Monday, April 17, 2017

PEZA grants power subsidies worth P15 B to 3 ‘mega’ investors

Published April 11, 2017, 10:01 PM By Bernie Cahiles-Magkilat

The national government has granted power subsidies to the country’s three “mega” investors – Hanjin Heavy Industries Corp. Philippines in Subic Freeport, Texas Instruments Philippines, and Phoenix Semiconductors Philippines Corp. in Clark Freeport Zone – which combined energy cost subsidy could reach P15 billion.
Philippine Economic Zone Authority (PEZA) said the power subsidy had been coursed through its budget instead of the Power Sector Assets and Liabilities Management (PSALM) Corp., which cannot extend subsidy directly to a private entity.
Since the three mega investors are locators in PEZA Zones, the payment has to pass through PEZA. The amount granted to these investors was reflected as a subsidy from the national government to PEZA.
PEZA Director-General Charito B. Plaza explained that PEZA has never incurred any government subsidy and they have been self-sufficient. PEZA did not also release any amount to subsidize the power cost of the three investors.
“We did not release money for this subsidy,” said Plaza.
PEZA Deputy Director-General Theo Pangan said the three mega investors were assured of power cost subsidy by then President Gloria Arroyo to entice these firms to locate their huge investments into the country than in other ASEAN country.
These mega investors were granted a generation charge of P2.50 per kilowatt-hour in separate executive orders issued by then President Gloria Arroyo as a sweetener for them to locate their huge investments in the country, jobs creation and exports generation.
Total subsidy for these three firms could reach R15 billion up to 2025. In the case of TI, its subsidy could run up to June 2017, Hanjin up to 2018 and Phoenix by 2020.
Each was granted a subsidy for a period of ten years. But the Aquino administration only granted some of the subsidies on its last year or under the 2016 budget, but the Duterte administration has readily agreed to fulfill the promised subsidy by the Arroyo administration.
As a result, PEZA in 2016 incurred a subsidy of P1.8 billion.
PEZA, a self-generating government-owned and controlled corporation, has not been receiving any government budgetary allocation since 1995. PEZA had asked for this budget to keep the government’s commitment to its big investors.
It was a quid pro quo so that these huge investments will come into the country as they will generate huge employment opportunities and exports.
The Korean firm Hanjin invested $2 billion for its sprawling ship manufacturing operation in Subic freeport. The project is now exporting ocean-going vessels to the world. It is also employing more than 15,000 workers, particularly highly-skilled welders.
Texas Instruments also invested $2 billion for its expansion project from Baguio City to Clark economic zone. The company is now on its full operation employing – workers. It is also expected to export between $3 billion to $4 billion worth of goods annually.
Phoenix Semiconductor is owned by world’s giant electronics firm Samsung of Korea. It invested $500 million in Clark ecozone. Under full commercial operation, Phoenix is expected to export $3.5 billion annually.

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