PIPPA seeks removal of coal tariff

MANILA, Philippines — The Philippine Independent Power Producers Association Inc. (PIPPA) is pushing for the permanent removal of coal tariff so the country can diversify its sources beyond ASEAN Free Trade Area (AFTA) countries.

This follows the petition of Foundation for Economic Freedom (FEF) to extend the zero tariff on coal under Executive Order (EO) No. 171 beyond Dec. 31 this year.

Instead of just extending it for another year, power producers want to remove the coal tariff permanently, PIPPA president and executive director Anne Estorco Montelibano said during the Tariff Commission hearing.

“Aside from supporting the position of FEF, we also propose for the consideration of the body…that we need to remove the tariff on coal. Our rationale for this is we need to diversify imported coal sources,” she said.

Currently, 99 percent of the country’s coal imports come from Indonesia.

That being the case, when Indonesia imposed a coal export ban, it “exposed significant risks due to our dependence on Indonesian coal,” Montelibano said.

“Second, the political and regulatory uncertainty in Indonesia poses an ongoing risk for the export ban recurring. Third, there is a need to explore other supply sources in lieu of increasing worldwide coal prices,” she said.

The PIPPA official said the country is in dire need to ensure energy security to recover post-pandemic.

“This is the most important as we are recovering from a post-pandemic world and we are trying to achieve our goals to fully develop our country, we need a stable, reliable and sufficient energy supply,” Montelibano said.

If the coal tariff will be removed, it will not have foregone revenue effects to the country, Jon Cleofas of PIPPA said.

This is because the Philippines sources 99 percent of its coal source from Indonesia, which enjoys a zero percent tariff.

“Since most power supply contracts have fuel pass through, any increase in the fuel will be felt by consumers and the power sector cuts across all sectors. So, we are asking the Tariff Commission to consider the permanent removal of coal import tariff for non AFTA countries,” he said.

And as coal-fired power plants run 24/7, the removal of tariff will help drive electricity costs lower, Aboitiz Power Corp. assistant vice president Mark Lim said.

“In terms of the removal of tariffs, it will be most ideal for us if the tariffs were removed on a longer term or if not, on a permanent basis because that will enable us to contract longer term and provide more stability and predictability in terms of pricing,” he said.

“This year, it has been helpful that tariffs were lifted temporarily but that also only enabled us to purchase on spot basis, meaning within the year but it has not able to give us enough stability to buy longer term because of the unpredictability of tariffs,” the AboitizPower official said.