BWorld 822, Nuclear and coal energy for economic prosperity

Nuclear and coal energy for economic prosperity

September 18, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2025/09/18/699036/nuclear-and-coal-energy-for-economic-prosperity/

 

DUBAI, UAE — This is the second time I’ve seen Dubai Airport and Dubai City from the air and they continue to amaze me. Very modern, very bright at night, attracting many visitors and investors from many countries. I have a long layover in Dubai Airport while waiting for my connecting flight to Madrid, Spain, then I will take a train to Valencia to attend a conference.

 

As an economics and energy researcher, I find the United Arab Emirates’ (UAE) moves in energy expansion rather bold and sensical. The share of natural gas fell from nearly 100% of total power generation, down to 68% in 2024 as the use of nuclear energy expanded significantly. From using no nuclear power until 2019, to generating 10.5 terawatt-hours (TWh) with it in 2021, and 40.6 TWh in 2024, contributing 23% of total generation last year. No other country in the world has made this big a jump in nuclear power generation in such a very short period of time.

 

While the UAE expands its use of nuclear energy, other countries are cutting down, like Germany which shut down all its remaining nuclear plants in early 2024. Other countries that cut their nuclear power use are the UK and Japan, from 80 TWh to 41 TWh and from 286 TWh to 85 TWh, respectively. Nonetheless, there is still a net expansion in nuclear generation worldwide, from 2,761 TWh in 2004 to 2,818 TWh in 2024 (see Table 1).

 

What is really increasing the power generation of many countries is coal, not intermittent renewables like solar-wind, or gas, or nuclear. In the experience of many Asian countries, as they expand their coal use, their overall power generation increases, and their GDP sizes have expanded significantly, delivered rising prosperity to their people.

 

The opposite results are seen among many European nations. They deliberately cut their coal use in a mad rush to decarbonization and net zero, and their overall power generation declined. This can be clearly seen in the cases of Germany, the UK, Spain, and Italy (see Table 2).

 

We need to expand, not reduce, our use of coal for power to sustain growth and fight the perennial yellow-red alerts (due to insufficient power supply and rising power demand) as our Gross Domestic Product (GDP) growth is now among the fastest in the world.

 

I wish that construction begins soon on Meralco Power Gen’s Atimonan 1 Energy (A1E) plant, a planned 1,200-megawatt (MW) super-critical high-efficiency low-emission (HELE) coal plant, so it can be commissioned by 2030 or earlier.

 

I also wish that the expansion of Aboitiz Power’s Therma Visayas, Inc. (TVI) in Toledo, Cebu will proceed. Among the three grids of Luzon, Visayas, Mindanao, the Visayas has the thinnest power reserves margin and thus, yellow alerts are more frequently experienced there. The business chambers and organizations in Cebu are very vocal in their support for coal expansion, despite continued opposition by some environmental groups who create zero productive jobs in Cebu.

 

I will be attending two big energy conferences. First is ENERCON 2025, organized by the University of the Philippines-Los Baños Economics Department, to be held at Vivere Hotel in Muntinlupa City on Sept. 25. Economics faculty and UPLB students, both undergrad and graduate doing research in energy policies, will interact with industry players, government, and independent researchers like me.

 

Then comes the Philippine International Nuclear Supply Chain Forum 2025, organized by the Department of Energy as Chair of the Nuclear Energy Program Inter-Agency Committee (NEP-IAC), to be held at the Grand Hyatt Hotel in Taguig City on Oct. 2-3. This is a big event with speakers from countries using nuclear energy like the US, Canada, Spain, Japan, and South Korea, so it will be a good learning experience for the audience.

PhilStar 59, Attaining a balanced budget and cutting hard the deficit

Attaining a balanced budget and cutting hard the deficit

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star 

September 18, 2025 | 12:00am

https://www.philstar.com/business/2025/09/18/2473562/attaining-balanced-budget-and-cutting-hard-deficit

 

DUBAI – The United Arab Emirates suffered a five percent GDP contraction in 2020 during the global lockdowns, their public debt rose from 26.8 percent of GDP in 2019 to 41.3 percent in 2020, then slowly reduced it to 32.1 percent in 2024. That is a good achievement.

 

I am here waiting for my connecting flight to Madrid, Spain, then train to Valencia, the venue of my conference. Spain suffered a double-digit 10.9 percent GDP contraction in 2020. Their public debt rose from 97.6 percent of GDP in 2019 to 119.2 percent in 2020, then slowly reduced it to 101.8 percent in 2024.

 

Philippine public debt rose from 37 percent of GDP in 2019 to 51.6 percent in 2020, rose to 57 percent in 2021 and remained at that level in 2024 (Data from IMF World Economic Outlook 2025).

 

Reducing our public debt seems to have become a slippery goal. So fiscal and monetary economics stories like these in The Philippine STAR yesterday, Sept.17, are good news to me: “GOCC dividends hit P117 billion in September”, ‘One more rate cut possible this year’, and “Government expects P100 billion boost from bond market inclusion.”

 

Government derives revenues not only from taxes, regulatory fees and fines, and asset privatization, also from dividends of government-owned and controlled corporations (GOCCs) and finance institutions. Data from the Bureau of the Treasury show that GOCC dividends remitted were P69.1 billion in 2022, P102.2 billion in 2023, P138.5 billion in 2024 and P106.3 billion as of July 2025.

 

In a press statement by the Department of Finance (DOF) last Sept. 16, “Recto to GOCCs: You are people-owned, Filipinos must be at the heart of services anchored on good governance,” Secretary Ralph Recto recognized the 53 GOCCs for their dividend contributions of P109 billion as of Sept. 12. The DOF also expects the year-end dividend remittances to reach at least P117 billion, even up to P157 billion.

 

This is good news. Especially to the “rock star” of GOCCs, Land Bank of the Philippines that remitted P32 billion last year and P33.5 billion this year under the leadership of LBP president Lynette Ortiz.

 

Our budget deficit has been at the P1.5 trillion to P1.6 trillion a year from 2020-2024, and projected to stay at that level until 2028. With or without any economic or virus crisis our public spending and subsidies never decline relative to increases in revenues.

 

There is a need to deliberately cut certain spending, government should aspire to have a balanced budget, even a fiscal surplus to reduce the public debt stock – P17.6 trillion as of July 2025 when it was only P8.2 trillion in 2019 and P6.1 trillion in 2012.

 

When Department of Budget and Management Secretary Amenah Pangandaman reported that the various agencies have submitted a total of P10.1 trillion last April for the 2026 budget, my hypothesis that national government agencies are increasingly getting more fiscally irresponsible is further confirmed. Why, because the budget in 2025 is only P6.3 trillion and agencies submitted nearly P4 trillion increase in just one year.

 

It is good that Secretary Pangandaman, along with Secretaries Recto and Balisacan have disallowed many huge spending requests by various agencies.

 

The interest payment for our public debt is getting worse. The principal amortization plus interest payment are as follows: P1.257.3 trillion and P763.3 billion in 2024; P1.206 trillion and P848 billion in 2025; and P1.055.6 trillion and P950 billion in 2026. Interest payment keeps rising even if principal amortization is falling.

 

Below are general guidelines where spending cut by the national government can be done, my unsolicited proposals.

 

One, cut social programs and subsidies where local governments have high and rising spending already. From the Budget of Expenditures and Sources of Financing (BESF) 2026 by the DBM, allocations to LGUs are P1 trillion in 2024, P1.19 trillion in 2025 and P1.35 trillion in 2026. Then they have local revenue sources aside from these transfers from the national government.

 

These include cutting the budget of DepEd, state universities and colleges (SUCs), DSWD freebies, DOH freebies. For instance, there are 121 local government universities on top of 113 SUCs. What most if not all SUCs do, they expand the number of campuses per province.

 

Two, cut if not discontinue certain subsidies for Metro Manila. Like the 50 percent discount for seniors, students and PWDs in LRT, MRT. Then the “zero balance billing” in DOH hospitals as most DOH hospitals are in Metro Manila. Such subsidies are additional attraction to people in the provinces to further flock to the big city as there are many government freebies there that are not available in most provinces and cities.

 

Three, infrastructure programs where public-private partnership (PPP) programs and funding can be optimized. These include Luzon-long highways with the expansion of TPLEX up to Ilocos Norte, expansion of SLEX down to Sorsogon. Private corporations like SMC can do help in river dredging and flood control at no cost to government. SMC needs more filling materials for the Bulacan Airport project.

 

Four, reforms in military and uniformed personnel (MUP) pension, civilian pension. Also in the BESF, pension and gratuity fund are P144.7 billion in 2025 and P198.0 billion in 2026. Government personnel, uniformed or not, should contribute for their own retirement fund someday via monthly salary pension deduction. This should not be added to the annual budget that contribute to the bloating of the deficit.

 

Five, back to more personal and parental responsibility and less government responsibility in running people’s daily lives. Cultural corruption can happen when many parents think that their children’s education, healthcare and nutrition, cash allowances are largely government responsibility and not theirs.

BWorld 821, Revenue reforms and Asian credit ratings

Revenue reforms and Asian credit ratings

September 16, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2025/09/16/698524/revenue-reforms-and-asian-credit-ratings/

 

The spending side of the Philippines’ public finance needs major reforms that include spending cuts in many agencies like the corruption-tainted Department of Public Works and Highways (DPWH). Instead, we can increase infrastructure projects via Public-Private Partnerships (PPP).

 

The revenue side too needs additional reforms, especially when it comes to excise tax because the declining trend continues with more privatization of government assets, and with rising dividends given by government-owned and -controlled corporations (GOCCs).

 

Bureau of Internal Revenue (BIR) collections continue their natural annual increase even without any major tax hikes; it is the Bureau of Customs that needs dynamism (see Table 1).

 

“A closer look at some indicators will belie Secretary [Ralph] Recto’s statements. The seemingly satisfactory revenue effort is deceiving. Note that ‘better-than-expected’ nontax revenue collections primarily drove higher total revenue collections. These nontax revenues included public-private partnership concession fees amounting to P30 billion, and notably, P167.2-billion transfer of funds from two government-owned and -controlled corporations (GOCCs), the Philippine Health Insurance Corp. (PHIC) and the Philippine Deposit Insurance Corp. (PDIC).”

 

That paragraph is from “Binding constraints: Corruption and limited fiscal space” by Pia Rodrigo and Filomeno S. Sta. Ana III, a story in BusinessWorld’s Anniversary Report, which came out earlier this month. The above statement on the transfer of PHIC and PDIC funds to the national treasury as non-tax revenue is not accurate. As shown in Table 1, a big Land Bank of the Philippines dividend of P32 billion last year constituted a big increase in non-tax revenues.

 

The needed reforms in excise tax relate mainly to tobacco taxes. Revenues from alcohol, sugary drinks, mining, and automobile keep rising or remain steady; it is the revenue from tobacco that keeps declining as the tax rate increases. Tobacco smugglers and their corrupt protectors in government love high tobacco tax rates because the price gap between legal or taxed products and illegal or untaxed products becomes wider. Smokers and vapers naturally want cheap products, and illicit and smuggled tobacco are sold at lower prices.

 

It is wrong for health activists and agencies to depend on tobacco and alcohol taxes to fund public health. Many health activist groups want to stop people from smoking and vaping completely, so one assumes that they wish that tobacco tax revenues would someday be zero. Yet they demand more billions of pesos from more smokers and drinkers who pay higher tobacco and alcohol taxes.

 

Any tobacco and alcohol tax revenue should go to the National Treasury, with zero earmarked for the Health department or for the Philippine Health Insurance Corp. (better known as PhilHealth). That way, there is zero dependence on smokers and drinkers.

 

INFRASTRUCTURE

Meanwhile, the economic and infrastructure teams went to Osaka, Japan last week for a Philippines Economic Briefing on Sept. 12. There was also the Philippines-Japan High-Level Joint Committee Meeting on Infrastructure Development and Economic Cooperation on Sept. 11.

 

The Philippine delegation was led by Finance Secretary Ralph G. Recto. The delegation included Economics Secretary Arsenio Balisacan, Trade Secretary Ma. Cristina Roque, and Energy Secretary Sharon Garin. Budget Secretary Amenah Pangandaman was not there as she was facing and addressing spending concerns on DPWH flood control projects and other agencies at the Senate hearings and other venues.

 

I checked the status of the Philippines’ credit rating with respect to its neighbors in Asia. We are just one notch from attaining an “A” rating from the Big Three agencies — S&P, Moody’s, and Fitch — while we have already secured an “A” from Ratings and Investment (R&I, Japan) and the Japan Credit Ratings Agency (JCRA), as seen in Table 2.

 

Improved credit ratings would mean the lower cost of government borrowings to cover domestic infrastructure and social services spending. While this is a good way towards fiscal consolidation, a better way is to cut spending somewhere, like abolishing old subsidy programs when new subsidy programs are created.

 

Also, there should be major reforms in the military and uniformed personnel (MUP) pension system. Active duty personnel should contribute to their own pensions someday. A pension fund is personal, not social or collective, so its funding should also be personal, not social or collective. And the indexation of retired personnel’s pensions to the salaries of active personnel of equal rank should be abolished. 

The "Trillion Peso March" against corruption on Martial Law anniversary

I am still in Dubai airport waiting for my connecting flight from Madrid to Manila. I saw this in Philippine Star.

This is good, people are vigilant against abuses by government. And this should serve as big warning to corrupt and abusive leaders and officials in both Executive and Legislative branches, that the anti-corruption rallies in Nepal and Indonesia that turned violent would happen in the country.

Today is also the Martial Law anniversary imposed by former President Ferdinand Marcos Sr. in Sept. 21, 1972 or 52 years ago.

There are many faces and forms of corruption, especially the endless "crisis" narratives -- hunger crisis, education crisis, health crisis, population crisis, inequality crisis, garbage crisis, climate crisis, virus crisis,... Each"crisis" narrative once accepted leads to more government "solutions" that require even bigger government spending, taxation, borrowings, and so on.

The Trillion Peso March can help lead to such realization. We do more personal and parental responsibility in our own lives, less government responsibility, less government taxation and spending.

BWorld 820, On declining inflation and on the Philippines’ import partners

On declining inflation and on the Philippines’ import partners

September 9, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2025/09/09/696985/on-declining-inflation-and-on-the-philippines-import-partners/

 

The Philippines inflation rate for August 2025 was released last week, and we see that it was still low at 1.5% although a bit higher than July’s 0.9%. So the average inflation rate of the country for January to August is still at 1.7%, and this is lower than the average inflation rate of many other Asian countries.

 

Finance Secretary Ralph G. Recto issued an upbeat statement on this, saying that “Kahit napanatili natin ang mababang inflation, mas paiigtingin pa ng gobyerno ang mga hakbang para suportahan ang produksyon… Patuloy naming prayoridad na protektahan ang halaga ng bawat pisong kinikita ng bawat pamilyang Pilipino (Even though we have maintained low inflation, the government will further intensify measures to support production… Our priority continues to be to protect the value of every peso earned by every Filipino family).”

 

Low and stable prices, high employment and job opportunities, these are the most basic concerns of Filipinos and almost all other people around the world.

 

Meanwhile, Japan is now the “inflation capital” of major Asian economies, and this is ironic because it is an industrialized country and industrial economies are supposed to have low inflation because they can mass produce, mass store, and mass transport many things so that logistical and supply bottlenecks are avoided when delivering the goods and services to consumers.

 

Meanwhile, China has entered deflation.

 

Major economies in America and Europe also suffer from high inflation above 2.5%. A few though have experienced declining inflation from 2023-2025, like Spain, Portugal, Germany and France (see Table 1). 

 

And when it comes to GDP growth, only three European countries have had growth above 2.5% in 2024 and in the first and second quarters (Q1 and Q2) of 2025: Turkey with 3.2% and 3.6% respectively, Poland with 2.9% and 3.3%, and Spain with 3.2% and 2.8%. Big European nations with crawling growth are: the UK with 1.1% and 1.3%, France with 1.1% and 0.7%, Italy with 0.7% and 0.6%, and Germany with -0.2% and 0.4% (Germany is suffering degrowth).

 

WHO ARE WE IMPORTING FROM?

Two weeks ago, the Philippine Statistics Authority (PSA) released the country’s merchandise trade data for July. In Table 2, I have compared the January-July total merchandise imports for 2022-2025.

 

China’s share keeps rising, from 19.8% of the Philippines’ total imports in 2022 to 28.5% in 2025. Including Hong Kong, this comes up to 30%, which is huge. Meanwhile, the share of Japan and the US in the Philippines’ total imports is declining. This means that, for example, more Philippine bus companies are buying more Yutong, King Long, and Higer buses than they are Hino or Isuzu buses, and they are buying no US buses.

 

Only four European countries make it to the top 20 sources of Philippine imports — Germany, France, Italy, and Spain. The UK is out (see Table 2).

 

While the Philippines’ defense and war-mongering camps regularly issue anti-China statements, Philippines businesses embrace more China products. China’s trend of domestic deflation (see Table 1 again) is also reflected in its export prices, so many countries’ imports from China (including those of the Philippines) will continue to rise.

 

Among the big European economies, Spain is the only country with high growth and declining inflation. I read that their tourism sector is doing very well, which contributes to their high growth. The Philippines can learn a thing or two about Spain’s tourism that may be applicable here.

PhilStar 58, Revenue expansion and spending control

Revenue expansion and spending control

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star 

September 4, 2025 | 12:00am

https://www.philstar.com/business/2025/09/04/2470244/revenue-expansion-and-spending-control-oplas

 

Last week, the Bureau of the Treasury released the Cash Operations Report (COR) for July 2025. Here, I compare the total for January-July 2023, 2024 and 2025, respectively. All units in billion pesos:

 

Total revenues: 2,271.9, 2,606.9 and 2,732.5, or an increase of only 125.6 in 2025. The Bureau of Internal Revenue (BIR) has collected 1,492.3, 1,681.8 and 1,889.4, or an increase of 207.6 in 2025.

 

The Bureau of Customs (BOC) underperformed with collections of 506.5, 535.9 and 544.0, or an increase of only 8.1. Big underperformance in January-June 2025, but last July, BOC collected 85.2 versus an average of only 76/month in April-June. So new BOC Commissioner Ariel Nepomuceno has delivered in his first month in office. Congratulations Commissioner Nepomuceno, keep it going.

 

The non-tax revenues suffered a big decline: 255.3, 368.7 and 277.0, or a decline of 91.7 this year. This is because “other non-tax” like remittances by government corporations have significantly expanded in 2024 and not able to sustain it this year: 63.0, 143.6 and 73.7, a decline of 69.9.

 

Expenditures have increased faster: 2,871.4, 3,249.7 and 3,516.9, or an increase of 267.2 this year. The expansion came mainly from national government disbursements: 1,859.0, 2,100.0 and 2,229.5, or an increase of 130.0 this year. The allotment to local government units have increased too: 538.2, 590.4 and 670.0, or an increase this year of 79.3.

 

Interest payment alone of our high public debt keeps increasing too: 346.0, 456.7 and 521.0, or an increase of 64.4 this year. Our interest payment excluding principal amortization in the first seven months of 2025 was 2.5/day, that is big.

 

Faster expansion in expenditures and slower expansion in revenues means the budget deficit has expanded too: 599.5, 642.8 and 784.4, or an increase of 141.7 this year.

 

Higher deficit means higher financing or borrowing needed: 928.6, 851.9 and 1,402.5, an increase this year of 550.6. We keep borrowing high, the expenditures and subsidies remain high, even without any economic or finance or virus crisis.

 

That is one indicator of fiscal irresponsibility by many agencies, the Department of Public Works and Highways (DPWH) being on spotlight because of hundreds of billions of pesos lost yearly due to wastage if not outright corruption and stealing.

 

See this report from The Philippine Star: “P118.5 billion a year lost to flood control corruption – DOF” (Sept. 3). It quoted there Finance Secretary Ralph Recto at the Development Budget Coordination Committee (DBCC) briefing at the Senate, stating in disappointment, “Raising revenues is no joke. Then you will see that it does not go to the right projects and the welfare of the people. Some even become non-existent. Because of ghost projects, our economy has lost P42.3 billion to P118.5 billion… Maybe if that money was spent better, we could have reached six percent growth.”

 

Yes, raising more revenues is a lot more tiring than raising spending and subsidies. During the budget call for 2026, Department of Budget and Management (DBM) Secretary Amenah Pangandaman said that DBM received P10.1 trillion in total spending request from all agencies. Horrible. The total budget this year is only P6.3 trillion and agencies requested nearly P4 trillion increase in just one year.

 

Philippines’ “deep state” at work, spend-spend-spend without regards for the adverse fiscal impact like the big jump in the deficit, in borrowings and in debt payment both principal and interest. And it is not only in DPWH but in many agencies, both national and local. So DBM and the rest of the economic team disallowed many budget expansion request and submitted a total of P6.8 trillion to Congress for 2026.

 

My short notes on the ongoing DPWH corruption scandals.

 

One, the term “flood control” is wrong because no one can control flood, control rains, control lava flows, etc. They go with gravity. The appropriate term should be “flood facilitation.”

 

Two, creeks, rivers and lakes should have regular dredging to make them deeper and hold more water during flash flood. Drainage size should be expanded, deeper and wider, so small-diameter drainage should be plucked out and replaced with wider drainage system.

 

Three, obstructions to regular flood flow should be removed and this includes removal of squatter settlements in riverbanks, beside creeks, and under bridges. This may sound “politically incorrect” and “insensitive” the cost to lives and properties of urban flash flooding is much higher.

 

Four, government should buy low-lying areas from private hands and convert these into deep mini-lakes, excess flood water to go there then be pumped out when the rains have stopped.

 

Five, these public projects will be costly but useful. Rechannel public spending on wasteful climate meetings, travels and junkets. “Rising ocean” from global warming and melting polar ice remains fictional but “rising rivers” are actual, real and annual events and problems. We should prepare for the latter, not the former.

BWorld 819, More about wind-solar, more about inflation

More about wind-solar, more about inflation

September 4, 2025 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/opinion/2025/09/04/695552/more-about-wind-solar-more-about-inflation/

 

Last Thursday, Aug. 28, I attended the Energy Smart Forum 2025 of the European Chamber of Commerce of the Philippines (ECCP) at the Dusit Hotel in Makati City. The event’s advocacy partners were six embassies, those of Austria, Denmark, Finland, Germany, Netherlands, and Norway.

 

One thing I noticed that was similar to the AmCham Energy Forum held on Aug. 14 and in many other industry and business fora, was the predominance of discussions on “energy transition” and “net zero,” although the ECCP forum was at a higher level than all other fora.

 

Today I take off from this column’s piece last week, “Energy transition leading to higher inflation and lower growth” (Aug. 26). I restate here the data, I used then — the (solar + wind)/total generation ratio in 2014 and 2024, and the inflation rate during the three years proximate to the two periods. Thus, the average inflation rate from 2013-2014, then 2023-2025.

 

The trend is even clearer. Countries that expanded their (S+W)/T ratio also experienced higher inflation over those periods — all of Europe except Russia (which has a negligible ratio of only 0.6%).

 

In contrast, Asian nations had low ratios of 0.4% (Indonesia) to 18% (China) and their inflation rates during those periods either flatlined or declined (except for Japan, Taiwan, Korea, the Philippines and Singapore). North and South America saw the same trend as the European nations (see Table 1).

 

So if we want more inflation and see more degrowth, we should invest in more wind and solar power. If we want price stability and industrialization, we should invest in more thermal and fossil fuel energy plus nuclear power.

 

Why do high (S+W)/T ratio countries experience rising inflation? Three immediate explanations come to mind.

 

One is that these two intermittent sources need backup power and ancillary services (AS) — batteries, storage like pumped hydro, and diesel power plants. These AS are not cheap, so the generation cost is high.

 

Two, the transmission cost is also high as these solar-wind farms are in far-away areas — solar farms in the mountains and offshore for wind where both construction costs and maintenance costs are rather prohibitive.

 

Third, their adverse impact on food production, forest, fishery protection and production. Solar and wind are very land intensive. While one can put up a 1,000-megawatt (MW) coal or gas plant on just 100 hectares or less, one will need at least 1,200 hectares to put up a 1,000-MW solar farm — and actual electricity production in the solar farm is small, is zero at night, and low in the day time when it is cloudy or raining.

 

More wind and solar power is not good for the Philippines and other developing countries. Our neighbors in Asia know this. They are not hoodwinked by the net-zero push and other impractical advocacy.

 

Yesterday I attended the Independent Electricity Market Operator of the Philippines (IEMOP) media briefing where I learned that the average prices for the August billing have increased by P0.60/kWh. This was because demand increased while supply decreased and so the reserves margin declined.

 

I checked the energy mix and compared it with recent months this year. The share of coal has been steadily declining in the last three months, not because there was more solar-wind power production, but because the liquefied natural gas (LNG) plants in Batangas went into full operation, plus the hydro power plants were busy kicking and producing power during the current rainy months (see Table 2).

 

We should do more renewables, yes, but only hydro and geothermal. Still, hydro is cyclical, with low output during the dry months of December to May, and geothermal plants have good output only near volcanoes.

 

We should expand our thermal power capacities — coal and gas, plus diesel as peaking plants, and add nuclear power. We should prioritize our country’s economic needs and push for industrialization.

PhilStar 57, More dividends by government corporations, privatization to reduce borrowings

More dividends by government corporations, privatization to reduce borrowings

ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star 

August 28, 2025 | 12:00am

https://www.philstar.com/business/2025/08/28/2468509/more-dividends-government-corporations-privatization-reduce-borrowings

 

The House of Representatives Committee on Appropriation continues deliberating on the national budget for 2026. Spending is funded and limited based on (a) consistency with the Medium-Term Philippine Development Plan and (b) projected revenues and borrowings. Agencies cannot just propose a P10-trillion budget when the projected revenues are only P6 trillion, leaving a budget deficit of P4 trillion that requires borrowings of equivalent amounts. No, that is fiscally irresponsible, unsustainable and economically destructive.

 

From the Budget of Expenditures and Sources of Financing 2026 submitted by the Department of Budget and Management (DBM) and the Office of the President, proposed Disbursements and spending will increase to P6.63 trillion in 2026 from P6.08 trillion in 2025. The projected revenues from taxes and non-taxes will also rise to P4.98 trillion next year from P4.52 trillion this year, so the projected budget deficit will rise to P1.65 trillion from P1.56 trillion this year. To help cover this deficit, net financing (gross borrowing minus amortization) will rise to P1.63 trillion next year from P1.39 trillion this year.

 

Huge borrowing means huge interest payment aside from huge principal amortization. In 2024, we paid interest payment alone – P763 billion or an average of P2.1 billion a day. Projected interest payment this year would be P848 billion or an average of P2.3 billion a day; next year, P950 billion or an average of P2.6 billion a day and in 2027, will breach the P1 trillion mark – huge.

 

Many government agencies, upon the prodding of legislators and subsidy-seeking public, and pronouncements of new subsidies by the President himself during his annual State of the Nation Address, are bent on spend-spend-spend. It leaves the Department of Finance (DOF) scratching its head as to where to get new revenues, on top of existing revenues and the need to reduce the need for more borrowings.

 

Among the important new revenues initiated by the DOF and rightly so, are higher dividends and mandatory remittances by government-owned and controlled corporations (GOCCs).

 

Data from the Bureau of Treasury show that dividends by GOCCs reached P58.1 billion in 2021, rose to P69.1 billion in 2022, P102.2 billion in 2023, and further increased to P138.5 billion in 2024. This year, January-June dividends already reached P86.81 billion so it is possible to reach at least P150 billion full year 2025. Good.

 

The biggest contributor to high dividends in 2024 were: Bangko Sentral ng Pilipinas with P53.2 billion, Land Bank of the Philippines with P32.1 billion, PDIC with P10.7 billion, PPA with P5.1 billion and PAGCOR with P4.6 billion, a huge decline from its peak P17 billion in 2020 after POGOs were banned.

 

In January-June, the biggest contributors so far are: LBP with P26.4 billion, PAGCOR with P12.7 billion, PDIC with P10.1 billion, PSALM with P9 billion, PPA with P5.2 billion, and BCDA with P4.5 billion.

 

LBP has posted a huge turnaround in dividends to the National Treasury. From an average contribution of P6.2 billion per year in 2013–2016, it increased to P8.4 billion in 2022, dropped to zero in 2023 due to a P50-billion contribution to the Maharlika Investment Corp., then rose to P32 billion in 2024 and P33 billion by July 2025. Huge. Hats off to LBP president and CEO Lynette Ortiz, a decades-long private banker and the first Filipino CEO of Standard Chartered Bank Philippines.

 

DOF Secretary Ralph G. Recto’s initiative in 2024 to raise the mandatory remittances of GOCCs from 50 percent to 75 percent of their net earnings was good, among the important game changers in Philippines’ public finance policies.

 

On the flipside of GOCCs sending big remittances and dividends to the National Treasury, many other GOCCs are subsidy-dependent. The worst of these is the National Irrigation Administration (NIA), with a subsidy of P34.6 billion a year from 2017-2022, P40.7 billion in 2023, P71.2 billion in 2024 and P17.7 billion in January-June 2025.

 

I think it is a wrong policy by the government under the Free Irrigation Service Act (FISA) of 2018. Not all beneficiaries of this law are small farmers, some are corporate farms, private resorts and hotels in the provinces and hence, can afford to pay the service. Now all taxpayers nationwide subsidize these private businesses.

 

Another subsidy-dependent and wasteful GOCC is the National Electrification Administration (NEA). Its average subsidy from 2012-2024 was P4.3 billion a year.  Many electric cooperatives (ECs) in the provinces are inefficient if not outright wasteful. Instead of making these ECs become corporations and private distribution utilities monitored by SEC and not getting subsidies, NEA is the political protector of these ECs and sends them money. Moral hazard problem is created, many ECs have little incentive to be efficient and provide good service (little or no blackout) to their customers because there is NEA that will send them money all the time.

 

Another good source of government revenues aside from taxes and remittances by GOCCs is privatization of certain government assets and corporations. Privatization proceeds are projected to increase from P3.3 billion in 2024, P5 billion this year and P101 billion in 2026. The star of the show is the privatization of CBK hydro power plant sold by PSALM to Aboitiz Power and partners for P36.3 billion last month. The sale will be finalized in 2026.

 

Ultimately, the best fiscal consolidation policy of the government would be to control spending, end certain existing subsidies when new subsidies are created. Tell people to become more self-sufficient and not state-dependent seemingly forever. DBM Secretary Amenah Pangandaman and staff will have easier work when there are less subsidy- and freebie-seeking people and agencies. And many public infrastructures are funded via PPP, not via taxes and borrowings.