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Energy security and Philippine business, the case for coal power expansion in Cebu

Last Tuesday, Aug. 13, nine business and professional groups issued a “Joint Statement of Support for the Department of Energy” or DoE. They applauded DoE Secretary Raphael P.M. Lotilla for pursuing a policy of “a balanced energy mix… balanc[ing] energy security and affordability with climate change concerns to support its economic progress…. Energy insecurity is expensive.”

The groups were the Management Association of the Philippines (MAP), the Makati Business Club (MBC), the Employers Confederation of the Philippines (ECOP), the Federation of Philippine Industries (FPI), the Financial Executives Institute of the Philippines (FINEX), the Foundation for Economic Freedom (FEF), the Blockchain Council of the Philippines (BCP), the Fintech Alliance.PH, and the Women’s Business Council Philippines (WomenBiz).

Early this month the Philippine Chamber of Commerce and Industry (PCCI) announced their support of the DoE. See these reports in BusinessWorld: “Charges vs Lotilla have potential to drive investors away, PCCI says” (Aug. 5) and “‘Balanced’ energy mix keeps power affordable — biz groups” (Aug. 13).

Mr. Lotilla has endorsed the expansion of the Therma Visayas, Inc. (TVI) coal plant in Cebu, which will be constructing Unit 3. Last month the People for Power (P4P) coalition filed criminal and administrative cases against the DoE secretary, arguing that the expansion violates the moratorium on new coal projects declared by former DoE Secretary Alfonso Cusi in 2020.

Mr. Lotilla is correct. The 10 business and professional groups that support him are correct. The P4P and allied organizations and ideologues are wrong.

Here are some reasons why this is so (the numbers refer to the period from March to June 2024).

First, the Visayas has the smallest supply margin — supply minus demand minus reserve requirement plus imports from neighbors — compared to the Luzon and Mindanao grids. The Visayas has a margin average of only 144 megawatts/month (MW/month) vs 889 MW/month in Mindanao and 1,838 MW/month in Luzon. The Visayas needs additional capacity to avoid blackouts, like the horrible blackout that befell the four provinces of Panay in early January this year.

Low margins mean high prices. The price of power in the Visayas is higher on average than Luzon prices (by P1.50/kWh) and Mindanao prices (by P2.50/kWh). They need additional capacity to reduce the price.

The Visayas is exporting more power to Luzon (mainly geothermal from Leyte) than it imports, at an average of 149 MW/month. Then the Visayas is sucking extra supply from Mindanao, at an average of 291 MW/month.

Within the Visayas grid, Cebu is exporting power to Negros and Panay islands. That is why prices in the latter two islands are higher than in Cebu. Additional capacity in Cebu will help stabilize the prices in these three islands and sub-grids. Bohol, which mainly imports geothermal power from Leyte, has the highest prices in the Visayas.

Nationwide, coal provides about 62% of total power generation. Including gas and oil, fossil fuels contribute 80% of total electricity while wind and solar combined contribute only 4% of total (see the accompanying table). The share of oil-based plants in the total energy mix was 0.8% in March, 1.9% in April, 2.2% in May, and 1.7% in June.

Those who have deep angst against coal power should go off-grid and use purely solar and/or wind in their houses and offices.

The following officials in Cebu declared the need for additional capacity, baseload, or running new plants 24/7  this year: Cebu Provincial Governor Gwen Garcia (“‘Not in 2027 but now’: Garcia wants power self-sufficient Cebu,” The Freeman/Philstar, Feb. 3; “Cebu must ensure long-term power supply as economy grows,”Cebu Daily News, June 15); Cebu Chamber of Commerce and Industry (CCCI) President Charles Kenneth Co (“Cebu needs more power plants,” The Freeman/Philstar, Jan. 27), Mandaue Chamber of Commerce and Industry President Marc Ynoc and acting Cebu City Mayor Alvin Garcia (“Cebu as next Silicon Valley?: Looming power shortage weakens Cebu’s potential,” The Freeman/Philstar, Aug. 1).

I think that by now the local companies that are funding P4P in their coal-hating, RE- and indigenous gas-pushing campaign are ashamed that many high-profile Philippine business and professional organizations are supporting the DoE, and these pro-DoE groups have an idea who the backers of those ecological bullies are.

I congratulate the MAP, MBC, ECOP, FEF, FINEX, FPI, FinTech, BCP, WomenBiz, and PCCI for standing behind the DoE and Secretary Lotilla.

 

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

Robinsons Hotels, Hira Holding to open luxury eco-resort in Siargao by 2026

ROBINSONS Hotels and Resorts (RHR) and Hira Holdings, Inc. (HHI) said they will open a luxury eco-friendly villa resort in Siargao, targeted to be ready by 2026.

Located in Brgy. Malinao, General Luna, the villa resort will have a total land area of 2,856 square meters, RHR said in a media release on Aug. 13.

RHR said it signed a ten-year management agreement with HHI to bring global hospitality standards with “a unique Filipino heart of service” to Siargao.

RHR has 30 hotels across the country under local hotel brands Go Hotels, Go Hotels Plus, Summit Hotels and Resorts, Grand Summit Hotels, and Fili Hotel.

“We are delighted to have this meaningful partnership with Hira Holdings, Inc., a company that shares the same values as RHR,” said Barun Jolly, senior vice-president and business unit head of Robinsons Hotels and Resorts.

He said the partnership signifies a step forward in expanding its geographic presence while maintaining a commitment to “exceptional service and sustainable practices.”

“We are grateful to RHR for opening this opportunity to us. We are confident in the brands and capacity of Robinsons Hotels, which is why it was easy for us to trust and sign with them for our very first hotel, and we look forward to building more with them in the future,” said Haresh Hiranand, president of Hira Holdings.

“We are confident in the bullish economic projection of the country, and with our expertise in hotel brand development, we would like to enable optimistic investors who want to venture into the hospitality industry as well,” Mr. Jolly added. — Aubrey Rose A. Inosante

AXA Philippines launches equity fund

PHILIPPINE AXA Life Insurance Corp. (AXA Philippines) has launched an equity fund that allows its clients to invest in selected companies expected to benefit from global economic developments.

“As Filipinos’ partner in their financial wellness journey, we want to ensure they have all the means to safeguard and grow their wealth with peace of mind. We have been in the business of protecting what matters for 25 years in the country, and so it is our priority to secure their legacy for all the succeeding years to come,” AXA Philippines Chief Proposition and Products Office Abel Vergara said in a statement on Wednesday.

“As proof of this commitment, the AXA Global Edge Equity Fund uses a strategy that has a proven track record of investing early in companies positioned for growth, with some investments growing as much as 60 times from the initial year. This alone provides promising longevity or sustained success over time,” he added.

The AXA Global Edge Equity Fund is an expansion of the AXA Asset Master Insurance plan, which guarantees policyholders a life coverage of 125% of the one-time premium or the plan’s account value, whichever is higher.

“The AXA Global Edge Equity Fund via Asset Master aims to provide long-term capital growth by investing in both established and emerging companies with sustainable competitive advantages and solid financials,” AXA Philippines said.  “It is also an actively managed fund that undergoes regular asset reviews to achieve sustained growth over time,” it added.

The AXA Global Edge Equity Fund invests in “selected high-potential companies,” it said.

“This strategy has also demonstrated resilience during market fluctuations, consistently outperforming benchmarks,” it added.

AXA Philippines booked a premium income of P21.76 billion and a net income of P2.73 billion in 2023. — AMCS

AI companies lose bid to dismiss parts of visual artists’ copyright case

A GROUP of visual artists can continue to pursue some claims that Stability AI, Midjourney, DeviantArt, and Runway AI’s artificial intelligence (AI)-based image generation systems infringe their copyrights, a California federal judge ruled on Monday.

US District Judge William Orrick said the artists plausibly argued that the companies violate their rights by illegally storing their works on their systems. Mr. Orrick also refused to dismiss related trademark-law claims, though he threw out others accusing the companies of unjust enrichment, breach of contract and breaking a separate US copyright law.

The decision did not address the artists’ core claim that the alleged misuse of their work to train AI systems directly infringes their copyrights, or the key defense that AI companies make fair use of copyrighted material.

A spokesperson for Stability and an attorney for Midjourney declined to comment on the decision on Tuesday. Spokespeople and attorneys for the other companies did not immediately respond to requests for comment.

The artists’ attorneys Joseph Saveri and Matthew Butterick said in a statement on Tuesday that the decision was “a significant step forward for the case.”

Illustrators Sarah Andersen, Kelly McKernan, and Karla Ortiz initially sued the companies last January in one of the first of several high-stakes lawsuits against tech companies over the use of copyrighted work in AI training. Mr. Orrick had dismissed many of their allegations in October but allowed them to be refiled.

Ms. Andersen, Ms. McKernan, Ms. Ortiz and seven other artists brought an amended complaint in November. They argued that Stability’s Stable Diffusion model, utilized by all of the companies, unlawfully contains “compressed copies” of their works used to train it.

Mr. Orrick said in a tentative ruling in May that he was inclined to let the copyright allegations continue. He elaborated on Monday that the companies could not dismiss the claims at an early stage of the case.

“The plausible inferences at this juncture are that Stable Diffusion by operation by end users creates copyright infringement and was created to facilitate that infringement by design,” Mr. Orrick said. — Reuters

OPPO Philippines set to launch ‘more accessible’ AI-powered smartphone Reno12 F 5G next week

OPPO Philippines is set to launch the OPPO Reno12 F 5G in the country on Aug. 20, it said on Wednesday.

The brand is rolling out the latest device in the OPPO Reno12 Series as a “more accessible” artificial intelligence (AI)-powered smartphone option, it said in a statement.

“Following the footsteps of the OPPO Reno12 Series 5G, the latest addition to the Reno Series also packs intuitive AI features that can unlock Filipinos’ creativity, imagination, and productivity in their everyday lives,” OPPO Philippines said.

The OPPO Reno12 F 5G has a 50-megapixel (MP) flagship level main camera, as well as a 2-MP macro lens and a 112-degree 8-MP ultra-wide camera. It also features a 32-MP selfie lens.

“As the more accessible OPPO AI smartphone, the OPPO Reno12 F 5G is packed by AI imaging features such as the upgraded AI Eraser 2.0, which now has a “Remove People” capability for easier and faster removal of photobombers and AI Studio, a pre-installed app that lets you transform any photo of yourself into your own digital avatar,” it added.

The phone also comes with the AI LinkBoost proprietary communication technology developed by OPPO.

“Further boosting the OPPO Reno12 F 5G is BeaconLink, which enhances Bluetooth uplink capabilities by 300%, enabling device-to-device voice calls over Bluetooth at a distance of up to 200 meters in a completely disconnected environment,” OPPO Philippines added.

The phone has a Smart Adaptive Screen with a 120Hz refresh rate, which can reach up to 2,100 nits of local peak brightness and an overall peak brightness of 1,200 nits. It also comes with OPPO’s Holo Audio feature for a dynamic and spatial audio environment.

The OPPO Reno12 F 5G features the brand’s All-Round Armor structure and Splash Touch technology with an all-new Cosmos Ring Design and Halo Light inspired by classic wristwatches.

The phone comes in Amber Orange and Olive Green colorways.

Luxury and bargain hunting

ARTEM BELIAIKIN-UNSPLASH

IT’S NOT ONLY compulsive shoppers who get high on the phrases “outlet mall” and “online shopping.” Bargain hunting is a sport that delights even the conservative acquirer of goods. Its logic is simple — if you can get the same goods and services at a lower price than usual, let me know where I should shop.

Differentiated pricing of the same (or almost the same) service has been a long-standing tradition in the airline industry which introduced three (and sometimes even more) price classes for first, business, and economy. While the cheap category is sometimes given fancy names like “world class traveler” or “sardine,” the first two are unabashedly descriptive of their target niches.

Bargain hunters argue that the price premium is a waste of money. You’re in the same plane, headed for the same destination, so why pay more to have leg room and panna cotta for dessert? Of course, those behind the curtain consider themselves in a different place — where sleeping is possible, unless there are crying babies nearby.

The bargain hunter, say for a hotel room, argues that a room is just a room. Isn’t it just for storage of luggage and crashing? Why pay for the view of the sunrise over the water, a bathtub, and breakfast buffet? You can still walk to the same white beach and watch dolphins if you wake up early. Anyway, how long do you stay in your room? It’s just for sleeping.

The other end of this bargain hunting culture aims to flaunt wealth. (If you’ve got it, show it.) Bragging rights drive politicians, successful boxers, and the new rich from online gaming to go for status symbols and splurge on high-end cars, luxury watches (with their auction price) that don’t track blood pressure, celebrity mistresses, and mansions overlooking golf courses out of town. They post their luxurious possessions on social media, intending to attract the envy of other social climbers.

Even well-trodden beaches that already offer a full spectrum of experiences and prices need to have pricing differentials to give the bargain hunter a financial incentive. Stations (arbitrarily designated) mark how far one is from the white sands and how isolated or crowded the area is.

On the luxury end are isolated villas with their own infinity pools and breakfast served on a private terrace. From the welcome serenade, garlands of flowers, cold face towels and quick check-in, there is a sense of unaccustomed bliss — who says money can’t buy happiness?

The premium staff combines efficiency and thoughtfulness — do you want to have a bonfire and dinner at the beach? Housekeeping is unobtrusive, making up the bed and laying out the incense while guests are out. You may even get a personal valet to lay out and match clothes or book a table at the beach restaurant for the evening.

The luxury market is available not just in resorts and hotels but in all service categories, including bespoke jeans, fine dining, private banking, travel, and theme parks that offer no-queue passes.

Increasingly, the upper end of the spectrum is catering to senior citizens and retirees. This gray niche can go on a reckless spending spree, heeding the advice of ancients to cash out long-held investments and properties and spend the money on yourselves with sybaritic abandon. Any remaining cash or assets should just about cover the wake.

Can prohibitive luxury goods target the bargain hunters too?

Special promos persevere and have opened traditional luxury services like two-week cruises to the low end of the spectrum by bannering discounts (as much as 75%) for a limited period. Luxury liners don’t want to leave the dock with empty rooms which can never be sold again.

Even in investments like the stock market, the price rally of stocks that have taken a swan dive previously is attributed to “bargain hunting,” referring to now cheaper and undervalued stocks being snapped up by savvy players. When the trend reverses, it is explained as “profit taking.”

Even bargain hunters do not apply their stinting approach to everything they need to buy. It is not a luxury to go for the best available. There is still room for discarding bargain hunting habits for such necessities as healthcare, diets — and a good sleep.

 

Tony Samson is chairman and CEO of TOUCH xda

ar.samson@yahoo.com

AllDay Marts reports 7.7% rise in first-half profit to P185 million

AllDay Supermarket

VILLAR-LED premium segment supermarket operator AllDay Marts, Inc. posted a 7.7% increase in attributable net income for the first half to P185 million from P172 million last year.

Revenue for the January-to-June period rose by 0.8% to P4.9 billion, AllDay said in an e-mailed statement on Wednesday.

Gross profit increased by 2.6% to P1.027 billion, while earnings before interest, taxes, depreciation, and amortization grew by 11.2% to P504 million.

“On the operational side, we looked into every opportunity to increase efficiency. While taking special care to preserve — even improve on — the unique AllDay experience, controlled spending and cost control measures allowed us to deliver even better value to our stakeholders,” AllDay Acting President and Chief Executive Officer Jacqueline B. Cano said.

“Notably, our increased efforts to shore up AllDay’s brand equity through an attractive and comprehensive imported item offering, as well as optimal pricing strategies, are increasingly bearing fruit,” she added.

Based on its website, AllDay has 33 locations across 25 cities and municipalities nationwide. The company offers fresh items, food items, and non-food items, comprising approximately 3,600 local and international brands and about 40,000 different items.

On Wednesday, AllDay shares fell by 1.45% or P0.002 to P0.136 apiece. — Revin Mikhael D. Ochave 

Surfshark: Philippines 28th most breached country in Q2 2024

The Philippines placed 28th out of 250 countries and territories with a total of 385,019 breached accounts in the second quarter of the year, latest data from Surfshark’s Data Breach Statistics showed. This was lower by 95% from the first quarter of 2024. Among its peers in the East and Southeast Asian region, the Philippines was the eighth-most breached country/territory during the period.

Surfshark: Philippines 28<sup>th</sup> most breached country in Q2 2024

How PSEi member stocks performed — August 14, 2024

Here’s a quick glance at how PSEi stocks fared on Wednesday, August 14, 2024.


PSEi back above 6,700 as mart awaits BSP move

REUTERS

THE MAIN INDEX climbed to the 6,700 level on Wednesday, propped up by bargain hunting before the policy meeting of the Bangko Sentral ng Pilipinas (BSP), a strong peso, and positive spillovers from Wall Street overnight.

The bellwether Philippine Stock Exchange index (PSEi) rose by 0.82% or 54.52 points to end at 6,704.96 on Wednesday, while the broader all shares index climbed by 0.53% or 19.30 points to close at 3,629.30. This was the PSEi’s best close in almost three weeks or since it finished at 6,726.01 on July 26.

“Investors continued to bargain hunt ahead of the BSP meeting [on Thursday], while more economic data and corporate earnings continue to underscore that the economy continues to perform remarkably well,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

A BusinessWorld poll showed that nine out of 16 analysts surveyed expect the Monetary Board to deliver a 25-basis-point (bp) rate cut at Thursday’s policy meeting, bringing the target reverse repurchase rate to 6.25% from the current over 17-year high of 6.5%, where it has been since October 2023.

On the other hand, seven others expect the BSP to keep rates steady. The Monetary Board last reduced rates in November 2020, when it delivered a 25-bp cut and brought the key rate to 2% to support economic recovery amid the coronavirus pandemic.

“The local market extended its rise this Wednesday, gaining 0.82%. The positive spillovers from Wall Street’s overnight rally driven by the US’ below-expected producer price index numbers gave a boost in [Wednesday’s] session,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“The local currency’s recent strengthening against the US dollar also helped in sustaining the market’s upward movement,” Mr. Tantiangco added.

The peso inched up to P56.955 per dollar on Wednesday from P56.96 on Tuesday, according to Bankers Association of the Philippines data.

This was a new near four-month high for the local unit as it was its best finish since closing at P56.808 on April 15.

All sectoral indices closed higher on Wednesday. Property rose by 1.68% or 44.75 points to 2,693.91; mining and oil increased by 1.44% or 116.87 points to 8,219.39; industrials went up by 1.32% or 120.18 points to 9,166.15; holding firms jumped by 0.79% or 45.70 points to 5,788.74; services improved by 0.06% or 1.27 points to 2,088.22; and financials inched up by 0.02% or 0.44 point to 1,984.65.

Value turnover went up to P6.96 billion on Wednesday with 670.22 million issues changing hands from P4.98 billion with 607.05 million shares traded on Tuesday.

Decliners outnumbered advancers, 105 versus 98, while 54 issues were unchanged.

Net foreign buying rose to P457.52 million on Wednesday from P121.63 million on Tuesday. — R.M.D. Ochave

Peso inches up before key US inflation report

ANGIE REYES-PEXELS

THE PESO rose further against the dollar on Wednesday as the market awaits the July US consumer price index (CPI) report, which could cement expectations of a September rate cut by the US Federal Reserve.

The local unit closed at P56.955 per dollar on Wednesday, inching up by half a centavo from its P56.96 finish on Tuesday, Bankers Association of the Philippines data showed.

This was the peso’s strongest showing in almost four months or since its P56.808-a-dollar close on April 15.

The peso opened Tuesday’s session stronger at P56.90 against the dollar. Its weakest showing was at P57.12, while its intraday best was at P56.835 versus the greenback.

Dollars exchanged went down to $1.34 billion on Wednesday from $1.799 billion on Tuesday.

“The peso-dollar moved sideways ahead of the figures of US inflation later. The market is expecting higher US CPI. We saw some slight buying earlier in the session due to bets of higher-than-expected CPI data,” a trader said by phone.

The peso appreciated slightly amid the dollar’s decline after the release of US producer price index (PPI) data overnight, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar hovered near a one-week low on Wednesday as traders bet US consumer price data later in the day will keep the Fed on course to cut rates next month, Reuters reported.

Traders were largely cautious ahead of US inflation data at 1230 GMT (8:30 a.m. ET), which is expected to show consumer prices increased 0.2% in July, on a month-on-month basis, following a 0.1% decline a month ago.

The dollar index — which measures the greenback against other major currencies — dipped 0.1% to 102.52, after slumping 0.5% on Tuesday when a slower-than-expected rise in producer prices reinforced hopes of a US rate cut next month.

Traders had been widely expecting a rate cut in September before the producer price data and ramped up bets for a super-sized 50-basis-point cut after the release to 52.5% from 50% a day earlier, according to CME’s FedWatch Tool.

For Thursday, the trader said the peso’s movement against the dollar would depend on the Philippine central bank’s policy decision.

The trader expects the peso to move between P56.80 and P57.20 per dollar, while Mr. Ricafort sees it ranging from P56.85 to P57.05. — A.M.C. Sy with Reuters

Vind Energy wins green-lane privileges for two wind farms

NICHOLAS DOHERTY-UNSPLASH

THE Board of Investments (BoI) said on Wednesday that it awarded green lane certifications to Vind Energy Corp. for its combined P331 billion worth of offshore wind projects in Cavite and Guimaras.

In a statement, the BoI said that it awarded the certificates to Alma Roxas-Aguila, development director of Corio Generation, a shareholder of Vind Energy and a company in Macquarie Asset Management’s portfolio.

“We greatly appreciate the government’s support for renewable energy, particularly offshore wind. These green lane certifications are crucial for our project development and efforts in helping the country reach its decarbonization targets,” Ms. Roxas-Aguila said.

The projects in Cavite and Guimaras have a potential maximum capacity of 994 megawatts (MW) and 728 MW, respectively, and are expected to start operations in 2030.

“In particular, the projects will utilize a fixed-bottom offshore wind technology with a combined project cost of more than P331 billion,” the BoI said.

Corio’s portfolio includes floating and fixed-foundation projects across established and emerging markets. In the Asia-Pacific, it also has projects in Australia, South Korea, Taiwan, and Vietnam.

The government, through Executive Order (EO) No. 18, established green lanes in all government agencies to speed up the approval and registration process for priority or strategic investments.

There are 102 projects with investments worth P3 trillion endorsed by the BoI’s One-Stop Action Center for Strategic Investments, the majority of which are renewable energy (RE) projects.

The government has taken in increased investment in RE projects after it allowed full foreign ownership in the industry, which was previously limited to 40%.

According to Corio, EO 18 and EO 21, which directed the establishment of the framework for offshore wind development, will help in the seamless implementation of the company’s five projects in the Philippines. — Justine Irish D. Tabile