New coal import taxation may lead to higher power rates – Power Players


With the Bureau of Customs (BOC) enforcing revised uniform taxation on Indonesian coal imports for power generation, industry players believe that this could further push up power rates. 

In a report by the Manila Bulletin, American Chamber of Commerce of the Philippines (AMCHAM) president and Quezon Power managing director Frank Thiel said that Memorandum Order No. 242-2022 issued by the Assessment and Operations Coordination Group (AOCG) of the BOC did not consider the different coal calorific values (CV) nor consider the different indexes used to contract and price coal. 

The rate increase could range from Php0.10 per kilowatt-hour (kWh) up to Php1.70 per kWh for bigger-scale coal-fired power plants or those in the 600-megawatt (MW) installed capacity range. 

The BOC used the price of the July coal shipments, which was $319 per metric ton, as basis. AMCHAM said that the fixed rate imposition on tax assessments is seen to have a drastic effect, especially on unwanted surges in electric bills. 

Thiel said that the AOCG memorandum does not follow market forces “as coal is a commodity,” adding that the memo only “seeks to assess a flat fee of x/MT regardless of what the contract details are behind the shipment.” 

Based on data from the Department of Energy (DOE) in 2020, 96.9% of the country’s coal imports come from Indonesia.

The Philippine Independent Power Producers Association Inc. (PIPPA) also stressed that if there will be no distinction between the low and high CV of coal, power companies that designed their plants to run on low CV coal will be forced to sustain increasing fuel costs due to additional dutiable taxes and landed costs. 

The BOC allegedly applied the Harga Batubara Acuan (HBA), an index based on average prices of high CV coal, into the memorandum. 

In a letter sent to Customs Commissioner Yogi Filemon Ruiz, PIPPA President and Executive Director Anne Estorco-Montelibano said that power generators did a simulation on a 600 MW representative plant which resulted that every $100/MT increase in coal prices translates to a Php1.70 per kWh increase. 

Some generation companies said that the increase in fuel costs will result in higher generation rates for consumers.