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  • Oil & Gas
30 April 2019

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  • Philippines

THE favorable arbitration ruling on the $1.1-billion tax case between the Malampaya consortium and the Commission on Audit (COA) would entice investors to pursue exploration activities in the country.

“The Department of Energy welcomes this latest development in the International Chamber of Commerce [ICC] arbitration case. We have always upheld the position that the tax regime for petroleum service contracts is legal and valid. This victory would go a long way in giving exploration and development activities in the country a much needed and long overdue boost as investors will now have renewed confidence in our upstream gas industry,” Energy Secretary Alfonso G. Cusi said in a text message on Monday.

The DOE has been urging investors to “explore, explore, explore” to help the country build its power supply. He said last year, the country was grossly trailing behind its neighbors in terms of petroleum exploration and development activities.

“It is high time we step up. We need to attain energy security and sustainability to minimize our vulnerability to global oil price shocks,” Cusi said during the launch of a new round of energy-contracting exploration program.

The ICC decided in favor of the Malampaya consortium, with a unanimous vote of 3-0. The ICC is a global organization that provides services to resolve disputes in international business, with headquarters in Paris, France. Service Contract 38, which governs the Malampaya project, provides for dispute resolution under the arbitration rules of the ICC.

The Senate Committee on Energy, the proponent of the Drill Drill Drill program, said there is no longer a legal impediment for investors to undertake oil and natural gas exploration now that the arbitration court in Singapore has finally resolved the tax case between Shell Philippines Exploration BV (SPEX) and the government.

“The multi-billion tax case has been a big specter that discouraged foreign players from conducting petroleum explorations in the Philippines over the past several years and drove away investments in high risk, capital-intensive, and technology-intensive sectors. With the case now behind us, it is high time for the government to aggressively pursue a ‘Drill, Drill, Drill’ program, so that we can tap these oil and gas resources and use them to achieve Philippine energy independence and pave the way for the country to become an energy exporting powerhouse,” Sen. Sherwin Gatchalian said.

The Petroleum Association of the Philippines (PAP) also said the ruling will revive the oil and gas exploration industry.

“I hope the government will react positively. This, of course, will be of great help to the exploration industry,” PAP chairman Rufino Bomasang said.

Shell Philippines Exploration B.V. (SPEX), which leads the Malampaya consortium, and the DOE, will meet soon.

“The Malampaya joint venture can confirm that the ICC arbitration tribunal has issued its decision, which we are currently reviewing with our legal counsels. At this stage, we cannot provide details due to the confidentiality of the proceedings, but the joint venture will be engaging the Department of Energy in due course,” Spex said.

Other members of the consortium are Chevron Malampaya LLC, with a 45-percent stake and state-owned PNOC Exploration Corp. with the remaining 10 percent.

The case stemmed from a COA ruling that overruled the petition of the Malampaya consortium that income tax was already imputed in the government’s 60-percent share in the Malampaya royalties. The tax, it argued, was deductible from the government’s share of the Malampaya earnings.

The COA, in its April 6, 2015 decision, upheld its findings that the income taxes of the service contractors could not be assumed by the national government in its 60 percent share in the Malampaya proceeds and thus ordered the consortium to pay the national government P53,140,304,739.86 in taxes.

It stressed that is no provision in the law stating that the income tax of the contractors forms part of the share of the government.

On a per year basis, COA said the under collection amounted to P2,409,817,191.46 in 2003; P2,335,402,961.38 in 2004; P2,832,586,038.93 in 2005; P7,901,265,361.42 in 2006; P11,272,523,434.55 in 2007; P15,826,563,356.86 in 2008; and P10,562,146,395.26 in 2009.

In September 2015, SPEX filed an arbitration case against the National Government with the Singapore International Arbitration Center. In July 2016, SPEX filed another arbitration case in the International Centre for the Settlement of Investment Disputes Arbitration (ICSID) in Washington against the National Government regarding its tax dispute.

  • Renewables
30 April 2019

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  • Vietnam

AC Energy, Inc. expects to break ground early next year on several wind projects in Vietnam with its three existing partners in the regional neighbor in time for the feed-in tariff deadline in November 2021, its top official said.

“It could be as big as 250-300 megawatts (MW), it could be as small as 30 MW. That’s a big range,” Eric T. Francia, president and chief executive officer of Ayala Corp.’s energy company, told reporters in an informal gathering in Vietnam during the weekend to celebrate the completion of a solar project.

“We have over 250-MW, expandable to 350 MW with AMI,” he said, referring to Vietnamese partner AMI Renewables Energy Joint Stock Co.

In 2017, AC Energy formed a platform company with AMI Renewables to build renewable energy plants in Vietnam, including a 352-MW wind project in Vietnam’s Quang Binh province.

“We could also potentially do solar in there, so puwede kaming mag-hybrid (we could go hybrid), but we haven’t really finalized that yet,” Mr. Francia said.

The platform company became AC Energy’s second in Vietnam after it partnered with BIM Group of Vietnam to develop 330 MW of solar power in the country.

In November last year, AC Energy announced its international unit had invested in Singapore-based renewable energy company The Blue Circle Pte. Ltd. through a 25% ownership acquisition as well as co-investment rights in the latter’s projects.

AC Energy and The Blue Circle are to jointly develop, construct, own and operate the latter’s pipeline of around 1,500 MW of wind projects across Southeast Asia, including about 700 MW in Vietnam. Its partner developed and constructed one of the first wind farms in Vietnam.

The company announced back then that the partnership plans to develop around 100 to 200 MW of wind energy projects out of The Blue Circle’s project pipeline in Vietnam.

“We really focused on solar because of the tighter deadline, it’s June 2019. Now we did 410 MW between BIM and AMI — 330 [MW] with BIM [and] 80 [MW] with AMI,” Mr. Francia said, referring to the solar projects AC Energy completed with its Vietnamese partners with a feed-in tariff rate of 9.35 US cents.

“We don’t own all of that 410 [MW],” he said, adding that about half of that capacity is attributable to AC Energy.

“Now the focus shifts to wind because the deadline now is 2021. It takes about a year, a year-and-a-half to build a wind farm, so we have until early 2020 to start construction. Between now and early 2020, basically in the next 12 months, we really need to get the projects to shovel-ready stage,” he said.

Mr. Francia had said that he was seeing a potential 1,000 MW of wind projects attributable to AC Energy in Vietnam. He earlier said that the company was in talks with BIM to partner with the latter’s 300-MW wind project.

He declined to identify which of the wind projects would be completed first.

“We don’t know yet which of the 1,000 MW we’re gonna do. That’s just the potential based on the pipeline that we see. It really depends on getting the permits, getting the financing,” he said. “We have two years.”

Mr. Francia said the feed-in tariff used to be 7.80 US cents for wind, but was adjusted a few months ago to 8.50 US cents to encourage more investments. He said the “meaningful adjustment” in the tariff, which guarantees a fixed electricity rate and a regular revenue stream, made wind projects viable in Vietnam.

“Definitely, we’re very bullish with Vietnam. That’s gonna be one of our major international markets,” he said.

  • Electricity/Power Grid
30 April 2019

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  • Cambodia

Cambodia has been gripped by daily blackouts in recent weeks, leaving many parts of the capital Phnom Penh without power for most of the day. As temperatures spike during the region’s hot season, heated questions are rising about why the government can’t seem to keep the lights on.

Prime Minister Hun Sen has blamed the blackouts on a severe drought that has stifled the operations of hydropower dams, which supply about half of the country’s electricity needs.

Last month the Ministry of Environment advised farmers not to plant their next rice crop because of the drought, causing some to resort to eating lotus roots to survive, according to local reports.

But the economic impact of the blackouts will be most acutely felt in the national capital, home to the country’s most profitable industries. There is not yet any concrete official estimate on the rising costs of the daily power cuts on the economy.

Kimlong Chheng, director of the Center for Governance, Innovation and Democracy at the Asian Vision Institute, a local think-tank, says that economist costs “depends on the frequency and duration of power cuts.”

“It is hard to say exactly without having hard evidence. Possibly, an estimated 40-50% of factories have been affected, but only about 20 to 30% of their production processes might have been damaged,” he estimates.

An electricity utility worker checks power lines in Phnom Penh. Photo: Twitter

Ou Virak, president of the Future Forum, another local think tank, reckons that the effect on the economy could “be in the tens of millions of dollars.” He adds, however, that a business sector friend estimates the blackouts could cost the economy hundreds of millions of dollars if they last until June.

In mid-March, the government estimated that 400 megawatts of energy were needed to make up for the shortfall caused by depleted hydropower dams, or roughly one-sixth of all the electricity Cambodia consumed last year.

So far only a quarter of this power gap has been purchased from neighboring Laos and Thailand. Vietnam, meanwhile, has declined to sell Cambodia any more power because it, too, is facing energy reductions in its southern provinces.

On April 2, the government agreed to terms on a three year lease of a vessel from Turkey that can generate 200 megawatts of energy, but it is not yet known when the floating facility will be operational.

The hardship, depending on how long it lasts, could have implications for stability. Electricity generator vendors have dramatically raised prices in recent weeks, sparking a heated response on social media.

Government spokesman Phay Siphan has asked people to “keep faithful behavior toward[s] each other with a culture of solidarity for Cambodian people, especially when it comes to hard times with electricity shortages.”

But clearly not everyone is pulling together, exposing the already severe divide between rich and poor.

The commanding towers of the capital’s only licensed casino, NagaWorld, which saw more money pass through its VIP rooms last year than the nation’s entire gross domestic product (GDP), are glaringly illuminated day and night.

Phnom Penh’s poorest neighborhoods, including those on the city’s hard-scrabble outskirts, are being hit the hardest by the power cuts, with some areas apparently receiving electricity for only a couple of hours per day.

A Phnom Penh apartment building in a file photo. Photo: Facebook

Such a dire situation was somewhat foreseeable. In 2015, Cambodia experienced its worst drought in 50 years, while one in 2012 affected half of the country’s provinces.

A report by the United Nations in 2015 predicted Cambodia would be the world’s ninth-most vulnerable country for natural disasters, including droughts and floods, as well as other effects of climate change.

That means the current electricity shortage might become a regular occurrence without more forward-thinking investment and planning.

Cambodia’s electricity needs are growing rapidly, in line with a fast accelerating economy that has seen average GDP growth of 7% in recent years. The country consumed roughly 2,650 megawatts of electricity last year, up 15% from 2017, according to government data.

About 20% of this energy came from imports from Thailand, Vietnam and Laos last year, down from imports of about 60% in 2010. The remainder came from coal-fired plants (660 megawatts), other fossil-fuel burning stations (271 megawatts), renewable sources (163 megawatts) and the remainder from hydropower, officials from the Ministry of Mines and Energy told local media.

The Electricity Authority of Cambodia, a state utility, reckons that about 72% of all households now have electricity and that percentage is expected to rise this year, which will see projected electricity needs grow to 2,870 megawatts by the end of 2019.

According to a report published on April 1 by Fitch Solution, a macroeconomic research firm, Cambodia’s net power consumption will grow at an annual average of 6.1% between now and 2028, largely “driven by an expanding industrial and manufacturing sector, particularly for textiles.”

Cambodias Lower Sesan II hydropower dam. Photo: Facebook

The government reckons that hydropower projects can be expanded so that they produce around 2,000 megawatts by 2020 – up from 1,329 megawatts last year – and eventually 10,000 megawatts at some point in non-specified future.

The Fitch Solutions report, however, argues that supply projection is likely too optimistic and that only 1,380 megawatts will be available from hydropower dams next year.

“Project delays have been frequent and general environmental and social opposition from the region could curb future growth in the sector,” it stated, referring to frequent land rights protests by people who are relocated to make way for the dams.

Moreover, the firm revised down its estimates for this year’s hydropower generation, noting that while the drought is the main cause of the problems, it is “compounded by the country’s strong power demand that have exceeded government estimates.”

Shortages, meanwhile, are compounding costs for the state. It is not yet known how much the electricity shortages will cost the wider economy, but the losses will inevitably impact on tax revenues and thus the government’s future spending power.

More costly, however, are the state’s emergency outlays to cover shortfalls. Energy produced from the vessel leased from Turkey, for example, will cost US$0.03 more per kilowatt per hour than power produced by local hydropower plants, according to local media reports.

The cost of the lease agreement has not yet been announced, although the Cambodian government says it will subsidize the additional energy prices for consumers. But pass-through effects are inevitable.

Workers in a Cambodian garment factory. Photo: Facebook

Inflation was expected to hit around 2.6% this year, according to the National Bank of Cambodia, but that estimate will no doubt rise with more costly power.

Last month, the state-owned Electricite Du Cambodge agreed to purchase 200 megawatts of energy from the Electricite Du Laos over the next three years, although the price Cambodia will pay similarly has not been publicly disclosed.

Apart from the extra cost to national coffers, “the worst is the impact [the shortages] will have on potential investments,” says Ou Virak, of the Future Forum think-tank.

“That’s much more difficult to know. My bet is potential investors will now incorporate the blackouts and lack of predictability into their costs and risks considerations” when making investment decisions, he adds.

Cambodia already has some of the highest electricity rates in Southeast Asia, which private businesses say makes industry, especially those in the electricity-dependent manufacturing sector, less competitive.

High electricity costs are also affecting Cambodia’s ambitions to move up from low-cost, low-skilled manufacturing to higher-skilled technology assembly.

The government clearly understands the costs and problems incurred by expensive and unreliable power. In December, Hun Sen responded to rising concerns by announcing that electricity rates would be cut in 2019.

Cambodian Prime Minister Hun Sen speaks during a ground breaking ceremony in Phnom Penh on January 14, 2019. Photo: AFP/Ly Lay

“The reduction of electricity rates will make people happy. They will welcome the effort to lower electricity rates . . . even if the rates for the water and the prices of other goods are the same,” Hun Sen said at the time.

In March, the leader announced plans to cut electricity prices from $0.17 to $0.02 per kilowatt per hour for most industries – and even lower for vitally important economic sectors like garment manufacturing.

Such cost savings would no doubt be widely welcomed by private businesses, but such vows will be more pie-in-the-sky than reality as long as Hun Sen’s government struggles to even keep the power on.

  • Oil & Gas
30 April 2019

 – 

  • Cambodia

Amid electricity cuts, parched hydropower dams and millions of dollars of blackout-related economic losses, a bright spot could be emerging on Cambodia’s energy front.

After nearly two decades of false starts, Cambodia has announced it will begin to extract oil for the first time later this year, representing a potential rich new source of energy and revenue.

Extraction is expected to begin by the end of this year from the so-called “Apsara” oil field, situated in a 5,000 square kilometer area of the Gulf of Thailand known as Block A.

Cambodia’s extraction plans have been hobbled for years due to a maritime territorial dispute with neighboring Thailand but Block A is safely within Cambodia’s solely claimed area.

The area contains an estimated 30 million barrels of oil, according to the Ministry of Economy and Finance. Currently, Cambodia is a net fuel-importing nation.

US energy giant Chevron, which took a controlling stake in Block A in 2012, had earlier estimated it held 700 million barrels of oil but that figure has since been revised down substantially.

Source: KrisEnergy

Two years later, Chevron backed out of the venture, selling its stake to Singapore’s KrisEnergy for US$65 million, roughly a third of what the US company had spent on exploration in the area over the years.

KrisEnergy first entered the joint venture in 2010. The fact that one of the world’s most experienced energy companies abandoned the field at a loss led many analysts to assume that it was commercially unviable.

Chevron’s decision coincided with a slump in global oil prices: the price of a single barrel of oil dropped from around $115 in 2014 to just $35 in 2016.

In 2017, KrisEnergy signed an agreement with the Cambodian government over the oil field’s ownership. The Singaporean firm holds a 95% stake in the contract area while the government maintains a 5% share.

The company predicts the oil field will produce somewhere near 8,000 barrels per day of crude, with the first oil expected to be produced in October this year and transported by barge. It says 27 wells have been drilled in Block 1A, 13 of which have reportedly struck oil and gas.

In Phases 1B and 1C, which haven’t yet been assigned start dates, nine more extraction platforms are expected to be built in the maritime area.

The Ministry of Economy estimates that Block A has about 30 million barrels of oil and that complete extraction of the fuel could take as long as nine years.

KrisEnergy Chief Operating Officer Kelvin Tang (L) shakes hands with Cambodia’s Minister of Mines and Energy Suy Sem during a signing ceremony in Phnom Penh, August 23, 2017. Photo: AFP/Tang Chhin Sothy

So far there are few reliable estimates on how much the enterprise would be worth to Cambodia. A previous sticking point with Chevron involved revenue-sharing, with the government requesting as much as 70%-80% during negotiations.

The revenue-sharing arrangement with KrisEnergy isn’t immediately clear.

Much, of course, depends on whether the global price of petroleum stabilizes near its $65 per barrel historical moving average after recent years of wild up-and-down fluctuations.

A recent report by Oxfam and the Cambodian For Resources Revenue Transparency, a nongovernmental organization, estimates that the first six-year phase could earn the government between $90-$120 million.

If the government’s estimate of roughly 30 million barrels of oil holds, and if the fuel is also sold at today’s prices of around $65 per barrel, then the extraction could be worth as much as $1.9 billion.

Ancillary benefits could be derived from foreign investment in the fledgling sector. The Ministry of Mines and Energy stated last year that foreign direct investment (FDI) in extractive industries, including oil exploration as well as mining, was worth $1.3 billion last year.

“Future opening up of the resources sector offer huge potential for investors. The infrastructure sector is in the need of investments as well. The local refinery production facilities are not able to handle large-scale exploitation operations,” reads a recent Asean Briefing by Dezan Shira & Associates, an Asian consultancy firm.

In February the Ministry of Mines and Energy announced that a Canadian firm, Angkor Gold, is also diversifying into oil and gas, and has applied for exploration permits.

A KrisEnergy platform type that will be used at Block A in the Gulf of Thailand. Photo: KrisEnergy/Facebook

The company has not publicly disclosed where it aims to explore; its website says the company is negotiating with the government for permits to as much as 7,000 square kilometers, with a particular interest in the Kampong Som basin, an area southwest of Phnom Penh where thermal conditions indicate a possibility of oil or dry gas.

The company is also reportedly the only company exploring any of Cambodia’s 19 onshore blocks.

In March, a report by the Indonesian news agency Antara said that “Indonesian companies and [state enterprises] need to explore minerals [in Cambodia], as there is still a lot of space, for instance, in gold and oil which has not been well-explored there.”

Initially, it was thought that Block A’s extracted oil would first be sold only in the Cambodian market, according to past statements by Cheap Sour, director-general of the General Department of Petroleum at the Ministry of Mines and Energy.

However the ministry now says, at least in the initial phases of extraction, that the crude oil will be exported because Cambodia lacks the infrastructure to process and refine the raw fuel.

To be sure, crude oil exports will bring in needed revenue for the government, though some already caution a sudden surge in foreign currency dominated capital inflows could also ramp up inflation if mismanaged.

Inflation is “manageable” at the moment, according to a National Bank of Cambodia statement in January, and is projected to grow about 2.6% this year, though the price of food is set to increase at a higher rate.

A fuel vendor prepares to fill a motorbike with petrol along a street in Phnom Penh in a file photo. Photo: AFP/Tang Chhin Sothy

If Cambodia can move to quickly develop the necessary infrastructure so that processing can be done domestically – meaning some of the produced oil enters the local market – it could boost the economy on various fronts and potentially alleviate future power crises.

That would potentially include money saved on the high amount currently spent on subsidizing the local petroleum market as well as on fuel imports.

In March 2016, a cross-ministerial directive established a mechanism for limiting the price domestic petroleum distributors are allowed to charge customers. This price is updated every ten days and gas stations can be fined if they flout the rules.

When global oil prices rose in early 2018, the government spent $83 million to stabilize domestic fuel prices for consumers in the first five months of the year, Sim Vireak, a strategic adviser to the Asian Vision Institute, a local think tank, recently noted.

To soften the blow for petroleum distributors and to forestall another rise in gas prices, last June the government drastically cut tax rates, costing the state about $30 million in revenue.

An electricity utility worker checks power lines in Phnom Penh. Photo: Twitter

While the sums aren’t vast, the steep rise in the price of oil and gas over the last four months has no doubt added to the government’s financial burden, notably at a time of politically challenging rolling electricity blackouts.

But the promise of domestically produced oil, including reductions in how much Cambodia imports and potentially lower fuel costs, would be a boon to domestic distributors and narrow the need for expensive state subsidies.

Yet all of this “depends on the price of oil and the cost of extraction. If it costs too much, and the price is too low, extraction does not make sense,” says Sophal Ear, associate professor of diplomacy and world affairs at Occidental College at Los Angeles.

  • Energy Economy
  • Energy Efficiency
  • Renewables
30 April 2019

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  • Cambodia

China Huaneng Group has unveiled plans to invest in a 200-megawatt solar project in Cambodia to help develop the Kingdom’s renewable energy industry.

In a meeting on Sunday with Cambodian Prime Minister Hun Sen, held on the sidelines of the Belt and Road Initiative (BRI) Forum in Beijing, a representative of China Huaneng said the company has recently finished a study on Cambodia’s solar sector, concluding that the Kingdom has great potential in solar power generation.

“The study shows that Cambodia has enough hours of sunshine to make investments in solar viable,” Mr Hun Sen said in a post on his Facebook page.

..

“The company said it plans to invest in a project that will generate 200 MW in Cambodia,” the premier said.

Mr Hun Sen said he supported the project, and explained that solar can be a more reliable energy form than hydropower.

“Hydropower dams cannot operate at full capacity during the dry season because of water shortages,” Mr Hun Sen said in the post.

China Huaneng Group is one of the investors behind the 400-MW Lower Se Sam 2 Dam in Steung Treng province. The project is a joint venture with local company Royal Group.

The country needs new investments in energy projects to face the current energy deficit, Victor Jona, director general of energy in the Ministry of Mines and Energy, told Khmer Times yesterday.

..

Regarding China Huaneng’s plans, he said, “It is a good move because it will contribute to the sustainable development of the energy sector.

“The current energy deficit is the result of high temperatures and a water shortage. We hope solar and wind energy investments can help ameliorate the situation.”

Since power cuts began in March across the country, the government has approved several energy investments – a hydropower dam in Pursat province as well as solar farms in Kampong Chhnang and Pursat provinces – and increased energy imports from neighbouring countries.

According to Mr Jona, a new study shows that Cambodia also has potential in wind energy, particularly in Preah Sihanouk and Mondulkiri provinces.

Last year, Cambodia consumed 2,650 MW, a 15 percent increase compared to a year earlier. 442 MW were imported from Thailand, Vietnam, and Laos in 2018.

  • Bioenergy
30 April 2019

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  • Indonesia

With a population of some 260 million people, Indonesia is one of the world’s largest producers of garbage, which includes plastic waste.

In fact, a study conducted by the office of the Coordinating Minister for Maritime Affairs, in cooperation with the World Bank, showed that 80 percent of plastic waste thrown into Indonesia’s oceans came from 87 cities mostly on Java island.

While the Government has made various efforts to reduce this waste, the issue needs to be dealt with more seriously as it could damage the environment and spell doom for future generations.

The Government’s recent strategy has been to handle garbage in the form of waste-to-energy (WTE) power plants, which have been confirmed by the enactment of Presidential Regulation No. 35 of 2018 or the Acceleration of Eco-friendly Waste-to-Energy Power Plant Development.

The Bantargebang Landfill waste-to-energy plant, which is a pilot project of thermal process waste management, was dedicated by Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan in Bekasi, on the outskirts of Jakarta, on March 25, 2019.

Jakarta generates about 7,000 kg of waste per day, which includes more than enough municipal waste input for WTE.

“Garbage, in my opinion, is a problem that has to be dealt with. We use domestic technology. This pilot project uses domestic components in almost the entire process,” he remarked.

The waste-to-energy plant called PLTSa “Merah-Putih”, which has a capacity to process 100 tons of garbage daily and produce 750 kWh of electricity, is aimed at solving the problem of urban waste in Indonesia.

“If we do not begin, when will we make progress? Later, if processing 100 tons per day works, we will replicate it in other cities, such as Labuan Bajo, Balige, Pontianak, and other cities that produce daily garbage of around 100-200 tons,” he noted.

The replication of this pilot project is also expected to solve the landfill problem throughout the country.

BPPT Chairman Hammam Riza remarked that the PLTSa Merah-Putih utilizes thermal technology, which is environmentally friendly and economical, and uses mainly local components. It has been used in several other waste-to-energy plants in the world.

“This is a result of BPPT’s study and built with local partners. Most of its equipment includes domestic products, so we proudly call it PLTSa Merah Putih,” Riza remarked.

Meanwhile, Minister Nasir stated that the most important aspect of this pilot project is waste treatment and not electricity production. This is part of efforts to make the city cleaner.

“Do not think of energy production, but how to make Jakarta clean, and Bekasi clean. That is what matters. We should not calculate the cost per kWH,” he added.

One month later, on April 28, 2019, Pandjaitan revealed that Indonesia has developed waste-to-energy power plants in 12 cities.

“Waste-to-energy plants are being utilized in cities to treat waste into energy,” Luhut Pandjaitan said while launching the Clean Indonesia Movement.

Jakarta has a waste-to-energy power plant capable of treating 1,500 tons of waste daily.

The Government wants three to four waste-to-energy power plants to treat 8,000 tons of waste produced daily by Jakarta residents.

Similar plants exist in Medan (North Sumatra), Surabaya (East Java), Bali, Bandung (West Java), Manado (north Sulawesi) and several other cities.

The Government will also develop waste incinerators having minimal C02 in regions producing waste below 150 tons per day. “These incinerators will be located far from settlement areas,” he said.

He urged everyone to reduce waste production. He also called for a lifestyle change to reduce the usage of single-use plastic products.

“If you go shopping, don’t use plastic bags. Take your own reusable bags,” the minister said.

Meanwhile, Indonesia had earlier explored the development of a waste-to-energy power plant in cooperation with the environmental conservation organization World Wildlife Fund (WWF) Indonesia and investors.

Last year, Pandjaitan discussed the development of alternative energy, specifically waste-based energy, with a chemical plastic recycling firm, Plastic Energy Limited.

Along with the founder and CEO of Plastic Energy Ltd Carlos Monreal, he witnessed the signing of a cooperation in waste collecting and processing into energy resources.

The cooperation was aimed at improving waste management and reducing sea waste in the Indonesian waters by processing plastic waste into energy.

“We are the only operator in the world that has succeeded in converting domestic plastic waste on a commercial scale using the recycling process of Thermal Anaerobic Technology (TAC). The process uses low carbon tracing technology that produces alternative fuel oil,” Monreal said.

Monreal said his plant in Spain has produced some 850 liters of fuel oil for each ton of plastic waste.

The company has cooperated with WWF Indonesia to collect waste, educate people and get familiar with the system.

A local environmental NGO, the Indonesia Center for Environmental Law, however, has called for a review of WTE projects in the country stating that the Supreme Court (MA) has ruled that waste incineration is against the laws.

“The Supreme Court ruling clearly says that thermal technology is forbidden because it contravenes the laws. The government’s move is dangerous,” the center’s executive director Henri Subagio said in December last year.

  • Energy Cooperation
  • Energy Economy
30 April 2019

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  • Malaysia
KUALA LUMPUR: As the next six-month deadline (June 30) draws nearer for the Energy Commission (EC) to reflect changes in fuel and generation costs in electricity tariffs, some quarters expect to see electricity tariffs being reduced to match the international pricing of gas and coal.

As two-thirds of our electricity bill come from fuel and generation costs, lower international prices of gas and coal recently may have triggered such expectations.

Coal and gas are the two primary fuel in generating electricity in Peninsular Malaysia. Around 41 per cent of the power plants are coal-fired and 47 per cent more are natural gas plants. Naturally, this implies Malaysia is susceptible to global fuel prices.

Of late, spot coal cargo prices for exports from Australia’s Newcastle terminal have fallen by more than 25 per cent from US$118 per tonne in July 2018 to about US$88 per tonne currently.

Asian liquid natural gas (LNG) spot prices for May deliveries reportedly dropped more than 60 per cent from US$11.81 per MMBtu in September 2018 to around US$4.65 this week.

So, can the easing coal and gas prices in recent weeks translate into rebates?  Of interest here is that the tariff structure has not changed since 2014. Under the current Imbalance Cost Pass-Through (ICPT) mechanism, the EC reflects changes in fuel and generation costs in the electricity tariffs, either as a rebate or surcharge in a review done every six months. And this is subject to government approval.

The current ICPT mechanism is for between Jan 1 and June 30, 2019 while the next is from between July 1 and Dec 31, 2019.  The mechanism falls under the framework of the Incentive-based Regulation (IBR) that was introduced in 2014.

In line with global standards, ICPT promotes a fair and transparent tariff setting.

Tariffs are determined by the EC when it evaluates the pricing structure and cost of fuel every six months with a six-month lag in implementation.

If the overall actual cost of fuel in the previous six months is higher than the forecasted cost of production of electricity, then a surcharge will be imposed on consumers in the subsequent six months.

But if the actual cost is lower, then consumers can enjoy a reduction or rebate in the following six months.

The current average base tariff, as decided last year is 39.45 sen per kWh. The rate is usually reviewed once every three years as the EC has set that level of base tariff for 2018, 2019 and 2020.

Every six months, the EC looks at the international pricing structure and compares it to the base fuel price of generating electricity, to determine whether there would be a ICPT surcharge or a rebate, said an industry source.

“This allows for a structured, transparent and informed way of tariff setting taking into cognisance huge requirement for capital expenditure (CAPEX) and operational expenditure (OPEX) by power utilities, including TNB,” she added.

From the above scenarios, a pertinent point must also be taken into account here: although prices of coal and gas have come down, their levels are still above the forecasted fuel prices used to arrive at the base tariff of 39.45 sen per kWh.

This is because the assumption that the international markets pricing of coal averages are at US$75 per tonne and piped gas at RM27.20 per mmBtu from 2018 to 2020.

This may prove difficult for the EC to reduce tariffs for the time being unless coal and gas prices slip past their yardstick base prices. – Bernama

Read more at https://www.thestar.com.my/business/business-news/2019/04/30/how-tariffs-are-determined-for-energy-consumers/#vHoVGoCvg3cDKv1y.99

  • Energy Economy
30 April 2019

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  • Malaysia

Malaysia is expecting to rake a potential trade and investment of RM10 billion through the country’s participation at the Expo 2020 Dubai.

According to Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin (picture), Malaysia will exhibit sustainable energy solutions, while the clean energy and green industry will be displayed at the centre stage for the country’s pavilion.

“It is important for us to showcase the work and development that we have been working on,” Yeo said at the media briefing in Putrajaya yesterday.

“Next year, it is important for Malaysia to be at the world stage to chart a new path that we will continue to develop as a country,” she said, adding that Malaysia has gone through rapid developments since Prime Minister Tun Dr Mahathir Mohamad envisioned the Vision 2020 almost two decades ago.

The Malaysian delegation aims to secure 1,000 business leads, as well as 20 collaborative projects with other participating countries.

“At the moment, we are aiming to achieve a number of primary targets besides the total investment value, which are to secure 1,000 business leads and sign 20 memoranda of understanding among the participating companies during the expo,” she said.

Yeo added that Malaysia pavilion themed “Energising Sustainability” is looking to attract more than 5,000 participants for its programmes while expecting one million visitors, including 20 delegations from other participating countries.

Yeo said RM60 million of capital expenditure (capex) will be provisioned for the exhibition, of which will be partially contributed by the private sector.

“Following the Cabinet meeting on Dec 12 last year, the ministry has been tasked to lead Malaysia’s participation in this expo.

“We have received the first cash sponsorship from Helios Photovoltaic Sdn Bhd for RM250,000 and I want this expo to not just be a mere participation to make connections, but to generate revenue for the country,” she said.

The ministry expects to bring 200 companies and agencies that will be organising programmes and business matching sessions for six industry clusters.

“We are proposing to present six clusters including the agriculture and primary commodities sustainability, the energy, surface technology international and environment.

“We have 200 slots allocated for about 200 companies and agencies from the public and private sectors, and we are in the process of calling in for participation,” she said.

Malaysia will be among the 192 countries and international organisations taking part in the global expo held between Oct 20, 2020 and April 10, 2021 at the Dubai Exhibition Centre in United Arab Emirates (UAE).

Expo 2020, an international exhibition hosts by a different country for every five years, is a six-month event that will exhibit a wide array of technological developments according to the countries’ expertise.

As of December 2018, Malaysia approved 27 manufacturing projects from the UAE with a total investment value of RM1.32 billion while providing 1,636 employment opportunities for Malaysia.

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