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  • Oil & Gas
15 January 2019

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  • Indonesia

JAKARTA, Jan 15 (Reuters) –

* Pertamina to buy 2.5 million barrels of crude per month from Chevron Pacific Indonesia in January-June 2019 – joint statement

* Pertamina crude purchases from Chevron and other companies to cut its crude imports to around 250,000 barrels per day (bpd) from 342,000 bpd (Reporting by Bernadette Christina Munthe and Wilda Asmarini Editing by Ed Davies)

 

  • Electricity/Power Grid
15 January 2019

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  • Philippines
MANILA, Philippines — To start the new year, Meralco announced that overall electricity rates decreased to P9.8385 per kWh this month from last month’s P10.1803 per kWh. The downward adjustment of P0.3418 per kWh will mean a decrease of around P68 in the total bill of a typical household consuming 200kWh.
Lower PSA charges

From P5.3303 per kWh last month, the generation charge for January went down to P4.9119 per kWh, a decrease of P0.4184 per kWh.

The decrease is mainly the result of a P1.2293 per kWh reduction in the cost of power from Meralco’s Power Supply Agreements (PSAs). The share of PSAs to Meralco’s total requirement this month was at 40 percent.

Joe Zaldarriaga, public information office head for Meralco, said that “lower PSA charges were brought about by a reduction in capacity fees as a result of the annual reconciliation of outage allowances done at the end of each year under the PSAs approved by the Energy Regulatory Commission (ERC).

“The early completion of annual capacity payment for Sual Unit 1, Ilijan, Pagbilao Unit 1 and PEDC resulted in savings immediately passed on to consumers by way of lower electricity rates. The capacity fees of PSAs will return to normal levels in January that will impact on February bills after the downward adjustment in December,” Zaldarriaga added.

Charges from the Wholesale Electricity Spot Market (WESM) also went down by P0.0165 per kWh due to improvement in the Luzon power situation. The demand for power in the Luzon grid decreased by 101 MW.

Meanwhile, cost of power from the Independent Power Producers (IPPs) went up by P0.0847 per kWh due to peso depreciation. About 92 percent of IPP charges are dollar denominated. WESM and IPPs provided 18 percent and 42 percent of Meralco’s supply needs, respectively.
Transmission charge increases

Transmission charge of residential customers increased by P0.1210 per kWh this month due to higher NGCP Ancillary Services Charges. Taxes and other charges, however, went down by PhP0.0444 per kWh this month.

Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 42 months, after these registered reductions in July 2015. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges.

Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP. Taxes and other public policy charges like the FIT-All rate are remitted to the government.
Energy efficiency tips

Meralco once again encourages its customers to continue practicing energy efficiency initiatives to help manage their electricity consumption. These include everyday household tips that may help save energy, such as:

unplugging appliances when not in use to avoid “phantom load”
using the aircon at mid-setting or at 25-degree Celsius for maximum efficiency
using a power board or strip which can supply power to several appliances at once and allows a user to conveniently turn them off simultaneously with just one switch, and
maximizing natural light during daytime and keeping appliances well maintained to ensure optimal performance.

  • Energy Economy
15 January 2019

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  • Philippines

One of the Philippines’ largest banks, Rizal Commercial Banking Corporation (RCBC), on January 14 announced the establishment of its green finance framework to provide the basis for the issuances of green bonds and loans, which can be denominated in pesos or in any other currency.

Proceeds from any green financing exercise under the framework will be used to finance or refinance a portfolio of green-eligible projects relating to renewable energy, green buildings, clean transportation, energy efficiency and pollution prevention and control that contributes to the reduction of the environmental footprint in the Philippines.

RCBC’s green finance framework is the first in the Philippines to be aligned with the Asean Capital Market Forum’s Asean green bond standards 2018. The framework is also aligned with the green bond principles 2018 of the International Capital Market Association and the green loan principles 2018 of the Loan Market Association and the Asia-Pacific Loan Market Association.

In setting up the framework, RCBC CEO Gil Buenaventura says the bank recognizes the importance of developing greater environmental awareness and social responsibility through its operations and the businesses it serves.

RCBC believes that balancing non-financial factors such as environmental and social issues with financial priorities is essential to good corporate citizenship and is fundamental to risk management and the protection of its investors and shareholders. The bank has been an active proponent in the renewable energy space, having provided substantial financing support to a number of landmark projects in the Philippines and the rest of Southeast Asia.

For instance, in August 2018, RCBC was tapped as the sole lender and RCBC Capital Corporation as the sole mandated arranger in the US$211.50 million project finance debt facility to fund the 300MW solar energy project of BIM Renewable Energy Joint Stock Company of Vietnam. The project is a joint venture between one of Vietnam’s leading business groups BIM Group and AC Energy Holdings of the Philippines, and the transaction was the first major cross-border project finance deal by RCBC in Vietnam.

RCBC was also a lender in the Star Energy consortium’s acquisition of Chevron’s geothermal and power business in Indonesia and the Philippines in 2017.

Sustainalytics, a leading global provider of ESG research and rating, has reviewed the framework and concluded it is credible, robust and transparent. It is not only aligned with market best practices, but also contributes to the UN Sustainable Development Goals on affordable and clean energy, making cities and human settlements inclusive, safe, resilient and sustainable, and on responsible consumption and production

RCBC has mandated ING as the sole green structuring adviser for its green finance framework

  • Oil & Gas
15 January 2019

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  • Philippines

MANILA, Philippines — Another major fuel price hike takes effect today – the second in two weeks this month – in step with rising crude costs in the world market.

The second tranche of the fuel excise tax under the Tax Reform for Acceleration and Inclusion (TRAIN) law has nothing to do yet with the latest increase, industry players emphasized.

Oil companies announced upward adjustments in the pump prices of diesel at P2.30 per liter; gasoline, P1.40, and kerosene, P2. It was the highest mark-up for diesel in recent history.

In separate text advisories yesterday, Caltex Philippines and Eastern Petroleum said their price increases were to take effect after midnight last night.

“Price adjustment only factors the increase in world oil prices and not the second tranche of the TRAIN law,” Eastern Petroleum said.

Jetti Petroleum, Petro Gazz, Pilipinas Shell Petroleum Corp., PTT Philippines Corp. and Total Philippines Corp. said their respective price adjustments took effect at 6 a.m.

“This is not yet the effect of the fuel excise tax, but merely a reflection of the movement of international crude prices,” Petro Gazz said in its advisory.

“These reflect the changes in the prices of petroleum products in the world market and does not yet include the additional taxes under the TRAIN law,” Phoenix said in its advisory.

Meanwhile, Flying V, Phoenix Petroleum Philippines Inc., Petron Corp., Seaoil Philippines Inc. and UniOil Petroleum Philippines Inc. have yet to announce their price changes.

Department of Energy-Oil Industry Management Bureau assistant director Rodela Romero said reduction in supply approved by the Organization of Petroleum Exporting Countries (OPEC) explained the surge in local pump prices.

“The reason for increase is the implementation of supply cut by OPEC which started this January to June by 1.2 million barrels per day,” she said in text message.

Another factor that pushed global prices higher is the resumption of the US sanction against Iran, Romero said.

So far, only 469 of the 8,600 gas stations nationwide have factored in the second tranche of the TRAIN excise tax in price adjustments.

Of the total, 371 are from Petron, 29 from Flying V, 68 from Shell and one from Caltex, Romero said.

Under the second tranche of TRAIN implementation, an additional excise tax of P2 per liter will be imposed on diesel and gasoline, and P1 per kilogram on household LPG.

 

  • Electricity/Power Grid
  • Energy Economy
  • Energy Efficiency
15 January 2019

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  • Philippines

MANILA — AboitizPower remains keen on investment opportunities outside the Philippines, its Chief Operating Officer Emmanuel Rubio said Tuesday.

Rubio told reporters that the company is still looking for investment opportunities in the power generation business in Southeast Asian countries such as Indonesia, Myanmar, and Vietnam.

He said AboitizPower is currently doing feasibility studies and finding the right partners in those markets.

“We’re always in the lookout in Indonesia, Vietnam, and Myanmar. Until we get something concrete out of our business development group, I don’t think I can disclose any project, but we’re there in those countries,” he said.

“We’re just doing feasibility studies, looking for partners,” Rubio added.

He noted that it is crucial for the company to find the right partners who should have a good understanding about the local regulatory environment.

“We’ve realized that identifying the right partner is the key. You really have to be complementing and the values should be aligned. There are actually partners that we’ve identified outside,” Rubio said.

“Second, of course, is being able to understand the regulatory environment and be able to identify the risks present in those countries. Once we feel we can mitigate risks we’ve identified, if there are any, then I guess those are the key ingredients in getting to a country,” he added.

Rubio also mentioned that renewable energy projects will be the primary focus of AboitizPower in going to those countries, but the company remains “open to any opportunity” it may encounter overseas. (PNA)

  • Energy Cooperation
  • Energy Economy
  • Energy Efficiency
15 January 2019

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  • ASEAN

Southeast Asia’s energy demand is expected to grow by two-thirds by 2040, requiring massive investment in new energy generation and transmission. Installed capacity will double from 240 gigawatts to 565 gigawatts, which amounts to adding a bit more than Japan’s total electricity capacity.

To meet their growing needs, countries have to make pivotal choices. They will either lock the region into a carbon-intensive energy future or open up a more sustainable, flexible path based on renewables and energy trading. Outside investors – in particular China – will play a key role in the outcome.

Some of the region’s poorest developing countries face the greatest pressures. Myanmar, Cambodia and Laos can expect their energy demand to grow every year by double digits. Indonesia, the Philippines and Vietnam project 6-10 per cent annual growth rates.
A changing energy mix

Coal dominates power generation in the region. Under a business-as-usual scenario, the future energy mix would see coal use expand. A 2018 report by CoalSwarm shows that five of ASEAN’s 10 member states – Vietnam, Indonesia, the Philippines, Thailand and Cambodia – are among the world’s top 20 investors in new coal capacity.

Vietnam plans to increase coal generation five-fold, from just over 10 gigawatts in 2014 to over 55 gigawatts by 2030, an increase equal to Thailand’s entire 2017 electricity supply.

The International Energy Agency thinks US$2.7 trillion will be needed for energy supply, transmission and efficiency measures to meet regional projections. Total investment in generation will depend on the energy mix as costs differ for different production methods.

Costly coal

The region’s preference for coal runs counter to the global trend and risks derailing international commitments to cut carbon emissions. Globally, demand is dropping because of environmental concerns and the related risk of coal plants turning into economic sinkholes as prices shift.

However, Southeast Asia has locally available coal supplies and outside investors are advocating the use of so-called “clean” supercritical and ultra-supercritical coal technology. Chinese state-owned enterprises are notable for pushing coal investments, despite official government rhetoric about being a sustainability leader.

China’s role cannot be overstated: China is involved in funding or building nearly a quarter of all energy projects in mainland Southeast Asia, but invests in or constructs more than 43 per cent of all coal projects.

“Clean” coal technologies will ultimately be more expensive than older coal plants because carbon scrubbing mechanisms are more technically complex, making coal a questionable investment as more sustainable alternatives have become economically competitive.
Gas and renewables

The two emerging alternatives to coal are imported liquefied natural gas (LNG) and renewable energy. Global investment in new energy capacity has shifted away from oil and coal and towards renewables and natural gas.

Myanmar, Indonesia, Malaysia, Thailand and Vietnam have all exploited domestic natural gas resources for decades. However, the region’s natural gas reserves cannot meet projected electricity demand growth. Asia already consumes half of the global gas supply; the IEA forecasts this will rise to two-thirds by 2040.

Fortunately, the globalisation of natural gas markets and the US shale gas boom provide economically attractive alternatives. Investors in Thailand, Vietnam, Indonesia, Myanmar and the Philippines are all exploring LNG import terminals.

ASEAN has set an ambitious, shared target for renewables to form 23 per cent of the energy mix by 2025, though it is doubtful it will be met as the block’s developing countries lag behind others in deploying large-scale alternative energy projects.

With the exception of Thailand, which is more than halfway to its targets for installed solar capacity for 2030, most ASEAN countries are still developing national targets and policies for solar and wind power. Although Indonesia and the Philippines have the world’s second and third largest installed geothermal capacity and additional unexploited reserves, new investment has been slow.
Huge price drops

Interviews with energy planners across ASEAN indicate a widespread belief that coal is a reliable baseload that is more affordable than the alternatives, a perception that has created policy gaps.

The investment environment for renewables is unnecessarily high-risk because ASEAN governments’ work on supporting renewables and integrating them into the grid is insufficient. As a result, record low prices seen elsewhere around the world have yet to reach Southeast Asian markets.

Since 2009, commercial-scale solar power has dropped approximately 86 per cent in price and wind has dropped 65 per cent, making both competitive with traditional generation sources in many places.

The biggest price falls have happened since 2016 – driven downward by China’s overcapacity in solar production, competitive auctions for new projects, and a shift in financing and regulatory models. Bloomberg New Energy Finance forecasts additional price cuts of 34 per cent in 2018 and more in 2019 as China’s domestic demand slows and oversupply floods the global market.

With the exception of Thailand, which is more than halfway to its targets for installed solar capacity for 2030, most ASEAN countries are still developing national targets and policies for solar and wind power.

Time to catch up

Most national energy plans were developed before the enormity of the price cuts was common knowledge and when there was still a strong sense that low prices were only attainable with subsidies.

For instance, Cambodia’s Master Energy Plan was finalised in early 2017 and included no solar energy. By mid-2017, investor interest had exploded, forcing energy planners to indicate that the next energy plan would incorporate solar energy.

Many ASEAN countries do not yet have clear policies. Thailand, Malaysia, Vietnam and Indonesia have adopted feed-in-tariffs (FiTs) for solar or wind projects, but results are mixed as there is a lack of clarity on other regulatory issues, ranging from permits to the terms of power purchase agreements for solar, wind and biomass technologies.
Transmission needs

The IEA believes that most of the estimated US$2.7 trillion of investment is needed for transmission infrastructure, a topic that is easily overlooked in debates about the choice of power sources.

About 10 per cent of ASEAN’s population still lacks reliable access to electricity. Investment in traditional power grids to support energy trade and distributed micro-grids located in remote communities will be key to meeting their needs.

Leaders first mooted a regional ASEAN power grid for energy security in 1997. It has not yet been developed. There are no transmission lines for large-scale multi-national energy trade.

Bilateral energy trade is common but multilateral energy trade has largely been stymied by anxieties about protection of domestic energy industries, differences in electricity prices, and contractual problems.

The ASEAN Plan of Action for Energy Cooperation has set a target of getting three multilateral energy trade schemes operational by 2020. China also supports regional energy trade, as a regional grid could allow for excess hydropower from Yunnan province to reach foreign markets.

Despite investor interest, progress has been slow. By 2018, only one example of multilateral trade between Laos, Thailand, and Malaysia had moved forward. The political difficulties are unlikely to be addressed until the economics of trade become too attractive to be ignored.
Opportunities

Upcoming policy revisions provide opportunities for countries in the region to benefit from falling prices for renewables, though it far from certain they will do so. National energy plans are currently being updated in Thailand, Vietnam, Cambodia, Myanmar and Laos. Most other ASEAN members will be reviewing their plans after 2020.

There are some signs that ASEAN countries are responding to global energy market shifts. Thailand has recently raised its renewable energy target from 20 per cent to 30 per cent following some government successes in encouraging solar investment.

Cambodia, Indonesia, Malaysia and the Philippines are moving from feed-in-tariffs to competitive auctions for renewable energy projects.

The transition could gather pace as policymakers wake up to the evolving economics and shifting risk. Any new consideration of commercial-scale renewables, smart grid and distributed generation technologies, and energy trade presents an opportunity to outside investors, especially from China.

If decision-makers in China’s policy banks and state-owned enterprises move swiftly to take advantage of their country’s competitive solar sector and prioritise renewable investments abroad over outdated coal technologies, Southeast Asia’s energy future could quickly become more diverse and sustainable.

If they continue their current preference for coal plants, the prospects for the climate will be bleaker.

  • Electricity/Power Grid
15 January 2019

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  • Vietnam

Electric scooter producer Pega launched a new model, NewTech, on January 11 with a selling price of VND25 million. This e-scooter model, initially sold at a promotional price of VND22 million, is directed at male users and has a driving range of 90 kilometers per charge. The e-scooter battery can be used as a source of energy for mobile phones.

Pega has previously manufactured models for female users of different age ranges.

To attract customers since VinFast Klara e-scooters have already been introduced, Pega will allow customers to return the scooters within three days if they are not satisfied for any reason, a rare move among manufacturers.

Doan Linh, general director of Pega, stated that the firm was confident enough in the product to introduce the return policy on NewTech e-scooters. He had tested the e-scooter for months before the model was launched.

According to Linh, Pega understands its customers have real needs when they decide to buy.

Moreover, Linh said, if Pega does not provide a firm commitment and follow through, the firm will have no motivation for growth.

Over the past three years, Pega has sold some 30,000 scooters per year.

In addition to Pega, Vingroup joined the e-scooter market last November with the launch of the VinFast Klara. This model is priced at VND57 million for the version with a lithium-ion battery and VND34 million for the version running on a lead-acid battery.

When VinFast Klara was first introduced to the market, discount prices were used to attract customers, at only VND21 million per e-scooter with a lead-acid battery and VND35 million for those with a lithium-ion battery. The selling prices were then hiked to VND25 million and VND39.9 million, respectively.

According to e-scooter distributors, VinFast Klara e-scooters have received positive reactions from customers. Some 15,000-20,000 e-scooters were preordered during the launch, which is considered impressive for a new brand in the field.

Linh expressed pleasure over Vingroup’s interest in e-scooters. He added that the firm must have taken into account all financial matters and marketing activities.

It seems that customers no longer regard e-scooters simply as a medium of transport for students as e-scooters could replace conventional bikes in the future, Linh said.

“We find it a good thing that there are more domestic firms manufacturing e-scooters. Vietnam’s e-scooter market is still new and there are many opportunities. With new firms joining the market, e-scooters will be more popular,” he added.

The localization rate of e-scooters produced by domestic firms currently ranges from 30% to 80%.

Vingroup late last year teamed up with VNPost Petrolimex and PV Oil to set up 30,000-50,000 charge points and shops nationwide as part of efforts to popularize e-scooters.

E-scooter and e-bike shops in Vietnam sell both domestic products and Chinese-made products, which have lower prices and a shorter battery life.

Vietnam consumes an estimated 400,000 e-scooters and 7,000 e-bikes per year, whereas the consumption of regular motorbikes is some 3.3 million units.

Based on the attractiveness of Vietnam’s e-scooter market, MBI of South Korea last December said that it would launch three e-scooter models in Vietnam late next month. DKBike will represent MBI in assembling and distributing these products in the Vietnamese market.

According to Yoo Moon Soo, chairman of MBI, while most e-scooters available in Vietnam have capacities equivalent to 50cc and a maximum speed of 50 kilometers per hour, MBI scooters can be as powerful as a 110-125cc scooter and run at up to 110 kilometers per hour.

MBI plans to open 500 battery charge/exchange points in Vietnam toward the end of this July and targets some 15,000 points by 2020. Up to US$1 billion may be needed to fund the plan.

MBI expects its e-scooters to gradually replace scooters that run on fuel. MBI Motors Vietnam targets a market share of 3% in the first year (some 100,000 units per year) and over 5% in the following years (more than 200,000 units per year).

Piaggio also plans to sell the e-scooter Vespa Elettrica, launched in Europe last November, in Vietnam this year. However, Chairman and General Director of Piaggio Vietnam Gianluca Fiume remarked that the Vietnamese e-scooter market is untapped but full of challenges.

The shift to e-scooters is still in the early stages. Though the e-scooter market is growing, it is necessary to observe the market reaction over the long term.

  • Renewables
15 January 2019

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  • Lao PDR

The event, the second of its kind so far, was chaired by Le Cong Thanh, Deputy Minister of Natural Resources and Environment and Vice Chairman of the Vietnam National Mekong Commission.

Participants were updated on the progress of the Mekong River Commission (MRC)’s technical assessment report on documents related to the project. Experts also gave their ideas on the Pak Lay hydropower plant and other projects in the Mekong River and recommendations to the Vietnam National Mekong Commission.

Deputy Minister of Natural Resources Le Cong Thanh said that Vietnam is paying great attention to the possible effects from hydropower plant construction to the environment and the socio-economic situation in the Mekong Delta region, which also go hand-in-hand with impacts from climate change.

According to head of the Vietnam National Mekong Commission’s Office Le Duc Trung, the MRC Secretariat will analyse information from the project and consider the ideas of experts as to how to best evaluate the impacts of the project and measures to reduce them. It will then propose that the MRC Joint Committee ask Laos to make appropriate adjustments.

The consultation plan will prepare Vietnam for the upcoming special meeting of the MRC Joint Committee in February 2019, he said.

Participants at the event raised concern that the Mekong Delta region of Vietnam will be greatly affected by hydropower development activities along the Mekong River mainstream, especially in the context of increasing demand for water resources in the river basin and impacts from climate change.

They held that the Vietnam National Mekong Commission should build a detailed evaluation system on the Pak Lay hydropower project, especially its impacts to the Mekong Delta region before it is launched.

Vice Director of the Dong Thap Department of Natural Resources and Environment Huynh Van Nguyen expressed that he was worried about the effects of the project to agricultural production in the lower Mekong river.–VNA

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