Tax breaks for power firms in economic zone locators urged

Local businesses are eyeing and exploring various measures that will allow them to further reduce their electricity costs and improve the reliability of power supply in the country.

Dan Lachica, president of the Semiconductor and Electronics Industries in the Philippines Inc. (Seipi), said in a briefing Thursday that one of the options that might be beneficial particularly to economic zone locators was a proposal to allow retail electricity suppliers (RES) to avail themselves of tax breaks when supplying power to zone locators.

“This, in effect, means RES will be considered exporters (since they will be supplying to exporters) and will therefore benefit from tax breaks,” he explained.

RES are companies allowed to supply power under the open access scheme, which allows large power users to choose their own electricity suppliers. Under the previous system, electricity users had no choice but to buy power from the suppliers that have jurisdiction over their respective areas.

The open access scheme, which is already being implemented, is expected to spur competition among power suppliers, resulting in better, more competitive electricity prices. Eventually, the scheme will be extended to the retail level or households.

According to Lachica, the proposal concerning RES, which was sent by the Philippine Economic Zone Authority, is still pending with the Energy Regulatory Commission (ERC).

Lachica added that the government might also want to consider providing land to power generation companies willing to invest in the energy sector as a way to entice more firms to produce electricity, or provide “funding” for energy projects that would support the government’s thrust to ensure sustained and inclusive economic growth.

The country, he added, might also want to consider tapping more renewable energy sources like solar energy, to shore up and stabilize power supply.

Based on a policy brief titled “Manufacturing: Creating Million of Better Jobs,” the Joint Foreign Chambers, local business groups and industry associations  stressed the need to build more baseload power plants; temporarily suspend VAT on electricity for manufacturers; and introduce more competition by allowing foreign firms to have majority ownership in power distribution.

The Philippines reportedly ranks ninth highest globally in terms of electricity cost.