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November 11, 2014

GMA 7 NEWS: Congress looks at tax breaks for consumers, ILP participants

Congress is looking at exempting companies under the interruptible load program (ILP) from paying value-added tax (VAT) for a specific period – among other measures – as it scrambles to pass a joint resolution before the end of the year to prevent a projected power crisis in the summer of 2015.

Part of the provisions under the joint resolution is tax relief for companies self-generating power under the ILP government, Oriental Mindoro Representative Reynaldo Umali said during the 13th CEO Forum and 118th general membership meeting of the Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) in Makati City.

"We will provide VAT exemption for the service that they will offer. When they produce power, as required under ILP, we'll have to exempt that," he said.

"The private sector is already offering assistance to government to cover the shortage... I think it will be unfair for them if we will impose certain VAT," he added.

However, the VAT exemption will only be applied during the time companies will share its generating capacity with the Luzon grid, Umali said.

"We are looking at VAT exemption for whatever is going to be paid by government for those who will allow their gensets to be used for purposes of meeting the shortage in summer 2015," he noted.

Umali said tax relief for consumers buying energy efficient technology, like solar panels and inverters at a lower cost is also in the works.

"We will be able to offer these to consumers, and this will provide incentives to consumers to avail of these technologies," he added.

So far, over 20 companies have agreed to join ILP, House Deputy Minority Leader Arnel Ty said in a statement last week.

The power crisis stems from the concern of not having enough reserves when a power plant bogs down, unlike a definitive lack of supply, Energy Secretary Carlos Jericho Petilla said in the same forum. "That number is stretchable, from 200 MW to 2,000 MW," he said.

Last resort

Even if the time has lapsed to put up emergency power plants for the expected reserves shortfall next year, ILP is the last resort, Petilla noted.

The Energy official appealed for support from the semiconductor industry to join the program.  "Running a power plant is not your business, we realize that. But you will be there as a last resort than front-liner this summer 2015," he said.

Apart from ILP, the joint resolution will cover the concept of tapping power plant capacity, particularly from facilities whose rehabilitation may be fast-tracked, said Umali, who chairs the House Energy committee.

The joint resolution will also include energy conservation and efficiency measures being pushed by government and the private sector.

"We're still approving a joint resolution that will authorize the president to contract capacities from many sources like ILP," he said.

"All of this will give us some kind of comfort level, that we will not have any brownouts next year," he added.

The House Energy panel has moved the deadlinefor approving the joint resolution from October 29 to December 1.

On energy conservation, Petilla said government agencies are still experimenting on the measure before enforcing it on the private sector.

"In 2015, this will be a practice for all. How do we implement that in the private sector is a big challenge," he said.

"Come December, we will have energy conservation measures. These measures will have to be tested before summer 2015," the Energy secretary added. – VS, GMA News

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