MANILA, Philippines — The Department of Energy (DOE) has urged the
Board of Investments for the continued granting of tax incentives to baseload
energy projects in light of the huge power supply gap that is being addressed
via private sector investments.
The official position of the DOE was contained in its letter addressed
to the BOI.
“The DOE has a letter asking the BoI to extend the incentives to power
projects while there is still a lack of supply of baseload power,” the official
said.
With the DOE position, “it leaves a window open a review of the BOI
position.”
So far, the government is trying to build up its baseload power supply
to 30,000 megawatts. The current baseload power is only between 17,000 to
18,000 MW.
The new capacities of baseload power plants in Subic Freeport are also
facing environmental issues that might delay their commissioning.
The GN Power has also proposed to double its capacity.
It could be recalled that DTI Secretary Gregory L. Domingo, who also
chairs the BOI, has strongly opposed the continued granting of income tax
holidays to power projects. As a result, the power sector is no longer listed
in the proposed 2012 Investment Priorities Plan (IPP), which lists the
preferred economic activities that are eligible for government tax perks.
The BoI house, however, is divided as to the power incentives is
concerned. Thus, it sought the position of the DoE to help them guide in coming
up with the preferred list of economic activities for the 2012 IPP. The BOI is
the lead government agency in the crafting of the 2012 IPP. Economic activities
listed in the IPP are the ones that would be entitled to as much as six years
in tax income holidays.
“Domingo has expressed his position and the others in the Board are
just following on his cue, but he is not the only voice. There are others who
are against the Secretary’s position, but chose to be quiet,” the official
added.
Aside from other BOI officials who are against the removal of
incentives to power projects, the private power sector and the Philippine
Chamber of Commerce and Industry (PCCI) have also strongly opposed the plan to
remove the incentives to power projects.
Already, a BOI official said they would have difficulty hitting its
P400- billion investments target this year once the power sector will be
stripped of incentives.
The traditional power sector is expected to contribute P100 billion in
new investments for BOI or one-fourth of the agency’s full year target. The BOI
was hoping to register the P40 billion 600 megawatt coal-fired project of AES
this year.
In the first month this year, the BOI was able to register only P3
billion but this is already 10 percent higher than the P2.7 billion registered
in January 2011. There have been mini-hydro power projects that are expected to
register with the BOI but still it would be difficult to compensate for the
loss of the huge baseload power projects.
“This makes the P400 billion investments target challenging,” an
official noted.
Domingo, however, has stood pat on his decision to remove income tax
holiday to traditional power projects to avoid “double dipping” of government
incentives as these projects are already enjoying guaranteed rate of return.
“What we are against is double-dipping of incentives,” Domingo
stressed. He said the guaranteed rate of return the energy projects get from
the Energy Regulatory Commission is already a huge incentive to these
companies. (BCM)
Baseload Projects
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