Energy Group Says Using Local Gas Could Cut Power Costs by Half

Why It Matters

Reducing reliance on imported LNG can lower consumer electricity bills and shield the Philippines from global fuel volatility, boosting economic stability.

Key Takeaways

• Domestic gas halves electricity cost vs LNG.
• PAP urges full implementation of Natural Gas Act.
• VAT exemption could lower consumer electricity bills.
• Shift improves energy security amid Middle East tensions.
• Malampaya gas production underpins local supply expansion.

Pulse Analysis

The Philippines’ power sector has become increasingly dependent on imported liquefied natural gas (LNG), driving electricity tariffs to double the cost of domestically sourced fuel. Current rates show Malampaya‑derived power at roughly ₱4.80 per kilowatt‑hour, while LNG‑based generation averages ₱10.30. This stark price gap not only inflates household expenses but also erodes the competitiveness of energy‑intensive industries, prompting stakeholders to seek a more affordable, stable supply base.

Republic Act No. 12120, the Philippine Natural Gas Industry Development Act, offers a clear policy lever: Section 38 grants a value‑added tax exemption for indigenous natural gas and the electricity produced from it. By fully enforcing this provision, the Petroleum Association of the Philippines argues that the nation can capture immediate savings, translating into lower consumer bills without additional subsidies. The Malampaya gas‑to‑power project, operated by Prime Energy, exemplifies the untapped potential of local reserves, providing a cost‑effective hedge against volatile global markets.

Beyond economics, the shift toward domestic gas bolsters national energy security amid heightened geopolitical risk, such as the ongoing Iran conflict that threatens supply chains. A reliable, home‑grown fuel source reduces exposure to external shocks, encourages further upstream investment, and aligns with the Department of Energy’s broader strategy to diversify the fuel mix. As the Philippines balances tax policy debates and long‑term energy planning, embracing indigenous natural gas emerges as a pragmatic pathway to affordable, resilient power for the country’s growth.