DOE to release fuel mix policy to keep costs affordable

MANILA, Philippines - The Department of Energy (DOE) is coming out with a fuel mix policy to ensure fuel costs remain affordable, Energy Secretary Carlos Jericho Petilla said.

He said the DOE is targeting to come out with the fuel mix policy within the year.

“We don’t have a policy mix. We will come out with a firm policy on the targets after we compute the costs (of the different types of fuel),” Petilla explained.

According to DOE data, as of 2011, the country’s fuel mix was as follows: oil, 30 percent; coal, 20 percent; geothermal 22 percent; biomass, 12 percent; natural gas, eight percent; while the rest goes to wind, solar and hydro sources.

The fuel mix policy will also come amid the entry of liquefied natural gas (LNG) players in the country. Petilla said a fuel policy mix may be necessary to keep domestic pump prices affordable to consumers because LNG is expensive.

“We are coming up with a fuel mix policy but non-committal, non-firm, because bear in mind that although Shell is pushing for (LNG), there are LNG and gas-fired plants in Thailand which are not running because LNG is expensive,” Petilla said earlier.

LNG is a natural gas that has been converted into liquid for ease of storage or transport.

Numerous power players have already expressed interest in developing LNG terminals around the country.

Pilipinas Shell Petroleum Corp., for instance wants to build an LNG regasification terminal beside its refinery in Batangas with an estimated cost of $1 billion.

Lopez-led First Gen Corp., meanwhile, is developing up to 1,300 megawatts of power generation capacity fueled by natural gas from its facility in Batangas.

The DOE chief said the situation is expected to improve – meaning LNG prices can go down – when the LNG market in the Philippines matures.

The DOE is currently crafting an LNG masterplan to guide investments in the sector and attract LNG players in the country.