Saving Subic's image

MANILA, Philippines – The once-immaculate image of the Subic Bay Freeport was significantly tarnished by the drugs smuggling attempt perpetrated by the notorious Anthony Ang about a year ago.

As an economic hub, Subic cannot afford to see its reputation tarnished. Which is probably why Subic sympathizers are welcoming a forthcoming investigation by an independent panel led by retired Supreme Court Associate Justice Carolina Grino-Aquino into the Ang smuggling controversy.

Not only is President Arroyo reportedly very angry over the fact that Ang is still at large. She is even more angry that Ang was able to use the facility of Subic to operate his business.

It seems that there are two SBMA officials who would be in the best position to help the panel in its forthcoming probe.

SBMA chief operating officer Ferdinand Hernandez could explain how Ang was able to enter the restricted ship repair facility without being stopped by Subic security which is under Hernandez’ office. It will be recalled that Ang allegedly picked up his shabu cargo from a Chinese vessel berthed at that repair facility.

The other issue that Hernandez’ security men should explain is why they did not open Ang’s cargo, giving him the luxury of a 48-hour gap in the investigation. Ang had two days to pack his things and go into hiding.

But it is another SBMA senior official, lawyer Redentor Tuazon, who apparently holds the key to the Anthony Ang puzzle. Tuazon screens investors who apply for the privilege of setting up shop within Subic. He also reviews the status of  Subic locators.

Tuazon should help the public understand why Ang had enjoyed the perks and privileges of Subic for several years despite his previous brushes with the law, and whether or not those privileges were actually used to perpetrate the reported drugs smuggling attempt.

Tuazon might also want to assure everyone that Ang’s use of Subic’s port for his drug smuggling try was a single incident, to brush aside lingering doubts that there could have been other incidents but were not reported or were not caught at all.

Lower electricity rates

More and more legislators are now calling on government to help bring down the cost of electricity.

Just yesterday, the Senate committee on ways and means conducted a hearing on a proposal to suspend the franchise and income taxes of power utilities while the committee on energy is looking into a proposed suspension or reduction of royalties on natural gas as well as a suspension on VAT payments.

Sen. Miriam Santiago wants the Senate to conduct an inquiry, in aid of legislation, on a proposal to remove royalties on natural gas.

According to Santiago, the Philippine Chamber of Commerce and Industry (PCCI) is pushing for the removal of royalties on natural gas as a way to prevent companies from downsizing their operations and laying off people.

The PCCI proposal, once adopted, would allow industries to significantly reduce their electricity costs and help prevent retrenchment of workers or business closure.

The Senator recalled that before the global financial crisis, PCCI engaged in a series of dialogues with energy and finance officials on how best to slash power rates during which the PCCI suggested that the royalties on natural gas paid to the government be given to electricity consumers by way of discounts.

The resolution noted that sharing the royalty from the Malampaya gas with the consumers as discounts could trim power rates by as much as P1 per kilowatt-hour, which is a big relief to industries that were not entitled to the special ecozone rate of P3.27 per kwh. However, this suggestion was allegedly turned down by finance officials, saying this would run counter to the government’s thrust of increasing revenues.

Industry estimates reveal that a complete removal of the Malampaya royalties is enough to stimulate the economy in the face of uncertainties hovering the manufacturing sector. Last February alone, the export sector suffered an almost 40 percent drop in exports.

According to PCCI, the government’s royalty earnings from the Malampaya gas reached $1 billion in 2007, when the cost-recovery period for the Malampaya deep water gas-to-power project ended.

Royalty payments for Malampaya gas have been jacking up prices of electricity produced by the country’s three gas-fired power plants: the 1,000-megawatt Sta. Rita and 500-MW San Lorenzo of the Lopez family and the 1,200-MW Ilijan plant operated by Kepco.

Natural gas is an indigenous fuel that should not be indexed with imported fuel like coal and petroleum. The high cost of electricity in Luzon, particular in the Meralco franchise area, was traced further to the 60 percent royalty take of government from Shell Exploration’s net earnings from Malampaya gas.

Meanwhile, Senate President Juan Ponce Enrile wants to grant tax exemption on distribution utilities to further bring down consumers’ electricity bills.

In his explanatory note to Senate Bill No. 3148, Enrile said that while the Philippines is endowed with abundant energy resources, government impositions on the use of such resources for electricity generation “are more burdensome than those applied on imported fuels.”

The bill wants to reduce government royalties to three per cent of net proceeds from sale of indigenous sources of energy. This is apart from Enrile’s separate proposal to grant a tax exemption package to power distribution companies.

It is estimated that once royalties on natural gas and VAT on electricity are either reduced or totally scrapped, electricity consumers can enjoy a reduction of more than P3 per kwh.

Enrile pointed out that indigenous petroleum is subject to a 60 percent royalty while local extractive industries such as mining enjoy a much lower tax rate of three percent.

He lamented that “these policy anomalies are not present in our Asian neighbors similarly endowed with natural resources such as Thailand, Indonesia, Malaysia and Vietnam.

Enrile noted that as of May 2007, government royalties on indigenous natural gas was around P1.46/kwh (per kilowatt hour), as against taxes imposed on imported fuels such as coal (P0.17/kwh), oil (P0.20/kwh) and liquefied natural gas (P0.29/kwh).

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