March 25, 2012

Philippines: RE developers concerned over removal of incentives

RENEWABLE-energy developers are concerned over the possible removal of incentives given under the Renewable Energy Act should the proposed Senate bill that aims to rationalize incentives be approved.

Peregrino Fernandez, Renewable Energy Developers Caucus convener, said he is saddened by the development, especially in the face of rising oil prices.

“We have repeatedly said renewable energy is an investment for the future, a hedge on expensive fossil fuel. The longer we wait, the more burden the economy carries on its back,” Fernandez said.

The draft of the Senate bill, known as the Consolidated Investments Incentives Code of the Philippines, says only export-oriented companies will be given incentives.

“Consumers have little to look forward to because we failed to build a sustainable-energy infrastructure that would make the Philippines less dependent on imported fossil fuel. Had we approved the feed-in tariff, 300 megawatts of renewables would have been installed,” Tetchi Capellan, Philippine Solar Power founding president, said.

She said too much attention on the small increase in prices drove the country away from the inevitable.

The bill aims to restructure the Board of Investments, the principal investments promotion agency of the country.

The BOI’s functions pertaining to the registration of enterprises and the administration of fiscal and nonfiscal incentives under Executive Order 226 was transferred to the Philippine Economic Zone Authority.

The Senate bill says registered export enterprises can still avail themselves of 100-percent exemption from taxes and duties on imported capital equipment and raw material provided the equipment would be used exclusively in the registered activity of the export enterprise unless prior approval of Peza is secured.

Section 8 of the draft bill further states that registered enterprise shall be entitled to fiscal incentives only for export of sales of goods and export of sales of services.

“Conversely, registered enterprises are not entitled to the incentives if the activity or project they seek to register does not involve export sales of goods and export sales of services, even though they are located in the freeport or ecozones. Income derived from such other activity or project shall thus be subject to appropriate taxes,” it said.

The draft bill aims to repeal Chapter VII, Sections 15, 19, 21, 22 and 23 of Republic Act 9135 or the Renewable Energy Law of 2008.

Chapter VII, Section 15 states that developers of renewable-energy facilities, including hybrid systems hall be entitled to a seven-year income tax holiday, duty-free importation of renewable-energy machinery, special realty-tax rates on equipment and machinery, zero percent value-added tax rate, among other things.


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