The Board of Investments (BOI) has granted DMCI Power Corp. (DPC) a six-year income tax holiday for its 2 x 4.95-megawatt bunker-fired power plant in Aborlan, Palawan, the Consunji-owned firm said on Tuesday.
In the latest Investment Priorities Plan of the agency, power projects in missionary areas qualify for pioneer status.
In a statement, DMCI Power said its entitlement to the tax incentive was determined based on its project’s ability to contribute to the economy’s development as measured by its net value added, new jobs generated, multiplier effect and measured capacity.
“This incentive will effectively lower DMCI Power’s true cost of generation charge, in the end benefiting the electricity consumers of Palawan,” DMCI Power president Nestor Dadivas said.
The tax holiday will be applied once the Aborlan facility begins its commercial operations or six years from December 2016, whichever is earlier.
DMCI Power is investing around P620 million to build the facility, which will contribute nearly 10 megawatts of electricity to the Palawan grid, specifically the franchise area of Palawan Electric Cooperative Inc.
“Construction of the Aborlan plant is proceeding as scheduled,” Dadivas said, “We expect it to go online by yearend.”
He earlier said that DMCI Power’s investment in Aborlan would “address the continuing increase in electricity demand in the province due to the rise of local tourism and commercial establishments.”
Electricity demand
The demand for electricity in Palawan—which is not connected to the main national grid—had been growing faster than expected at 15 percent, catching even DMCI Power off guard as it had earlier expected growth at only around 12 percent.
Aborlan is a first-class municipality 69 kilometers south of Puerto Princesa City. Its population is estimated at over 32,000.
As of June 2016, only 5,400 of the 7,263 households in the municipality have electricity connections.
DMCI Power was established in 2006 to provide sufficient and reliable electricity to areas that are not connected to the main grid.
Aside from Palawan, the company also provides power to Masbate, Calapan, Oriental Mindoro and Sultan Kudarat through supply contracts with electric cooperatives.
To date, DPC has a total contracted capacity of about 56 megawatts.
The additional capacity will not translate to additional energy sales for DMCI Power as the new plant will only replace the dilapidated diesel-fired engines that would have to be retired.