BoI retains energy perks

Monday, 26 March, 2012 Written by Julito G. Rada


The Board of Investments has retained the tax incentives to the energy sector under the 2012 Investments Priorities Plan, provided it involves electricity projects in remote areas and power plants in Mindanao.


The energy sector’s re-inclusion in the IPP brought to 12 from 11 the preferred activities eligible for incentives this year.


Energy was delisted in a previous public hearing held by the BoI, which caused an uproar among energy stakeholders. This prompted the BoI to schedule another hearing Monday.


“Energy is definitely in this year’s IPP but [only] those projects in missionary areas and in Mindanao are included,” Trade undersecretary and BoI managing head Adrian Cristobal told Manila Standard at the sidelines of the latest public hearing.


Cristobal said during the hearing the BoI was not inclined to give additional incentives to projects that are enjoying a guaranteed rate of return. “What is clear is that if an industry enjoys guaranteed rate of return, why give additional incentives,” he said.


BoI said earlier that despite the 73-percent share of energy sector in tax incentives granted in previous years, this did not reflect in domestic power rates, which remain the highest in Asia.


It said the only projects in the power sector that are worthy of incentives are renewable energy projects which are included in the mandatory list.


The agency said expensive electricity has been one of the reasons why the country has been losing its competitiveness compared with neighboring countries.


“We will try to meet the regular deadline of submission of the final draft to Malacañang for President’s approval on March 30,” Cristobal said.


Cristobal said the agency will deliberate on the inputs of the hearing and come up with a final draft for submission to Malacañang.


Philippine Independent Power Producers Association president Ernie Pantangco, however, said the BoI should also reconsider giving incentives to power projects in Luzon and Mindanao, particularly those already registered with the BoI.


“There are currently eight projects with total capacity of 2,265 megawatts in Luzon and Visayas and 15 centavos per kilowatt-hour could be saved if there would be incentives from the government,” Pantangco said during the hearing.


He said the absence of incentives for these projects could result in P2-billion additional cost “that will be passed on to consumers.”


Pantangco said of these eight projects, Calaca and Genpower in Bataan were already registered with the BoI.


Aside from energy, other sectors included in the draft 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 partnership projects, and disaster prevention, mitigation and recovery projects.


(Published in the Manila Standard Today newspaper on /2012/March/27)