Department of Energy Considers Proposal of Power Stakeholders to Suspend Oil and Coal Taxes

The possibility of suspending excise tax and value-added taxes (VAT) on coal and oil, proposed by independent power producers is being considered by the Department of Energy (DOE), particularly as power rates are expected to increase. According to estimates presented by the Philippine Independent Power Producers Association (PIPPA), the price of fuel could spike to ₱9.00 per kilowatt-hour with the price of coal reaching $446 per ton on March 3.

On Friday, a meeting was held between Energy Secretary Alfonso Cusi and power generation stakeholders tackling the continued rise of international coal prices. During the meeting, proposals that could be collectively implemented were welcomed in an effort to address the increase in electric power prices.

The measure presented by PIPPA for VAT exemption and excise tax suspension will be examined by the DOE and raised in the department’s meeting with the National Economic Development Authority-Economic Development Committee (NEDA-EDC) scheduled on March 7. Cusi further requested a formal paper from PIPPA which would include price simulations as well as recommendations.

“Similar to our earlier meeting with the downstream oil industry players, we want to work with our electric power industry stakeholders in securing the sufficiency of our power supply, as well as in creating solutions to help arrest rising electricity costs,” explained Cusi. SMC Global Power, Aboitiz Power, Semirara Power, First Gen, Quezon Power, AC Energy, Team Energy, FDC, and Meralco Power Gen/Global Business Power — all members of PIPPA — were present at the meeting.

Granted the critical summer and election periods coming up, these stakeholders committed to securing the full availability of electricity. Aside from the proposal, PIPPA members likewise urged for solutions to mitigate the impact of electricity rates such as the DOE’s endorsement to the Energy Regulatory Commission, subsidies for electricity end-users sourced from the Malampaya Fund, and a 30-day relaxation on coal inventory requirement for generation companies.

The association also expressed its concern for the need to identify and accelerate the actual completion date of the Mindanao-Visayas Interconnection Project (MVIP) which would significantly assist in augmenting the power requirements of other regions.

Source: Manila Times