DTI stops ‘double dipping’ into perks for power sector

Business Mirror
WEDNESDAY, 18 APRIL 2012 22:33 JONATHAN L. MAYUGA / REPORTER


FROM now on, there will be no more “double dipping” into incentives for the power sector, the Department of Trade and Industry (DTI) said.


Trade Secretary Gregory Domingo said on Wednesday that while the power industry remains on the list of investment priorities that would get perks or incentives, implementing rules on the 2012 Investment Priorities Plan (IPP) will prevent a redundancy of incentives for power projects.


“We just want to gain more value in our investments. There will be no double dipping [anymore],” Domingo added.


Trade Undersecretary Adrian Cristobal said the final recommendation affirming an earlier decision that the incentives for power projects would be limited is being completed and will be submitted for approval by Malacañang within the month. Cristobal is also managing head of the Board of Investments (BOI), the investment promotion arm of the DTI.


The BOI wants to cut the perks for the power projects; local electricity rates remain the highest in Asia despite the incentives, it noted. Aside from guaranteed rate of return, some companies are also granted tax holidays.


The industries that have made it to the 2012 IPP are agriculture/agribusiness and fishery, creative industries/knowledge-based services, shipbuilding, mass housing, infrastructure, research and development, green projects, motor vehicles, strategic projects, public-private partnership (PPP) projects and disaster prevention, mitigation and recovery projects.


Essentially, according to Cristobal, the 2012 IPP will be no different from the 2011 IPP, but said, “the policy of the BOI is to avoid double dipping.”


Domingo said while the power industry is very important, the power projects need not be granted tax holidays because companies venturing into power generation are already given guaranteed rate of return by the Department of Energy (DOE).


“The power sector remains on the list. There are mandatory fees but it does not change the BOI policy that when we evaluate applications, there will be no [more] double dipping. A large part of evaluating these applications for incentives involves the project’s capability of generating jobs and its ability to add value to our products and supply chain and the multiplier effect,” the trade secretary added.