Business World Online
Posted on January 19, 2011 09:14:59 PM
THE TOWN of Pagbilao in Quezon will no longer auction the 750-megawatt (MW) Pagbilao coal-fired power plant to recover unpaid realty taxes after a compromise was reached in Malacañang yesterday.
The Aquino administration agreed to release money for priority projects in Quezon in exchange for wiping out the P6-billion tax liability, a Palace official said.
Ricky A. Carandang of the Presidential Communication Development and Strategic Planning Office said in an interview a meeting led by President Benigno S. C. Aquino III resulted in a compromise agreement which will be forwarded to the provincial government of Quezon.
“The auction is not going to push through. The President spoke to Gov. [David C.] Suarez and they are working out the details of the compromise. Cabinet members present in the meeting have been directed to also work out the details,” said Mr. Carandang.
The compromise deal will provide funds for priority projects that will “fast-track [the projects] in exchange for the tax liability to be extinguished.”
Details on how much in funding will be given and where it will be obtained have yet to be ironed out.
Present in the meeting were Finance Secretary Cesar V. Purisima, Executive Secretary Paquito “Jojo” N. Ochoa, Presidential Management Staff Chief Julia R. Abad, Department of the Interior and Local Government Secretary Jesse M. Robredo, and Energy Secretary Jose Rene D. Almendras.
The owner and operator of the Pagbilao power plant, TeaM Energy, was earlier informed by the municipal government of Pagbilao that it must pay P6 billion in real property taxes by Jan. 10.
An auction for the plant was scheduled for Jan. 26.
TeaM Energy has insisted that under its build-operate-transfer contract with the state-owned National Power Corp. (Napocor), the latter is obliged to pay all taxes related to the plant.
Power industry players have been calling on the national government to address the tax issue, among other problems hindering investments into the energy sector.
Napocor claimed in its appeal before the Supreme Court that it was exempt from paying taxes as a government entity. This was denied by the Supreme Court in a decision on Jan. 25, 2010.
TeaM Energy could not be reached for comment on the Malacañang-sponsored compromise.
Therma Luzon, Inc., a unit of Aboitiz Power Corp., holds the independent power producer administrator or IPPA contract for the Pagbilao power plant, which gives it the right to manage the power plant’s capacity and trade output at the wholesale electricity spot market.
A company source said Aboitiz Power would bid for the power plant if the municipal government of Pagbilao pushed through with the auction.
Publicly listed Aboitiz Power however prefers to keep the status quo, the source added.
Mr. Carandang claimed the auction would have undermined investor confidence in the Philippines, leading to higher electricity rates. -- Ana Mae G. Roa and E. N. J. David
Ricky A. Carandang of the Presidential Communication Development and Strategic Planning Office said in an interview a meeting led by President Benigno S. C. Aquino III resulted in a compromise agreement which will be forwarded to the provincial government of Quezon.
“The auction is not going to push through. The President spoke to Gov. [David C.] Suarez and they are working out the details of the compromise. Cabinet members present in the meeting have been directed to also work out the details,” said Mr. Carandang.
The compromise deal will provide funds for priority projects that will “fast-track [the projects] in exchange for the tax liability to be extinguished.”
Details on how much in funding will be given and where it will be obtained have yet to be ironed out.
Present in the meeting were Finance Secretary Cesar V. Purisima, Executive Secretary Paquito “Jojo” N. Ochoa, Presidential Management Staff Chief Julia R. Abad, Department of the Interior and Local Government Secretary Jesse M. Robredo, and Energy Secretary Jose Rene D. Almendras.
The owner and operator of the Pagbilao power plant, TeaM Energy, was earlier informed by the municipal government of Pagbilao that it must pay P6 billion in real property taxes by Jan. 10.
An auction for the plant was scheduled for Jan. 26.
TeaM Energy has insisted that under its build-operate-transfer contract with the state-owned National Power Corp. (Napocor), the latter is obliged to pay all taxes related to the plant.
Power industry players have been calling on the national government to address the tax issue, among other problems hindering investments into the energy sector.
Napocor claimed in its appeal before the Supreme Court that it was exempt from paying taxes as a government entity. This was denied by the Supreme Court in a decision on Jan. 25, 2010.
TeaM Energy could not be reached for comment on the Malacañang-sponsored compromise.
Therma Luzon, Inc., a unit of Aboitiz Power Corp., holds the independent power producer administrator or IPPA contract for the Pagbilao power plant, which gives it the right to manage the power plant’s capacity and trade output at the wholesale electricity spot market.
A company source said Aboitiz Power would bid for the power plant if the municipal government of Pagbilao pushed through with the auction.
Publicly listed Aboitiz Power however prefers to keep the status quo, the source added.
Mr. Carandang claimed the auction would have undermined investor confidence in the Philippines, leading to higher electricity rates. -- Ana Mae G. Roa and E. N. J. David
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