smokers and drinkers of legal products because then the tax revenues increase. When smokers shifted to illegal or illicit products because of the high tobacco tax rate, the revenues declined, and funding for PhilHealth declined.

 

CREDIT RATINGS

Last week, on Nov. 26, S&P raised the Philippines’ credit rating from “BBB+ stable” (given in April 2019) to “BBB+ positive.” So, the next ratings upgrade for the Philippines would be “A-,” and will hopefully be given within the next 12 to 24 months. This is good news for us.

 

I noticed that several developed countries have very high ratings of AA to AAA yet have had a high level of corporate bankruptcies recently, like Australia and Germany. In contrast, a number of East Asian economies also have high credit ratings but are seeing flat or a declining number of bankruptcies, like Singapore, Taiwan, Hong Kong, and South Korea (see Table 2).

 

The challenge for us, especially the government economic team, is to attract those failing and migrating companies to move from North America, Australia, and Europe to the Philippines. We have third fastest GDP growth in Asia next to India and Vietnam, have improving credit ratings, declining inflation and unemployment rates, and other positive factors.

Free Trade 75, West to East shift in global exports

This is a beautiful and simple chart, shared by a friend Eric Jurado.

Yes, Asia is an economic and industrial powerhouse now. 

CN is the anchor, JP only second, KR third.

In 2024, CN exports was almost equivalent to US + Germany combined.

While until 2005, CN exports was only 1/7 of US + Germany combined.

Also in 2024, KR exports was larger than Italy or France or UK.

While until 2005, the exports of any of these 3 Europeans were 2x or 3x of KR's.

See table 2 here, https://www.bworldonline.com/opinion/2025/05/15/672469/china-trade-dominance-and-small-philippine-exports/

Where there is more prosperity, there will be more freedom. 

And where there is degrowth and deprosperity, there will be less freedom.

So Asians will soon (or now) have more freedom than Europeans and even N.Americans.

Like the freedom to say, Yes there are only 2 genders, and not worry being harassed if not prosecuted.

Freedom to choose 2 or 3 aircons in the house, not freedom to choose occasionally candles or gensets.

Freedom to assert country border, freedom to immediately deport illegal immigrants and aliens.

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See also: 

Free trade 72, Illicit products and prohibitions in government, February 03, 2023

Free Trade 73, Trade diversion as consequence of zero or high tariffs, October 26, 2024

Free Trade 74, Trump's tariff reciprocity plan, March 02, 2025

BWorld 760, On gas power, Pacific Light, and coal

On gas power, Pacific Light, and coal

November 28, 2024 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2024/11/28/637736/on-gas-power-pacific-light-and-coal/

 

SINGAPORE — This small but very rich country is known for its bright lights at night, and huge indoor gardens and tall waterfalls featuring 24/7 lights and aircon like those at the Gardens by the Bay and the Jewell Changi airport, among others. The city-state has huge power generation per capita, about 10 times that of the Philippines.

 

Singapore is the most natural gas-intensive country in the world, with about 90% of its total power generated in liquified natural gas (LNG) plants, and another 10% generated from diesel. It has no coal or nuclear plants, no solar or wind farms. It is pure 100% fossil fuel power generation with competitive prices. It does not suffer from blackouts or power fluctuations.

 

Some Middle East Asia and North Africa countries — like Iran, Egypt, and the United Arab Emirates (UAE) — have gas to total generation shares of above 70%. In Asia, Thailand, and Taiwan follow Singapore in having high gas/total generation ratios (see Table 1).

 

Pacific Light Power (PLP) is one of the six generation companies (gencos) in Singapore that contribute to the country’s bright lights. It is the smallest among the six, with only about an 8% share of installed capacity, but it has a 10% consumer market share, meaning it is efficient and has competitive prices. It is jointly owned by Meralco Power Gen Corp. (MGen) with 58% share and First Pacific Co. Ltd. with 42%.

 

Singapore has no mandatory competitive selection process (CSP) — long-term supply contracts between gencos and consumers. Singapore’s retail competition and open access (RCOA) style service goes down to the household level, so households can choose their gencos for a contract of at least one year. With consumers’ ability to switch from one genco to another, each genco must be as price competitive as possible. And PLP is exactly doing that.

 

THE PHILIPPINE SITUATION

The Philippines has five gas plants that use either indigenous Malampaya natural gas or imported LNG. These gas plants supply between 14% to 16% of the total power generation yearly.

 

MGen is a potentially big player in the Philippines’ gas development, not only for its knowledge about gas power through PLP, but also through Chromite Holdings that will (hopefully) own two huge gas plants — Ilijan and Excellent Energy (EERI) — in a partnership between San Miguel Corp., Aboitiz Power, and MGen. The partnership is still subject to approval by the Philippine Competition Commission though.

 

Coal plants are the workhorses of the Philippines, they contribute between 60-62% of total power generation yearly. This ratio is similar to that of China, Indonesia, and Vietnam but lower than India’s 75%.

 

The average marginal increase in the Philippines’ power generation from 2019 to 2023 was about six terawatt-hours (TWh) a year. If the Philippines is to sustain an annual GDP growth of 6%, compounded, and avoid the frequent yellow-red alerts (low power) that we experienced until early this year, I estimate that we will need about seven to eight TWh/year from 2024-2026, then eight to 10 TWh/year from 2027-2032.

 

To achieve this, we will need new conventional power plants with a combined dependable capacity of 1,000 megawatts (MW) yearly. Since these are new, their projected capacity is up to 90%. To compute the potential output of a 1,000 MW conventional plant, we use this formula: (1,000 MW) x (0.90) x (24 hours/day) x (365 days/year) = 7.88 TWH/year

 

And to achieve this, gas, coal, or nuclear plants must be commissioned every year from 2028 onwards, and construction should start this year, not two or three years from now.

 

In the experience of many countries, those that shifted away from using coal experienced higher or flat inflation rates — Australia, Canada, Germany, the UK, and the US. Meanwhile, countries that increased their coal use experienced lower inflation rates — Taiwan, China, South Korea, Japan, India, Indonesia, Malaysia, the Philippines, Vietnam, Russia, and Turkey (see Table 2).

 

The numbers on total coal generation, population, and derivation of coal generation per capita were shown in this column’s previous article, “The Atimonan coal project, energy transition, and the ERC” (Sept. 19).

 

Despite the increase in the Philippines’ coal power capacity, our per capita coal generation remains the lowest in our neighborhood — it is, for instance, only one-half of Vietnam’s and only one-fourth of that of Malaysia.

 

We should not accede to the lobbying for the early shutdown of our coal plants unless there are huge gas or nuclear plants ready. If we do, we should be prepared for daily blackouts again like in 1990 and 1991. 

PhilStar 18, New fiscal targets and the anti-agricultural economic sabotage law

New fiscal targets and the anti-agricultural economic sabotage law

 

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star 

December 5, 2024 | 12:00am

https://www.philstar.com/business/2024/12/05/2405015/new-fiscal-targets-and-anti-agricultural-economic-sabotage-law

 

Three topics here and we go straight to the numbers and facts.

 

DBCC new fiscal targets

 

Last Monday Dec. 2, the Development Budget Coordination Committee (DBCC)  released their updated medium-term, 2024-2028 macroeconomic growth and fiscal targets. The DBCC is composed of DOF Secretary Ralph G. Recto, NEDA Secretary Arsenio M. Balisacan, DBM Secretary Amenah F. Pangandaman, and BSP Governor Eli Remolona.

 

The revenue targets are P4.38 trillion in 2024 or 16.5 percent of GDP, to P6.25 trillion in 2028 or 17 percent of GDP.

 

The disbursement or spending targets are P5.91 trillion in 2024 or 22.3 percent of GDP, to  P7.62 trillion in 2028 or 20.7 percent of GDP.

 

The budget deficit targets are P1.52 trillion in 2024 or -5.7 percent of GDP, to P1.37 trillion in 2028 or -3.7 percent of GDP.

 

In 2023, revenues were P3.82 trillion or 15.7 of GDP, disbursements were P5.34 trillion or

 

21.9 percent of GDP, and deficit was P1.51 trillion or -6.2 percent of GDP. So there were improvements in 2024 over 2023 – higher revenues, lower spending, and lower deficit as percent of GDP. And things would further improve on the way to 2028.

 

As an advocate of small government, small taxes and bureaucracies, I find the updated fiscal targets still high, like a deficit higher than -3 percent of GDP by 2028. But the behavior of many agencies both national and local, the behavior of the public themselves seeking more subsidies and freebies even without economic, finance or health crisis, make drastic reduction in spending, deficit and borrowings highly improbable.

 

Thus I find the compromise targets of the DBCC as practical and realistic. I particularly support the corporate income tax cut under CREATE MORE law pushed by DOF Secretary Recto, the spending cut under the proposed National Government Rightsizing Program (NGRP) bill pushed by DBM Secretary Pangandaman. These two measures should help expand the investment and corporate tax-base and reduce wastes and corruption in government. They will help expand the GDP size, the denominator, so that deficit/GDP and debt/GDP ratio should decline, slowly but consistently.

 

The Anti-agriculture economic sabotage (AES) law

 

Last Tuesday Dec. 3 I attended the Stratbase forum, “Strengthening Resilience for Food Security: Collaborative Strategies Against Agricultural Economic Sabotage” held at the AIM Conference Center in Makati. Focus was implementation of “Anti-Agricultural Sabotage Act” or RA 12022, signed into law only last Sept. 26. The law intends to control large-scale smuggling, hoarding and profiteering of agricultural products including tobacco.

 

The speakers were DA Assistant Secretary Felicizimo Madayag Jr., DOJ ASec Randolph Pascasio, DOF Revenue Operations Group Atty. Emee Macabales, BIR National Investigation Division Atty. Mary Gretchen Mondragon, NBI Cybercrime Division Atty. Van Homer Angluben, PNP Director for Intelligence PBGen Westrimundo Obinque, PCG Commander for Maritime Security Law Enforcement Command Robert Patrimonio. Host was Ms. Nikki de Guzman of TV5.

 

The DA official spoke about the need for border controls, partnership of national enforcement agencies with local government units and people’s organizations. The DOJ official admitted that out of 547 Customs cases only 23 percent reached the courts, and out of 192 agriculture smuggling cases only five percent resulted in prosecution. And DOJ  was improving their procedures to secure higher convictions.

 

The DOF, BIR, NBI, PNP and PCG officials followed up with their own measures to control smuggling and illicit trade of agriculture products into the country. Such illegal products not only can harm public health but they harm public finance, they pay zero or little taxes while annual public expenditures keep rising.

 

I checked the Philippine Statistics Authority (PSA) latest trade data, January-September 2024 vs January-September 2023. Here are some numbers for agriculture products: animal and vegetable oils and fats, fruits and vegetables, feeding stuff for animals (excluding unmilled cereals), dairy products – they have over $1 billion imports each in 2024 and registered positive percentage growth over 2023 levels.

 

But these products experienced decline in importation: fish and fish preparations down to $494 million or -9 percent; beverages and tobacco manufactures down to $379 million or -17 percent; and tobacco unmanufactured $225 million or -12 percent.

 

Perhaps the smugglers of fish and tobacco products sensed that the anti-AES bill was nearing enaction into law, they hastened their non- or under-declaration of agriculture imports.

 

The GB-BEM smuggling case

 

Among the prominent cases a few years ago about large-scale tobacco smuggling was GB-BEM Cigarette Co. Inc operating as a cigarette manufacturer inside Clark Ecozone. When the BIR raided it in Feb. 5, 2020, they found 1.65 million packs of cigarettes supposedly  for export to Malaysia but lacking tax stamps, GB BEM was registered with PEZA but not with the BIR as excise taxpayer, the estimated unpaid excise tax from 2017 to 2020 was P14.05 million. Plus many reports that its cigarettes were sold in Central Luzon.

 

See these reports, “BIR strike team shuts down illegal cigarette maker in Clark ecozone” (DOF website, April 6, 2020), “BIR promises to remove export cigarettes’ tax-stamp exemption” (BusinessWorld, March 1, 2021), “PEZA probes 2 cigarette makers without BIR registration” (BusinessWorld, March 8, 2021).

 

Then last Nov. 20, 2024, the First Division of the Court of Tax Appeals (CTA) promulgated a Decision acquitting PEZA-registered GB BEM Cigarette Co. Inc., and its officers. The CTA cited a number of technicalities that the BIR strike team failed to produce to secure conviction.

 

I think the lesson here is that technicalities and not substance, like the operation for several years of non-BIR-registered cigarette company, non-payment of excise tax for big volume of manufactured cigarettes, were resorted by the CTA. The BIR and DOF, the tobacco tax-dependent agencies like PhilHealth and potential health beneficiaries, are the losers. 

BWorld 759, BW’s Forecast 2025 forum and MUP pension reform

BW’s Forecast 2025 forum and MUP pension reform

November 26, 2024 | 12:01 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2024/11/26/637000/bws-forecast-2025-forum-and-mup-pension-reform/

 

The BusinessWorld Economic Forum today has a theme “Forecast 2025” and among the keynote speakers is Department of Finance (DoF) Undersecretary and Chief Economist Domini S. Velasquez. I have high regard for DoF’s economists in terms of fiscal and macroeconomic forecasting.

 

So far, the Philippines has had an average growth of 5.8% in the first three quarters (Q1 to Q3) of 2024. This is third highest among the major economies of Asia after India and Vietnam, and much higher than the average growth of countries in North America and Europe. The International Monetary Fund’s (IMF) forecast for the Philippines in 2025 is 6.1% growth — fair enough (see Table 1).

 

I saw two pieces of good news last week that I think will help the Philippines attain a growth rate of 6% or higher next year. These reports in BusinessWorld (BW) were: “Canada sending 300-member biz delegation to PHL in December” and “PEZA approvals hit P186B as of mid-Nov.” (Both came out on Nov. 21.)

 

Senior Trade Commissioner Guy Boileau of the Canadian Embassy in Manila was quoted saying that: “This is the biggest Team Canada Trade Mission that we have done. It is bigger than the delegations sent to Japan and Korea.”

 

Mr. Boileau also mentioned that among the standout reforms and new laws that helped many Canadian investors to consider the Philippines were: the amendment to the Public Service Act, Public-Private Partnership Code, and the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE).

 

DoF Secretary Ralph G. Recto used a lot of his political capital in pushing the CREATE MORE bill into a law, which was signed by the President on Nov. 11. The reduction in the corporate income tax rate from 25% to 20% is among the big reforms in the CREATE MORE law. I think it is a beautiful law because it responds to tax competition in East Asia, among other reasons.

 

The Philippine Economic Zone Authority (PEZA) reported that investment approvals in 2023 came to P140.88 billion, and now it is already P186 billion, and the year is not over yet. Cool.

 

MUP PENSION REFORM

Another piece of good news that was reported in BusinessWorld is this: “Military pension reform ‘not dead’ — DBM chief” (Nov. 25). It quoted Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman and Undersecretary and Principal Economist Joselito R. Basilio.

 

Ms. Pangandaman said that a different version is being worked out and it is “different from what Secretary Ben [Diokno] has intended from the very beginning.” Mr. Basilio said that “Discussions are still ongoing, there will be updating.”

 

The pension of the Military and Uniformed Personnel (MUP) in the government’s annual budget should be zero — that is if the MUPs had not been pampered by previous administrations, especially the Ramos administration. Instead, active personnel contribute nothing to their own personal pensions, plus the pensions of retired MUP are indexed to the salaries of active personnel.

 

The pension comes out to about P130 billion/year on average. The share of pension to basic pay is 68% to 72% (see Table 2).

 

There are bills to remedy this oddity, and compared to the House version, I like the provisions in the Senate version, SB 2501, better. It says members of the military should contribute 7% of their base monthly salary to a pension system and the National Government will contribute 14%; indexation is removed and the pension is limited to 50% of the base pay for the last position held by retired MUPs. The ideal, according to Mr. Basilio, is 9% and 11%.

 

If indexation is retained, as is being lobbied by the Defense department and other agencies, another option is that the pension should be subject to tax, around 25%. This way, pensioners who did not contribute to their pensions during their active days would now be helping contribute to their own pension.

 

Every year the DBM and DoF come under pressure from so many agencies wanting higher budgets while taxes and other revenues are not able to keep up, leading to a high annual budget deficit and high borrowings. It is time to reduce and cut the subsidies and freebies, both to the public and certain government personnel.

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See also:

BWorld 756, Growth forecast and Trump’s trade policies

BWorld 757, Philippine energy realism and Trump’s energy policies

BWorld 758, On the nuclear forum, and the link between nuclear energy and inflation

 

PhilStar 17, Gas power in Asia and Pacific Light (Part 1 of 2)

Gas power in Asia and Pacific Light (Part 1 of 2)

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star 

November 28, 2024 | 12:00am

https://www.philstar.com/business/2024/11/28/2403391/gas-power-asia-and-pacific-light-part-1-2

 

SINGAPORE – It’s the city of bright lights, fast and efficient trains underground, the regional headquarter of many big multinationals from the West and the host of one of Formula 1’s famous races held at night because it can afford to brighten the road tracks as if it is daytime.

 

Singapore is the richest Asian country in terms of per capita income. In 2023, Singapore has a per capita GDP at current prices of $84,734, fifth highest in the world behind Luxembourg, Ireland, Switzerland and Norway. But at per capita GDP at purchasing power parity (PPP) values, Singapore is the second highest at $127,544 just behind Luxembourg’s $133,973.

 

The per capita GDP at PPP values of other East Asians in 2023 were: Taiwan $67,044, Hong Kong $64,538, South Korea $54,103, Japan $54,103, Malaysia $34,864, China $22,078, Thailand $21,608, Indonesia $14,014, Vietnam $13,499 and the Philippines $10,165 (Source: IMF, World Economic Outlook database Oct. 2024).

 

One wonders what powers or what sustains the heavy use of electricity in Singapore. Well, in 2023, Singapore was the most natural-gas intensive country in the world. Here is the percentage share of natural gas in total power generation in terawatt-hours: Singapore used about 90 percent of 57 TWH, Iran used 84 percent of 383 TWH and Egypt used 81 percent of 220 TWH.

 

Other Asians have these numbers: Thailand with 68 percent of 190 TWH, Taiwan with 40 percent of 282 TWH, Malaysia with 37 percent of 188 TWH, Japan with 32 percent of 1,013 TWH, S. Korea with 27 percent of 618 TWH, Indonesia with 17 percent of 351 TWH, Philippines with 14 percent of 118 TWH (Source: Energy Institute, 2024).

 

So many Asians have high use of natural gas which contributes to their high power generation, which in turn, contributes to their high GDP size and/or high per capita GDP. It is an energy source that we should keep expanding in the Philippines.

 

There are five existing natural gas plants in the country, all located in Batangas, the biggest of which is the Ilijan plant with installed capacity of 1,436 MW and dependable capacity of 1,200 MW. It has been running since 2002, making it 22 years old already. It is owned by San Miguel Global Power (SMGP) but Chromite Gas Holdings Inc. (CGHI) where Aboitiz Power (AP) and Meralco Power Gen Corp. (MGen) are also co-investors with SMGP in Ilijan.

 

There are three other gas plants under construction. The biggest of which is the Excellent Energy Resources Inc. (EERI) in Batangas with 1,760 MW capacity (440 MW x 4 units), followed by Batangas Clean Energy Inc. with 1,100 MW and Energy World Corp. with 650 MW in Pagbilao, Quezon. EERI is also owned by SMGP but CGHI will later own and operate this, meaning it will be a partnership among SMGP, AP and MGen. The deal is still pending approval with the Philippine Competition Commission.

 

Now MGen also co-owns a gas plant in Singapore, Pacific Light Power (PLP). It is 830 MW (415 MW x 2 units) running on liquified natural gas (LNG) but capable of running on diesel as well, operational since 2013. MGen has 58 percent ownership with partner First Pacific Co. Ltd (HK) owning 42 percent. It is one of six generation companies in Singapore, located in Jurong Island, an industrial and energy enclave of the country.

 

In a press statement, Yari Miralao, president & CEO of MGen Gas Energy Holdings Inc. (MNatural Gas) said that “we are dedicated to investing in state-of-the-art facilities to enhance our competitiveness in the Singapore energy market. This includes a potential investment in a new 600- MW power plant, designed to be larger, more efficient and one of the most reliable on the Singapore grid.”

 

I find PLP interesting for four reasons. First, it occupies a small land area with only 13 hectares housing an 830-MW gas plant and will further expand to another 100 MW of fast-start LNG and hydrogen-ready ancillary service or peaking plant.

 

Second, it is competitively priced. It has about eight percent of installed capacity but gets about 10 percent of market share.

 

Third, it is the first power plant in Singapore to exceed 60 percent efficiency after the Advanced Turbine Energy Package upgrade, making it one of the most efficient gas plants in East Asia.

 

Fourth, it has a safe work environment with over one million man-hours without lost time injury and 1,000+ accident-free days as of October 2024.

 

Singapore recently solicited a supply of two new plants. PLP submitted its bid to build another gas plant with a capacity of 600 MW. The average cost of building a gas plant is $1.5 million per MW so this will cost around $900 million. See this story in PhilStar, “MGen’s PacificLight allots $900 million, to bid for 600-MW Singapore plant” by Brix Lelis (Nov. 27).

 

During the global lockdowns in 2020, Singapore suffered a 3.9 percent GDP contraction (or “negative growth”) but recovered with a 9.7 percent GDP growth in 2021. The Philippines suffered a much worse 9.5 percent contraction in 2020 and only recovered to a 5.7 percent growth in 2021.

 

Being a major exporter in the world with merchandise exports of $391 billion in 2019, $457 billion in 2021 and $476 billion in 2023, and further moving into high-end electronics exports, Singapore will need more electricity supply yearly. PLP expansion will help address this rising power demand while providing additional knowledge to MGen for the operation of the big EERI gas plant.

----------------

See also: 

Philstar 14, Energy issues from the US elections, The Freeman Cebu forum

Philstar 15, The Freeman energy forum; avoiding carbon tax

Philstar 16, CREATE MORE and Trump tax, spending cut plan

BWorld 758, On the nuclear forum, and the link between nuclear energy and inflation

On the nuclear forum, and the link between nuclear energy and inflation

November 19, 2024 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2024/11/19/635645/on-the-nuclear-forum-and-the-link-between-nuclear-energy-and-inflation/

 

Last week I attended the “Philippine International Nuclear Supply Chain Forum 2024” at Solaire Resort North in Quezon City. It was organized by the Department of Energy (DoE) and ran from Nov. 13-15, but I attended only the last two days.

 

Held on Nov. 13 was the Opening Ceremony with Keynote speeches from DoE Secretary Raphael P.M. Lotilla, US Ambassador to the Philippines MaryKay L. Carlson, and Special Assistant to the President on Investment and Economy Affairs Secretary Frederick D. Go (who was represented by his Assistant Secretary Marvin Jason Bayang). Then there were discussions on the US experience in nuclear energy development.

 

Nov. 14 focused on the nuclear energy experience of Canada in the morning, and that of France in the afternoon. The host in the morning session was Guy Boileau, Counselor and Senior Trade Commissioner of the Canadian embassy in the Philippines. A Welcome Message was given by the Ambassador of Canada, David Hartman. Among the speakers were Todd Smith, Vice-President of AtkinsRéalis’ Candu Energy, Inc., and Dr. Sara Supa-Amornkul also of AtkinsRéalis, a Thai-Canadian scientist who talked about CANDU (Canada Deuterium Uranium) technology as the only unenriched uranium technology in the world.

 

(I was one of several media participants who went along during the Philippines’ nuclear trade mission to Canada last March in Toronto, led by DoE Undersecretary Sharon Garin and other government officials.  Mr. Boileau was with us and Todd Smith was the Energy Minster of Ontario at that time and we met him there. It was one of the most educational foreign trips I have ever attended.)

 

On the afternoon of Day 2, France’s Ambassador to the Philippines Marie Fontanel gave an overview of the two countries’ economic partnership and her country’s nuclear energy delegation. A talk on France’s extensive nuclear experience was delivered by Thomas Muisset, Nuclear Special Adviser of the French Government in Paris.

  

Nov. 15 focused on the nuclear energy experience of South Korea in the morning and of Japan in the afternoon. Opening remarks in the morning were given by Energy Regulatory Commission Monalisa Dimalanta. I like the discussion given by an official of Korea Hydro and Nuclear Power (KHNP) of KORI 2, a nuclear plant “twin” of our Philippine Nuclear Power Plant 1 (PNPP 1) in Bataan. Both were built by Westinghouse. Kori 2 produces 640 megawatts (MW) of power and was commissioned in 1983 while the PNPP 1 is capable of producing 620 MW and should have been commissioned in 1985 but was unlucky.

 

The afternoon of Day 3 had plenty of presentations from Japanese agencies, nuclear vendors, and energy companies — the Ministry of Economy, Trade and Industry (METI), Japan NUS Co. (JANUS) about their small modular reactors (SMR), from JGC, Hitachi-GE, and Japan Atomic Power Co. (JAPC).

 

When we were in Toronto last March, we saw the future site of Hitachi-GE’s SMR named BWRX 300 at the Ontario Power Generation (OPG) — it was small, about the size of one soccer field, and yet it can deliver 300 MW of 24/7 reliable and cheap electricity. That is beautiful.

 

Also that afternoon, Senator Sherwin Gatchalian came to the venue and I briefly chatted with him. I was happy when he told me that he regularly reads my column on energy, especially my discussion and critique of the LNG bill, but it has already been enacted into a law last week.

 

Congratulations to the DoE, especially Secretary Lotilla and Undersecretary Garin. Ms. Garin stayed all throughout the three-day event. I think it was very successful and gave the Philippine energy sector a wider perspective of these rich countries — the US, Canada, France, South Korea, and Japan — who have been industrialized for many decades now.

 

ON NUCLEAR ENERGY AND INFLATION

I checked again the nuclear power generation of these five countries, plus that of some other countries. I also compared their power generation with their consumer price stabilization. These are some interesting points I discovered:

 

1. Countries with rising nuclear power use experienced declining inflation rates — China, Russia, India, South Korea, and the United Arab Emirates (UAE).

 

2. Countries with declining nuclear power use experienced rising inflation rates — Germany, Japan, and France.

 

3. Countries with generally flat nuclear power use also experienced generally flat inflation rates — the US and Canada (see the table).

 

There are many factors why a country’s inflation rate rises, stays flat, or declines. But the cost of energy and electricity is one of the big contributors to inflation trends among countries. This should be one important incentive for the Philippines to go into nuclear power generation — to acquire many SMR units or quickly rehabilitate or refurbish BNPP 1 and proceed with BNPP 2 and other large nuclear plants.

 

I saw a press release from the Manila Electric Co. (Meralco) along with the Meralco Power Academy (MPA) about a recent visit to the Université Paris-Saclay (UPS) and top nuclear institutions in France. Meralco has a new initiative called nuclear energy strategic transition (NEST) and the visit to France was cool, exploring possible collaborations on capacity building and knowledge sharing.

 

Among the Meralco officials who went to France were Executive Vice-President and Chief Operating Officer Ronnie L. Aperocho, Senior Vice-President and Chief Human Resources Officer Edgardo V. Carasig, and First Vice-President and Head of Networks Froilan J. Savet.

 

UPS will be one of Meralco’s partner institutions for its Filipino Scholars and Interns on Nuclear Engineering (FISSION) program. The company sends young Filipinos abroad to cultivate the next generation of strong innovators and professionals in nuclear energy. Good move. Keep giving your consumers in the country stable, reliable, and competitively priced electricity.

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See also:

BWorld 755, On the PEB in London, the PhilHealth funds, and the US elections

BWorld 756, Growth forecast and Trump’s trade policies

BWorld 757, Philippine energy realism and Trump’s energy policies

Economic liberalization vs economic retrogression: Why Finance Secretary Ralph Recto should be reappointed

Dear readers, here is my statement about the reappointment of DOF Secretary Ralph G. Recto. Thank you.