BOI to cut power subsidy given to 3 Clark locators

MANILA, Philippines - The government plans to reduce a power subsidy granted to three big ticket Clark locators.

Board of Investments (BOI) managing head Crisitino L. Panlilio said the government will save money by reducing by half the subsidy which is estimated at P4 billion yearly including opportunity cost.

During the term of former President Gloria Macapagal Arroyo, an executive order was drafted giving big locators a discount for power consumption. For ten years, the locators will only pay half of what ordinary consumers are paying. The discounted price is P2.15 per kilowatt hour. This includes generation, transmission and distribution charge. The plan is to reduce the subsidy by raising the subsidized price to a little over P3 per kwh.

Panlilio refused to name the firms but industry sources said the firms that were able to avail of the big discounts were Texas Instruments, Korean owned ship building facility of Hanjin Heavy Industries Corp. and Phoenix Petroleum Ltd. Inc. All three firms are in Clark Freeport Zone.

Texas Instruments was the first firm that was able to enjoy the subsidy which began in 2007. The source said Texas Instruments has seven more years worth of subsidy.

Hanjin on the other hand has eight more years while Phoenix has nine more years. With the current structure, the subsidy for the three firms is costing the government P500 million per year.

The BOI confirmed that they would like to reduce the amount of subsidy being given to firms. Panlilio said the BOI would like to renegotiate the deal to make it mutually beneficial to all parties concerned.”

He said the big power subsidy was only given to firms that invested billions of dollars. He said in total the firms that were given subsidies were able to create 30,000 jobs.