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Lopez to Garcia: Join our campaign to lower prices

By Abigail L. Ho
Philippine Daily Inquirer
First Posted 16:16:00 05/31/2008

Filed Under: Electricity Production & Distribution

MANILA, Philippines -- If you really want to help consumers, join our campaign.

Federico Lopez, president and chief executive of First Gas Power Corp., posed this challenge to Government Service Insurance System president and general manager Winston Garcia, who vowed that power rates would go down 10-20 percent when the state pension fund takes over the management of the Manila Electric Co.

The Lopez-led First Gas owns and operates the two independent power producers that supply power to Meralco: the 1,000-megawatt (MW) Sta. Rita and 500-MW San Lorenzo gas-fired power plants.

"If Mr. Garcia is sincere in his wanting lower power prices for Meralco consumers, we would like to invite him to join us in this advocacy of removing the government royalties on our natural gas,'' Lopez said in a statement.

"We have been saying for the longest time that if the government wants to rationally reduce power rates, it can readily do this through the removal of the sizeable royalties on natural gas. We are the only country left that penalizes its own consumers for using its own indigenous natural gas,'' he added.

He explained that of the P4.36 per kilowatt-hour (kWh) that First Gas charges Meralco, as much as P1.79 per kWh goes to the government as payment for royalty tax.

"The power of First Gas would (cost only) P2.57 per kWh if the royalty tax of P1.79 per kWh is removed, (making it) by far one of the cheapest in the country,'' he said.

"Royalty and taxes account for about half of the gas price. Reducing these components will transfer benefits of developing natural gas directly from the government to the consumers through lower electricity prices,'' he added.

He said the increased use of natural gas would still provide economic benefits to the country even if the government would decide to scrap the high royalty taxes slapped on it.

These benefits would come in the form of foreign exchange savings from forgone oil importation, he said.

Garcia had earlier said he would push for the cancellation of Meralco's "trillion-peso sweetheart deals'' with First Gas, which he called "the mother of all sweetheart deals.''



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