No more BOI perks for power projects

MANILA, Philippines -  Despite rotating brownouts in Mindanao and a looming power crisis in Luzon, the Board of Investments (BOI) has delisted new electric power projects from the 2012 Investment Priority Program (IPP).

This turned out to be the most controversial part of the draft list of investment projects that will enjoy income tax holidays during the recent public hearing held at the penthouse of the BOI building in Makati.

Top executives of power generating companies led by the Independent Power Producers (IPP) group vehemently opposed the delisting of their industries.

Explaining the decision, BOI officials said that despite the fact that the share of the power industry has eaten up 73 percent, or more than two thirds of actual incentives granted in previous years, this did not reflect in domestic power rates which are now known to be the highest in Asia.

Expensive electricity, the BOI further explained, has been one of the biggest reasons why the Philippines has been losing its competitiveness compared to neighboring economies.

“You must submit more compelling reasons besides luring new investments to restore the incentives of your industry,” the power generators were told during the consultation conference. They were given up to February 25 to submit their unified position paper for consideration by the President.

It was further pointed out that the power industry in the country is now matured and no longer needs tax holidays while other industries urgently need government help to modernize and create more jobs.

“Give me examples of power companies that have been losing money,” a BOI official challenged the power generators.

The only projects in the power sector that will be given BOI incentives will be on renewable energy which was listed among the mandatory recipients of perks under the recently passed Renewable Energy Act.

A possible exception to the delisting will be those that will be built off-grid or in island provinces not reached by the national electric power grids. But the decision on that exemption is yet to be made.