NEDA chief not keen on oil, power subsidies

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan on Monday said he was not keen on providing subsidies for oil and electricity, as this would only benefit the rich who are the biggest consumers of such utilities.

According to Balisacan, the government would rather give direct subsidies to the vulnerable sectors, as the experience with the Oil Price Stabilization Fund (OPSF), under which firms contributed when oil prices were low and drew from it when prices were high, leading to a budget deficit.

“We have been there before. I think our approach is not to subsidize oil generally but what we can subsidize (is the) vulnerable sector,” he told reporters on the sidelines of the Philippine Economic Briefing in Pasay City.

“I think we should avoid subsidizing power, electricity, fuels generally, because the biggest consumers of fuels, for example, are the rich. The biggest consumers of electricity are the rich, so if you subsidize those, who benefits?” he added.

This comes as San Miguel Corp. (SMC) president and chief executive officer Ramon Ang, in a panel, said that fuel and power prices in the Philippines remain high compared to its neighbors as other countries provide subsidies.

“If you look at it on an equal basis, our prices without the subsidy and without taxes, is even lower than Malaysia, Indonesia, and Thailand. It’s also the same as power. Our power generation compared to our neighboring countries are lower but we impose taxes on the power sector and fuel and we also don’t give subsidy on power that’s why our power prices are higher,” Ang said.

Moving forward, Balisacan said the government already provides targeted subsidies, which he said would only be improved as it implements its digitalization program which seeks to provide a national identification card for Filipinos.

“We should be able to perfect targeting. ‘Yung tina-target natin na matulungan, ‘yan talaga ang matutulungan (we will be able to help those that we are really targeting), but we can save a lot of fiscal resources and avoid potentially serious problems like fiscal crises as what happened in the past when you have oil price stabilization fund,” he said. — RSJ, GMA Integrated News