Quezon agrees to halt auction of Pagbilao plant

Manila Standard Today

PRESIDENT Benigno Aquino III has convinced Quezon Gov. David Suarez to stop the planned auction of the 600-megawatt Pagbilao Power Plant in exchange for infrastructure projects for the province to be financed by the national government, Malacañang said Wednesday.

That plant supplies about 7 percent of the power demand in Luzon, but the Quezon provincial government and the municipality of Pagbilao have threatened to auction if off, claiming its operator owe them P6.1 billion in real property taxes.

The breakthrough was reached after Mr. Aquino called Suarez on the phone, presidential spokesman Ramon Carandang said.

“The President spoke to Governor Suarez, and they are working out the details of a compromise,” Carandang said.

He said the details had yet to be worked out, but the agreement was that the Quezon provincial government would receive funds from the national government.

“There are a number of priority projects that the province has in the pipeline, so they will receive funds in order to continue those projects and maybe even fast-track them. In exchange, the tax liability will be extinguished,” Carandang said.

“In the meantime the auction will not push through.”

Carandang made the statement even as the Philippine Independent Power Producers Association on Wednesday asked the government to resolve the Pagbilao problem, saying it could dampen investor interest in the power sector.

“If the government does not resolve the issue, definitely no investor will come as it creates uncertainty every time there’s a local government election,” group president Ernesto Pangtangco said.

“At this point, we want to attract and not spook potential investors especially in the energy sector. We have to show that the Philippines has a stable investment climate where their investments are secure.”

The Japanese-controlled Team Energy Corp. operates the Pagbilao plant, while Therma Luzon Inc., a unit of Aboitiz Power Corp., sells its output.

State-run National Power Corp. assumed the responsibility of paying all the taxes on the plant when it awarded the contract to operate it to Team Energy.

The Quezon provincial government claims that Team Energy owes it P6.1 billion in real property taxes for the years 1997 to 2010, but National Power says the Local Government Code exempts it from paying tax on the plant. Roy Pelobello and Alena Mae S. Flores