3 Investors Getting Power Subsidy

Manila Bulletin

By Bernie Cahiles-Magkilat

January 30, 2013, 5:12pm

The country’s three “mega” investors are amenable to a higher subsidized electricity rate as a compromise for their continued entitlement of the discount, which is planned for inclusion under the annual government budget, outgoing Trade and Industry Undersecretary Cristino L. Panlilio said.

“We’re working on increasing it (rate) and it looks like they are amenable,” Panlilio told reporters noting that prices of fuel have gone up significantly since the power rate subsidy was granted to them – Hanjin Heavy Industries Corp. Philippines in Subic Freeport, Texas Instruments Philippines in Clark Freeport Zone and Phoenix Semiconductors Philippines Corp. – five years ago.

Under the Industry Competitiveness Fund, the three 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 to their huge investments into the country.

“It was just unfortunate that prices of fuel went up to $110 to $115 per barrel after they were granted with the power subsidy,” Panlilio said.

According to Panlilio, the three investors frankly told him they would be losing money without the subsidy, which expired in March 2011 but the three mega investors have not yet completed the prescribed subsidy period granted to them. The three mega investors are presently paying their electric bills under protest.

Texas has been enjoying the power rate subsidy for four years already and has 6 more years to go. Hanjin has been availing of the subsidy for three years already while Phoenix has one year into the program and its entitled will last until 2020 yet.

A computation done by the DTI showed that based on a generation charge of below P6 per kilowatt-hour, the total amount of subsidies would reach P5 billion.

But the Power Sector Assets and Liabilities Management Corp. (PSALM) said that it would take P42 billion for the total subsidy of the big three based on a P6 per kilowatt-hour computation.

Panlilio, who directly handles the ICF, has been pushing for the Aquino government to continue the program to support the revival of the domestic manufacturing industry.

It is also being proposed to include the ICF in the annual General Appropriations Act to ensure and continue a specific budget for this power rate subsidy.

The Department of Budget and Management, however, has yet to approve the proposed budgetary allocation under the GAA and for President Aquino to give a go signal to such plan.

“We are preparing a program that will continue effectively and provide it with strong legal support like including it in the succeeding GAA of the country,” he said adding the EOs that declared the rate subsidy were very specific.

“It’s just quid pro for such big investments, so much manpower requirements and huge exports that they were given incentives,” he said.

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 is investing $500 million in Clark ecozone. Under full commercial operation, Phoenix is expected to export $3.5 billion annually.(BCM)   source