Biz Buzz: P110B tax bill
It’s that time of the year again when the country’s top corporations report their earnings for the previous year.
And while this is sure to keep business journalists busy, billions of pesos worth of profits also beg the question: How much of these corporate earnings actually benefit the Filipino people?
In terms of total taxes paid, conglomerate San Miguel Corp. added a staggering P110 billion to the government’s coffers in 2013, the bulk of which was paid in the form of value added taxes (VAT) and specific/ad valorem taxes, on top of the usual income taxes of the group’s units and other duties.
It’s a huge sum, but not totally unexpected of the company that has been diversifying into different industries these past few years.
San Miguel—which now derives significant revenues from its new businesses such as fuel, power generation and infrastructure—paid a total of P58 billion in VAT in 2013. Petron Corp., SMC Global Power Holdings Corp., San Miguel Pure Foods Company Inc., and San Miguel Brewery Inc. were the largest contributors in the group.
San Miguel likewise paid specific/ad valorem taxes, or excise taxes, of about P33 billion, with SMB and Petron accounting for the bulk of the payments.
The group also paid a total of P11 billion in income tax, with San Miguel Brewery, San Miguel Pure Foods and Petron at the top tier.
Rounding it all out is another P8 billion in other taxes, including capital gains tax, real property tax, customs duties, licenses and fees, among others.
Of course, there used to be a time when corporations and individuals that paid large levies were frowned upon as not being smart enough to dodge taxes. Nowadays—thanks to the Bureau of Internal Revenues’ initiatives—taxpayers try to outdo each other in contributing to nation-building.
Definitely a good sign. —Daxim L. Lucas
Indonesian foray
If there’s any new overseas market that Aboitiz Power Corp. will wish to break through, it will likely be Indonesia.
Aboitiz Power had previously looked at Papua New Guinea, which it still sees as an attractive market. But it hasn’t been able to break into this market due to some domestic political obstacles.
For Aboitiz Power officials, Indonesia is an interesting market because the situation there is similar to that of the Philippines a few years ago when there was a shortage in power supply.
Recently, the Indonesian private sector has become more active in investing in infrastructure, and a lot of local groups are looking for foreign partners with both money and expertise.
In the case of Aboitiz Power, the group sees a lot of opportunities in getting into geothermal and hydroelectric power generation—two areas it specializes in.
The strategy, for now, is to scout for “bite-sized” projects, say 50 megawatts for geothermal and 20 megawatts for hydroelectric power.
Once it has gained a foothold in Southeast Asia’s largest market, expansion efforts throughout the rest of the region will follow.–Doris C. Dumlao
Ten-to-two habit
Are you familiar with the “Three-O-Clock Habit” that has become a daily devotional prayer for many Catholics?
There is another habit that Manila Electric Co. (Meralco) is pushing for amid the tightness in power reserves for Luzon this summer: the “10-to-2 habit.”
At an energy forum, experts say that electricity usage in Luzon peaks at around 10 a.m. to 2 p.m., mostly due to the use of cooling appliances such as air conditioners, electric fans and such.
There is help from the side of businesses: Every megawatt of power eased from the grid through the Interruptible Load Program (ILP) will save about 700 households from outages, said Lawrence Fernandez, Meralco’s utility economics head.
“Households ask us how they can help; raising the thermostat, say to 25 degrees from 24 (degrees), for example, will definitely help,” Fernandez said.
It would also help to move any other power-guzzling activity, such as clothes ironing, to the early morning or evening, and even on weekends, when power demand is lower, other experts said. In short, avoid the 10 a.m. to 2 p.m. peak slot, religiously, to ease the specter of “brownouts.”
“Hopefully we can develop the 10-to-2 habit,” Fernandez said. —Riza T. Olchondra
Orphaned
With drill rig counts dropping in the United States after shale oil explorers in fringe areas got spooked by declining oil prices in late 2014 and early 2015, some in the energy business are wondering whether any may be locked in for contracts in the Philippines.
Companies in the Philippines—not a traditionally exciting oil and gas exploration area—had often said they found it difficult to look for available rigs. While rig shopping may be easier now for some Philippine exploration projects, the controversial Service Contract 72 seems likely to remain quiet for some time.
Asked whether the UK-registered Forum Energy Plc. might start looking for a drill rig contractor while it has time to spare on exploration work, Philex Petroleum Corp. chair Manuel V. Pangilinan said it was unlikely given uncertainties in the project timeline.
The government, seeking not to ruffle feathers as it tries to spur talks on territorial claims in the area, has effectively imposed a moratorium on the exploration of Forum Energy’s Service Contract 72 off Palawan.
The government effectively asked Forum to declare force majeure in the area. The Department of Energy has since affirmed the move. All exploration work at SC72 was suspended from Dec. 15, 2014, and would remain so until the DOE notifies the company that it would commence drilling.
Hasn’t Forum given up on the venture? Pangilinan, at least, says no.
“I believe it’s ours,” he said.
Even so, it seems Forum’s hands are tied for the moment, even in terms of meeting with potential partners.
“I guess we can talk (with other companies), but not too much,” Pangilinan said.
And what of the Chinese state-owned CNOOC? Apparently they are still still a candidate for a partnership but they’re not talking to Forum, either.
“I’ve felt like an orphan,” Pangilinan said.–Riza T. Olchondra
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