MANILA, MAY 27, 2008
(STAR) Administration and opposition senators called on the government yesterday to reduce, if not totally eliminate, the value added tax (VAT) on oil and petroleum products to help cushion the impact of rising oil prices on consumers.

This, or the government should remove VAT on basic food products.

Senators came up with various proposals as they rejected the Department of Finance’s (DOF) “too simplistic” approach to a problem they said must prod the members of the House of Representatives to look into various suggestions to ease the burden on the people. All tax measures emanate from the Lower Chamber.

Finance Secretary Margarito Teves said the VAT on oil would not be scrapped but the P18-billion expected windfall due to higher prices of fuel since VAT was first implemented would be used to subsidize transport groups or food for the poor.

Senate President Manny Villar said he would support the use of the more than P18-billion windfall from VAT to subsidize the public transport sector.

Senators Francis Escudero, Juan Ponce-Enrile, Panfilo Lacson, Manuel Roxas II, Loren Legarda, Benigno Simeon Aquino III and Pia Cayetano said the public could not accept the DOF stance, especially when prices of fuel were projected to go up further.

Sen. Edgardo Angara said it was all right with him to keep the VAT on oil but the windfall must be used to subsidize fuel for the poor, electricity and basic food products like cooking oil.

Escudero, chairman of the Senate ways and means committee, said he would push for the “lifting, suspension or reduction” of VAT on oil. He and Roxas, chairman of the trade and commerce committee, countered the argument of Teves that only the rich would benefit from scrapping EVAT on oil because they were the main consumers of this product.

Escudero and Roxas said the DOF should know that the price of oil greatly affects the public transport sector and costs of production of other commodities. – Aurea Calica

Napocor eyes 40¢ rate cut, flat rate Tuesday, May 27, 2008

State-owned National Power Corp. (Napocor) filed yesterday its application for generation rate adjustment mechanism (GRAM) and incremental currency exchange rate adjustment (ICERA) for a possible rate reduction of 40 centavos per kilowatthour (kWh) for Luzon customers.

This as Napocor president Cyril del Callar reported that Napocor slashed its generation rates by as much as P1.44 per kilowatthour in Luzon between January last year and April this year.

“The over one peso cut in basic electric rates across the whole of the Luzon grid is testimony that we are taking the lead in bringing down power rates,” Del Callar said.

Del Callar added that Napocor will also try to file next month a flat charge for Manila Electric Co. (Meralco) to allow the utility firm to bill lower rates to its customers.

He, however, stressed that the application will have to be approved by the Energy Regulatory Commission (ERC).

“There is no amount yet. It is still being studied. The ERC will be the one to decide,” Del Callar said.

He noted that the reduction that they have implemented over the past four months has given some of its customers much needed relief amid rising electricity costs.

“The electric cooperatives, the distressed industries, the private utility companies and the special economic zones have all enjoyed the benefits of the power rate cuts, the last of which was reflected in our across-the-board rate cut of P0.42 per kilowatthour last April,” the Napocor head said.

Generation rate of Napocor plants in Luzon now averages P4.06 per kilowatthour as against Meralco’s purchase price from its sister IPPs at an average of P4.44 per kilowatthour.

The lowering by the government firm of generation cost was not fully felt by customers of Meralco because the latter gets more than 50 percent from its own IPPs.

Del Callar said the Lopez-controlled Meralco has been buying most of its baseload power needs from its sister power plants, particularly the Sta. Rita and San Lorenzo natural gas plants in Batangas and more recently the coal-fired Quezon plant.

Napocor generated electricity was bought by Meralco only when those it bought from its sister companies on any given day were not enough to supply the needs of its millions of household, commercial and industrial customers.

Meralco buys its supply of power at flat rates that do not change by the hour.

But the rates have been going up in tandem with the rise in the prices of oil as the price of locally sourced natural gas that those plants use as fuel have been pegged on the global prices of oil.

This has made the electric power in Metro Manila the highest in the Philippines and in Asia except Tokyo.

Meanwhile, Napocor officials and Camarines Sur. Rep. Luis Villafuerte pushed for live coverage of Meralco’s annual stockholders’ meeting today.

“There should be a big live coverage, Meralco is a public utility. Officials of Meralco are also public servants because they are rendering public service in a monopolistic franchise area that is subject to government regulation,” said Villafuerte, who earlier proposed to charge power generation plants flat rates, whether peak or off-peak hours, in a bid to reduce electricity costs. — With Helen Flores

Chief News Editor: Sol Jose Vanzi

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