The year 2020 brought a lot of challenges to the country which led to the energy sector facing issues on energy security. We started the year with the eruption of the Taal Volcano that significantly affected the country’s economy leading to shutdowns of the key manufacturing industries along the area. While recuperating with the aftermath of this natural disaster came a bigger event that struck the world – the COVID19 pandemic!
The energy sector was not spared from the impact of these events. The COVID19 pandemic led to depressed energy demand due to shutdowns and closure of energy-consuming industries. Because of this, we experienced an oversupply of energy during the first half of 2020, but this was compensated with the resumption of the economy in the second half. However, in between these events, we experienced the impending threat of the lack of supply due to the restriction and movement of goods and people in and out of the country, as well its resulting impact on economic activity.
The first major impact in the sector was the announcement of PSPC to temporarily close its refinery. Not long after was the announcement of Petron to shut down also its refinery. This has threatened us with energy security or availability of supply because these happened when the country is transitioning to reopening the economy. The event led us to analyze the oil trends and look at the availability of the petroleum supply in the country amidst the restriction of movement of supply internationally.
However, amid the pandemic, we made sure that the threatening heat index in the summer will not affect the supply of electricity for the household, which became the major user in this period with the limited movement of the people due to pandemic.
The limited economic activity during the period necessitated the government to look for additional funding to combat the pandemic. The IATF identified imposing additional 10% tariff in petroleum products under Executive Order 113. It has prompted to analyze the trends of Dubai crude price as well as Mean of Platts Singapore (MOPS) prices of diesel and gasoline and its impact on the domestic pump prices upon the imposition of the tariff; how long will it be imposed at when will it be lifted.
We, in the energy sector as well as the government is hopeful that this pandemic will be over soon. After the issuance of the Bayanihan Act I known as We Heal as One Act or Republic Act (RA) 11469 it was extended to Bayanihan Act II known as We Recover as One Act or RA 11494. The government has outlined its plans on the road to recovery from this pandemic. We, also in the energy sector did our homework to plan the equivalent energy requirements for this recovery, prompting us to formulate the short-term outlook 2020-2024, which summarizes the impact of the challenges brought by the pandemic.
Indeed, for as long as there is economic activity, the energy sector will continue to do its part in shaping the future of the country!