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Energy crisis puts Europe’s climate plan to test

REUTERS

THE RECORD spike in energy prices could hardly have come at a worse time for Europe’s ambitious new climate plan, with politicians just beginning to talk about how they’re going to implement the world’s most sweeping emissions-cutting strategy.

The energy crisis is threatening double-digit increases in consumer electricity bills months before the winter freeze and it’s also squeezing industrial giants. As European governments scrambled to blunt the impact on consumers — Greece promised subsidies on power bills, for example — threats of blackouts in the UK this past week were a vivid reminder of the fragility of energy supplies.   

For the European Union (EU), which is proposing to ban new fossil-fueled cars by 2035 and impose new costs on dirty home heating, the steep costs of such an ambitious plan will be an even tougher sell to voters already reeling from hikes in utility bills.   

“Of course, the current level of energy prices has the potential to make discussions on the climate package more complex,” said Peter Vis, a senior adviser at the Rud Pedersen Public Affairs consultancy and a former political aide to the EU’s first climate commissioner. “But to weaken the package due to the energy crunch today would detract from the longer-term solution of reducing Europe’s dependence on fossil fuels without addressing the cause of the gas supply squeeze.” 

Natural gas and power prices are surging to all-time highs in the 27-nation region, as the bloc’s economies rebound from the Covid-19 pandemic. The surge in demand comes amid limited gas imports from Norway and Russia, with some countries accusing Moscow of manipulating supplies. At the same time, the EU strategy to accelerate emissions cuts in every sector from transport to manufacturing and agriculture boosted demand for carbon permits, with prices more than doubling over the past two years to new records.

The EU wants to lead the global fight against climate change, setting an example for other major emitters such as the U.S. and China. Its overarching goal in the Green Deal strategy is to reach net zero emissions by 2050.   

The green package unveiled in July aims to align the economy with a 2030 stricter binding goal of reducing emissions by at least 55% from 1990 levels. The laws need to be approved by the European Parliament and member states in the Council of the EU, with each institution entitled to amending the plan, in a process likely to take around two years.

But for Europe’s lower-income countries — as well for the continent’s energy-intensive industries — the pain of any transition will be significant, and the EU will be under pressure to help cushion the blow from the current price jump.   

As the political talks get underway, governments from Madrid to Amsterdam are taking steps to alleviate the immediate impact of the energy crisis and prevent backlash against carbon-cutting policies. Measures to reduce emissions “may not stand a sustained period of abusive electricity prices,” Spain told the EU in a letter on Sept. 20, recalling the yellow vests protests that shook France two years ago.

The gas crisis already hijacked this week’s meeting of energy ministers, called to discuss draft laws to increase the share of renewables and boost energy savings. While the EU has limited powers in the area of energy policy, which largely remains in the hands of member states, the European Commission pledged to publish in the coming weeks guidelines on what short-term tools nations can use in line with the bloc’s law. Options include reducing value added tax and excise on energy.

In Greece, Prime Minister Kyriakos Mitsotakis earlier pledged to grant a power subsidy in the fourth quarter for all households aimed at covering most of the expected price spike in power bills. He also announced a reduction of sales tax until June 2022 for coffee, transport, non-alcoholic drinks, cinemas, gyms, dance schools and tourism packages.

The Netherlands amended the country’s budget to include 500 million euros ($586 million) to lower energy costs for companies and households. Spain will slap a windfall tax on power utilities and cap consumers’ energy bills, a move that critics said could limit investment in renewables.

“That is not sustainable,” Ignacio Galan, the chief executive officer of Spanish power company Iberdrola SA, said in an interview on Bloomberg TV. “That puts at risk the whole energy transition.”

But European governments are limited in what they can do to tackle the power crunch — without making their climate goals even harder to reach.

“It feels unlikely that politicians will reverse track and go back to coal generation or make changes to the approach to carbon,” said John Musk, an analyst at RBC Europe Ltd. “It is hard to see what measures can be adopted to alleviate near term supply-demand constraints on gas and power. There are likely be a couple of difficult years to navigate in terms of consumer prices and there may have to be some measures to help consumers here and there.”

The biggest industrial energy users are particularly exposed to the immediate impact of the price spike. Zinc producer Nyrstar NV said on Thursday it is cutting output at a major Dutch plant during peak times of day. For regional aluminum producers, electricity costs could equate to about 80% of the commodity’s overall price, the metals industry association Eurometaux said in a letter to the EU energy chief Kadri Simson, urging further support for the sector.   

“These rising electricity prices have already led to curtailments and could lead to further relocation of our sector outside Europe if not addressed,” the lobby said. “More broadly, we’re also concerned that if electricity remains too expensive, it will disincentivize industrial electrification as a decarbonization route, undermining the EU’s Green Deal objectives.”  Bloomberg

August BoP surplus biggest in 4 months

The Philippines’ balance of payment position (BoP) hit $1.044 billion in August, the highest in four months, due to increased special drawing rights (SDR) from the International Monetary Fund (IMF).

This was 58% higher than a year earlier and 62% more month on month, the central bank said in a statement on Friday.

“The BoP surplus in August was due mainly to the additional allocation of SDRs to the Philippines given the IMF’s efforts to increase global liquidity amid the pandemic and the BSP’s income from its investments abroad,” it said.

This was partially offset by foreign currency withdrawals by the National Government from the central bank as it paid off some debt, as well as the net foreign exchange operations of the Bangko Sentral ng Pilipinas (BSP).

The IMF allocated about $650 billion in special drawing rights last month to its members as part of efforts to help countries recover from a coronavirus pandemic. The Philippines got a $2.777-billion share.

The payment surplus was also boosted by remittance inflows and a rebound in foreign direct investment, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

Cash remittances rose by 2.5% to a seven-month high of $2.853 billion in July, bringing the year to date level to $17.771 billion.

Foreign direct investment inflows in June climbed by 60.4% to $833 million from a year earlier, pushing first-half inflows higher by 40.7% to $4.298 billion.

The BoP shows the country’s transactions with the rest of the world. A deficit means more funds left the country, while a surplus means more money came in.

The payment position remained in a deficit for the eighth straight month at $253 million, a reversal from the $4.774-billion surplus a year earlier.

The central bank last week lowered its BoP target this year to $4.1 billion, which is equivalent to 1.1% of economic output, from a previous estimate of a $7.1-billion surplus. — Luz Wendy T. Noble

Consumers less pessimistic in Q3 — BSP

PHILIPPINE STAR/MICHAEL VARCAS

Consumers were less pessimistic in the third quarter as more jobs opened up, but business sentiment turned sour amid a fresh surge in coronavirus infections, according to the Philippine central bank.

The consumer confidence index improved to -19.3% from -30.9% in the second quarter, the Bangko Sentral ng Pilipinas said on Friday.

On the other hand, the business confidence index declined to -5.6% from 1.4% in the previous quarter and after three straight quarters of optimism.

The BSP said consumer confidence has been improving steadily since a 54.5% slump in third quarter of last year amid a coronavirus pandemic.

Consumers were less pessimistic as more family members returned to work and households received higher income. They also approved of the cash aid from the government, sustained vaccine rollout and relaxed lockdown levels.

Consumer sentiment for the fourth quarter also improved to 2.7% from 1.3%, while the spending outlook was better at 31.4% from 25.4%.

The central bank said consumers were becoming less upbeat on their long-term outlook, with the index declining to 18.6% for the next 12 months from 19.8%.

The business confidence index was worse than 5.3% in the third quarter last year, as more business owners turned pessimistic.

This quarter’s business sentiment was the worst since -23.9% in the first quarter of 2009 during the global financial crisis.

Companies said the coronavirus pandemic affected their confidence this quarter, along with lockdowns in August and the continued decline in sales, orders and earnings.

Companies were also concerned about the government’s pandemic response amid the threat of a more contagious Delta coronavirus variant. Higher raw material and commodity prices also contributed to their gloomy outlook.

The business confidence index for the next quarter was at 31.9%. Companies also grew more confident for the next 12 months, as the index rose to 56% from 52.5%.

Meanwhile, the employment outlook index improved to 6.2% for the next quarter and to 24.3% for the next 12 months, from 5% and 14.7%, respectively as more companies expect to hire more workers.

But companies pursuing their expansion plans fell based on their outlook for the last quarter and for the coming year.

Lending remained muted amid the gloomy outlook, central bank Assistant Governor Iluminada T. Sicat told an online news briefing. “Given the uncertainty in terms of income source and employment status, households are borrowing less,” she said.

The central bank interviewed 5,670 consumers for the survey held on July 1-14, and 1,511 business owners for the survey held on July 22 to Sept. 15. — Beatrice M. Laforga

BSP fully awards 28-day bills

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The Philippine central bank fully awarded the short-term securities it sold at an auction on Friday, even as rates rose on growing inflation fears.

The Bangko Sentral ng Pilipinas (BSP) raised P110 billion in one-month bills, with total bids hitting P125.35 billion. The auction was 1.14 times oversubscribed.

The short-term debt fetched an average rate of 1.723%, 0.4 basis point higher than a week earlier. Yields sought by banks during the auction were 1.703% to 1.825%.

The central bank uses the securities and the term deposit facility to mop up excess liquidity in the financial system and guide market rates.

Concerns over elevated inflation at home and rising global oil prices pushed local yields higher, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

At its policy-setting meeting on Thursday, the central bank raised its inflation outlook for the year to 4.4% from 4.1% on rising food prices.

Inflation quickened to 4.9% in August from 4% a month earlier, the fastest in more than two years, bringing the eight-month average to 4.4%.

Mr. Ricafort said an ongoing retail dollar bond offering could have siphoned off some of the excess liquidity in the financial system, which added upward pressure to 28-day bill yields.

The Treasury bureau on Sept. 15 started offering five-year and 10-year retail dollar bonds, with coupon rates of 1.375% and 2.25%, respectively. It will end the sale on Oct. 1, unless closed earlier.

The bureau raised an initial $866.2 million during the price-setting auction last week, more than twice as much as the initial offer of $400 million amid high demand.

It sold $551.8 million worth of five-year dollar bonds and $314.4 million in 10-year dollar-denominated notes. — Beatrice M. Laforga

Marcos party names his only son its presidential bet

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The party founded by the late dictator Ferdinand E. Marcos, Sr. has nominated his only son and namesake as its presidential bet for the 2022 elections. 

Kilusang Bagong Lipunan, which was founded in 1978, announced its selection of former Senator Ferdinand “Bongbong” R. Marcos, Jr. at a national convention in Binangonan, Rizal on Friday days after the 49th anniversary of the dictator’s martial rule. 

Marcos Jr. thanked party members at an online forum without accepting or rejecting the nomination. He said he was considering running for “any national position.” 

“You cannot rush these things, and I fully intend to take all the available time that I have to make my decision,” Mr. Marcos said. On Wednesday he said running for President was part of his plan. 

He said many of his supporters want him to run for the presidency, where he had fared better in opinion polls than for the vice-presidential post. 

Mr. Marcos lost by a hair to Vice-President Maria Leonor G. Robredo in 2016. The Supreme Court sitting as the Presidential Electoral Tribunal rejected his election protest in February. 

Meanwhile, the Campaign Against the Return of the Marcoses and Martial Law opposed Mr. Marcos’s presidential bid. 

In a statement on Friday, the group said the presidential ambition of the dictator’s son “is a mad attempt” by the Marcos family to return to the presidential palace, allegedly to evade accountability for their crimes. 

Mr. Marcos placed the Philippines under martial rule on Sept. 21, 1972, citing the communist threat. Proclamation 1081 abolished Congress and allowed him to consolidate power by extending his tenure beyond the two presidential terms allowed by the 1935 Constitution. 

More than 70,000 people were jailed, about 34,000 were tortured and more than 3,000 people died under martial law, according to Amnesty International. 

Mr. Marcos ended martial law in January 1981, but it wasn’t until five years later that he was toppled by a popular street uprising that sent him and his family into exile in the United States.Bianca Angelica D. Añago and Alyssa Nicole O. Tan

Philippines adds 18,659 COVID-19 cases

PHILIPPINE STAR/ MICHAEL VARCAS

By Bianca Angelica D. Añago, Reporter

The Philippines reported 18,659 coronavirus infections on Friday, bringing the total to 2.45 million.

The Department of Health (DoH) did not report any deaths, citing technical issues while recoveries increased by 9,088 to 2.24 million.

There were 175,324 active cases, 88.1% of which were mild, 6.9% did not show symptoms, 1.5% were severe, 2.84% were moderate and 0.7% were critical.

The agency said 84 duplicates had been removed from the tally, 47 of which were reclassified as recoveries. One laboratory failed to submit data on Sept. 22.

Meanwhile, DoH cited a “rapid and large decline” in laboratory outputs for coronavirus results, resulting in a decline in infections nationally and in the capital region.

It was assessing whether cases had really gone down or was due to other factors, Health Undersecretary Maria Rosario S. Vergeire told an online news briefing.

She cited a decline in coronavirus testing outputs as of Sept. 21 in Metro Manila, Eastern Visayas, Zamboanga Peninsula, Northern Mindanao, Davao Region, Soccsksargen and Caraga.

In Metro Manila, the number of tests done fell by 10.3% from a week earlier to 258,047, she said.

Also on Friday, an inter-agency task force included election officials and more healthcare workers in the group who may go out of their houses during the lockdown.

Researchers, workers and staff of Solidarity Trial vaccine teams were classified as health workers, presidential spokesman Herminio L. Roque, Jr. told an online news briefing. The task force also allowed eligible patients to leave their homes for clinical trials, except those in areas under a granular lockdown.

The body also changed the rules for the alert level system in the National Capital Region as it enters the second week into the pilot implementation of the alert level system.

Individual outdoor exercises in the capital will be allowed but only in residential areas. Gatherings for wakes, funerals, and inurnment of the remains of deceased coronavirus patients have also been allowed in all areas in the capital regardless of community quarantine status but limited to immediate family members.

The pilot implementation of the alert level system in the capital will end on Sept. 30 but if it is extended, all indoor and outdoor contact sports will be prohibited except those under a bubble-type setup and as approved by the local government.

Personal care establishments offering cosmetic services such as make-up, spas and reflexology will continue to be barred from operating.

The pick-up of food and essential items in areas under a granular lockdown will be allowed at designated collection points.

Gov’t bought expired face shields — senator

The government bought millions of expired and substandard face shields for healthcare professionals from a private company that was awarded more than P8 billion in contracts, a senator said on Friday. 

“Already disadvantaged in benefits, and now our healthcare workers are also disadvantaged in their protective equipment,” Senator Ana Theresia N. Hontiveros-Baraquel in Filipino in a statement. “There is no grace within this greed.” 

During a hearing, the senator showed a recorded video of a Pharmally Pharmaceutical Corp. warehouse worker who testified that the certificates for 2 million face shields that expired last year had been replaced with new certificates dated 2021. 

The worker said he got an order from Krizel Grace U. Mago, regulatory affairs head at the company to rebadge the face shields. 

Ms. Mago admitted the practice, saying it had the blessing of the company management particularly Pharmally Treasurer Mohit Dargani. 

The treasurer denied the allegation at the hearing. “I did not give that instruction, neither do I know that warehouse employee,” he told senators. 

Senators urged Ms. Mago to divulge other dubious transactions at her company in exchange for her protection. — Alyssa Nicole O. Tan 

House OK’s extended registration period

PHILSTAR FILE PHOTO

The House of Representatives on Friday approved on second reading a bill that seeks to extend voter registration until Oct. 31. 

Congressmen approved House Bill 10261 after the Commission on Elections (Comelec) refused to extend the Sept. 30 deadline. 

The Senate approved a counterpart bill on second reading on Wednesday. 

Election officials told senators on Thursday they could extend the deadline by a week at most. — Russell Louis C. Ku 

Congressman: Ombudsman open to review of SALN memo

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The Office of the Ombudsman is open to revising a circular that restricts public access to the net worth statements of government officials, according to a congressman. 

Zamboanga del Norte Rep. Romeo M. Jalosjos, Jr., who sponsored the Ombudsman’s 2022 budget, told a House of Representatives hearing on Friday the Ombudsman was open to changes suggested by lawmakers. 

“The Ombudsman is open for revision of Circular No. 1,” he told fellow congressmen. 

The memo limits the release of statements of assets, liabilities and net worth (SALN) of public officials to authorized representatives of the official or if the request is either upon a lawful order of a court or for a fact-finding investigation by the Ombudsman. 

Party-list Rep. France L. Castro earlier urged the Ombudsman to review or revoke the memo for being illegal. — Russell Louis C. Ku 

SEC clears AllDay listing, Petron bond offer

THE Securities and Exchange Commission (SEC) approved the initial public offering (IPO) of supermarket operator AllDay Marts, Inc. and the bond offering of oil company Petron Corp. under shelf-registration.

SEC said in a statement on Friday that AllDay Marts will offer up to 6.857 billion primary common shares at 80 centavos apiece, with an overallotment option of up to 685.71 million common shares.

The said shares will be listed on the main board of the Philippine Stock Exchange (PSE).

“Net proceeds from the sale of the primary offer shares could amount to P5.296 billion. The company could raise an additional P530.5 million, assuming the overallotment option is fully exercised,” SEC said.

Proceeds from the IPO will be used for debt repayment, capital expenditures, and initial working capital for the company’s store network expansion.

The IPO will be from Oct. 15 to 25, while the listing on the PSE is set on Nov. 3.

“AllDay Marts is a supermarket operator with a total of 33 stores spanning 55,881 square meters in aggregate net selling space, as of June 30. It plans to expand its store network to 45 by 2022 and 100 by the end of 2026,” SEC said.

PNB Capital and Investment Corp. is the sole issue manager for the transaction. It will also partner with BDO Capital & Investment Corp. and China Bank Capital Corp. as the joint lead underwriters and joint bookrunners for the offering.

Meanwhile, SEC also approved Petron’s fixed-rate, peso-denominated bonds worth P50 billion in one or more tranches within three years.

The first tranche of the bond offering will be up to P18 billion worth of four-year Series-E bonds due in 2025 and six-year Series F bonds due in 2027.

SEC said Petron expects to raise P17.78 billion from the first tranche of the bond offering.

“Proceeds will be used for the redemption of its Series A bonds, for the partial financing of its power plant project, and for the payment of existing debt,” SEC said.

“The bonds comprising the first tranche will be offered at face value from Sept. 27 to Oct. 5, in time for their listing on the Philippine Dealing & Exchange Corp. on Oct. 12, based on the latest timetable submitted to the SEC,” it added.

BDO Capital, China Bank Capital, Philippine Commercial Capital Inc., PNB Capital, and SB Capital Investment Corp. are the join lead bookrunners and joint lead underwriters for the offering.

First Metro Investment Corp., Land Bank of the Philippines, and RCBC Capital will be co-lead underwriters for Petron’s offer. — Revin Mikhael D. Ochave

DoubleDragon expects P18-B revenue from 5 hotel projects

DoubleDragon Properties Corp. expects to generate P18.14 billion in revenues from the five projects of its subsidiary Hotel of Asia, Inc., the developer of Hotel 101.

“Hotel 101 pipeline of inventory from secured prime titled land sites in Cebu, Libis, Boracay, Palawan and Bohol are expected to generate P18.14 billion in revenues,” DoubleDragon said in a disclosure to the stock exchange on Friday.

The company said the five additional hotel properties are expected to be completed by 2024.

“The operation of these Hotel 101 projects will be just in time for the expected upswing and full [post-pandemic] recovery by 2024,” it noted.

The company added that the projects should allow it to achieve its objective of having 5,000 rooms in its hotel portfolio by 2025.

Hotel of Asia has secured the permits for the construction and pre-selling activities for its Hotel 101 project along the Cebu Mactan Airport Terminal Road near Mactan Marina Mall.

“The beach sites of the Hotel 101 projects in Boracay, Palawan and Bohol are prime white sand beachfront properties that are designed to be eco-friendly with complete modern sustainable features and facilities,” DoubleDragon noted. — Arjay L. Balinbin

Toyota launches P4.7-B Batangas car center

Toyota Motor Philippines Corp. (TMP) on Friday launched its P4.7-billion Batangas Vehicle Center (BVC) in a sign of “strong confidence” in the local automotive industry ahead of the recovery from the pandemic.

“This [center] is our renewed commitment to better days ahead. This is part of our joint efforts with the government, business sector and Filipino people to win the war against COVID-19 and build a better tomorrow, together,” TMP Chairman Alfred V. Ty said in a speech during the event as cited by the company’s media release.

The 32-hectare facility is said to streamline vehicle handling before inter-island transport, ensuring delivery time and car quality for dealers and customers.

TMP also pointed to its contribution to the economy with its sustained production of Vios and Innova cars to keep the jobs of about 40,000 Filipinos.

Mr. Ty said, “motor vehicle sales and services was one of the key sectors that contributed to the 11.8% growth in gross domestic product (GDP) in the second quarter of this year.”

He also cited the government’s resolution of the industry’s petition for safeguard measures, for considering the extension of the Comprehensive Automotive Resurgence Strategy, or CARS program, and for the inclusion of the mobility sector as essential services.

TMP President Atsuhiro Okamoto said the operation of center is essential in the company’s distribution network to address rising market demand.

“This facility gives a stock capacity of 4,500 units on top off our existing stockyard in Santa Rosa [City, Laguna], bringing to an annual capacity of over 160,000 units,” Mr. Okamoto said in his speech during the event.

With the new center, TMP’s Santa Rosa Vehicle Center will be dedicated to the completely knocked down (CKD) Vios and Innova models that will cater to the demand for locally made Toyota vehicles, the company said.

It also said that the BVC is built with sustainable features for human safety in every process, while having responsible practices for zero or net positive impact to the environment.

TMP said the BVC has 18 truck covered lanes for vehicle loading and unloading. It said the weatherproof structure is designed for added safety amid changing weather conditions.

“Future plans include the use of solar energy, rainwater harvesting and flood control features. Overall, the BVC has 26% land area designated for environmental management and conservation,” it added.