Arya News - Filipinos face Southeast Asia`s steepest electricity rates and frequent outages. Despite the find, experts say new gas ensures supply but will not reduce high consumer bills due to market issues.
MANILA – The recently announced discovery of a new natural gas reservoir at the Malampaya gas field west of the Philippines has raised hopes that electricity costs can be eased in the country, where consumers face some of the highest power rates in South-east Asia.
But analysts said the availability of a new source of domestic fuel is more likely to bolster energy security and buy time until local gas reserves run out than deliver immediate relief on monthly bills.
“Had we not discovered this, our gas supply would have run out by 2028. This extends it by another seven years or so, to 2035,” Energy Secretary Sharon Garin has said.
Mr Dindo Manhit, president of the Manila-based think-tank Stratbase ADR Institute, said declining domestic gas output could force greater reliance on imports, which would likely push prices higher.
So the primary benefit of the discovery lies in avoiding a sharper price spike, rather than lowering electricity tariffs outright, he added.
Electricity tariffs in the Philippines consistently rank among the region’s steepest, often exceeding by 50 per cent those of neighbours such as Indonesia and Vietnam, where governments provide heavier subsidies.
While Singapore’s household power rates are typically higher due to its reliance on imported fuel and gas-linked pricing, experts say Philippine consumers face a sharper burden relative to income and business costs.
In Palawan, the island province closest to Malampaya, the challenge is not only cost but also reliability. Unlike much of the main island of Luzon, which draws power from gas-fired plants fuelled by Malampaya, Palawan is largely off the main grid due to its geographic location and the high cost of subsea transmission links.
Instead, the island province relies on smaller diesel-fired generation distributed by an electric cooperative.
Mr Denis Batoy, 39, who runs a restaurant-bar in the famed Palawan beach town of El Nido, said residents in the province have long been used to rotating power outages that occur every week and can last up to eight hours each time.
“It’s such a big inconvenience for us. It turns away our customers and costs me income,” he told The Straits Times.
The outages force him to rely on a generator that adds to his operating costs and limits kitchen equipment use, slowing service and frustrating customers.
Mr Batoy’s electricity bill typically ranges from 20,000 pesos (S$440) to 24,000 pesos a month, almost half of his net monthly income. A similar restaurant operating in Luzon would pay about 10 per cent to 20 per cent less for electricity.
The deeper irony, he said, is that communities near the Malampaya gas source remain underserved.
“Malampaya is just in our backyard, and yet the people of Palawan are not benefiting from it,” said Mr Batoy. “It would be nice if we could directly benefit from Malampaya someday.”
Significant discovery
Announced in January by Philippine President Ferdinand Marcos Jr, the new gas reservoir, called Malampaya East-1 (MAE-1), is the first major discovery of natural gas in the country in over a decade.
The resource, located about 5km east of the existing Malampaya field, can generate about 14 billion kilowatt-hours annually – enough to supply electricity to 5.7 million households for a year, said Mr Marcos in a statement on Jan 19.
The existing Malampaya gas field sits off the coast of Palawan within the Philippines’ exclusive economic zone, facing the contested South China Sea. It has long been regarded as a strategic national asset, given its role in fuelling gas-fired power plants in Luzon and reducing dependence on imported energy.
Mr Marcos said initial testing indicated that MAE-1 was a “high-productivity resource” comparable to the original Malampaya wells. He added that the discovery also includes condensate, which he described as a “high-value liquid fuel” that could support efforts to stabilise power supply.
Ms Garin, however, stressed that the 98 billion cubic ft discovery is smaller than the original 2.3 trillion cubic ft Malampaya field, which has sustained Luzon’s gas-fired plants for about two decades.
“It’s not as much, that’s for sure,” she said in a Jan 29 interview with local TV news station Bilyonaryo News Channel. But she called it significant because it extends Malampaya’s life.
The discovery of MAE-1 will not immediately translate into electricity. The new well must still be connected to the existing system through a 5km pipeline link, a technically complex but less time-consuming task than building the original Malampaya infrastructure.
Ms Garin is hopeful that Luzon power plants can begin sourcing gas from MAE-1 by end-2026.
Ms Glenis Fiedacan (left) watches over her convenience store in Quezon City, one of the areas that source electricity from the natural gas drilled from the original Malampaya field. PHOTO: COURTESY OF GLENIS FIEDACAN/THE STRAITS TIMES
Limited impact on electricity prices
Analysts said that while the MAE-1 discovery may boost the Philippines’ energy security, it is unlikely to lower electricity prices.
Mr Manhit told ST that the find is “very good news” because it extends Malampaya’s life at a time when the Philippines risks heavier reliance on imported fuel.
“It will stabilise prices, because the fear before the discovery was that supply would run out and we would over-rely on imported gas,” he said. Mr Manhit also pointed to structural reasons for the high electricity costs, including taxes and limited subsidies in the Philippines, compared with other South-east Asian states.
Lawyer and climate activist Tony La Vina of the Manila Observatory offered a sharper distinction between energy security and affordability. The MAE-1 discovery, he said, helps ensure supply but does little to alter pricing dynamics.
“That’s supply, that’s not price,” he said, noting that gas – whether imported or domestic – is priced largely on market terms. “The impact of this is more of energy security rather than (lower) energy prices.”
He argued that the deeper drivers of high electricity costs in the country lie in market concentration and regulatory constraints that limit genuine competition, adding that faster deployment of renewable energy would have a more meaningful effect on consumer bills.
Still, analysts said indigenous gas is a necessary transition fuel as the Philippines expands renewables, helping the country move away from coal while avoiding overdependence on imported liquefied natural gas (LNG).
The Marcos government has so far moved to speed up renewable energy deployment by opening the sector to full foreign ownership in wind, solar, hydro and tidal projects, rolling out competitive green energy auctions and framing the transition as central to the country’s long-term energy security.
“It’s so easy to say, let’s support energy transition,” said Professor La Vina. “But the moment we turn off coal and natural gas (plants, it would be harder for us)… I’ve always argued for a balance in the energy mix.”
As Malampaya’s output declines, the Philippines has expanded LNG import capacity since 2022 with partners such as Japan.
The expansion of LNG capacity raises concerns about the Philippines being locked into long-term gas contracts, but analysts say MAE-1 could modestly ease that risk by extending domestic supply and reducing the volume of imports needed.
“All indigenous sources of energy will give us more energy security,” Prof La Vina said.
MAE-1 could modestly reduce the country’s exposure to imported fuel – which roughly accounts for about half of the country’s supply, largely driven by oil and coal imports – and ease pressure on its foreign exchange position.
But whether that macroeconomic gain translates into cheaper power depends on policy and market reforms like stronger regulatory oversight and faster deployment of renewable energy.
For small businesses, the distinction between stabilised prices and lower bills is tangible.
Ms Glenis Fiedacan, 57, who runs a convenience store adjoining her home in Quezon City, said her monthly electricity bill can climb to between 8,000 pesos and about 12,000 pesos due to refrigeration and lighting needs. Her city is among the areas linked to power plants fuelled by the Malampaya gas field.
“Honestly, I find our electricity prices quite high,” said the mother of two. “If the government can find a way to make it cheaper, it’s going to make life much easier. I can use the savings to buy more supplies for my store or more food for my family.”