New order allows firms to enjoy power rate cuts

MANILA, Philippines - Starting mid-June, companies consuming substantial amounts of power will enjoy reduced electricity charges by virtue of a presidential decree. Under Executive Order (EO) 796, also known as the Industry Competitive Fund (ICF), Manila will allot funds that will cut rates of power intensive industries. To be sourced from value-added tax (VAT) collections, the fund amount will be replenished as needed by the finance and budget departments. An initial budget of P1.6 billion has already been allotted, Energy Secretary Angelo T. Reyes said. Once the presidential order takes effect, the fund will be used to support power intensive industries, which have long clamored for lower electricity rates. An estimated one-third of companies’ overhead costs go to electricity bills since the Philippines reportedly has the second most expensive power rates in Asia next to Japan. The EO, drafted by the energy department, will “incentivize" its allotments to companies, depending on the level of their contribution to the economy, Reyes said. The arrangement also seeks to attract “new investments in the country," Reyes added. A committee will also be created and co-chaired by the energy and finance departments to implement the decree. The committee’s heads will also be designated to decide how much to allot to companies. Other committee members include the Department of Trade and Industry (DTI), the Philippine Economic Zone Authority (PEZA), the National Power Corp. (Napocor), the Department of Budget and Management (DBM), and the National Transmission Corp. (Transco). The creation of the Fund was approved by President Arroyo last year. “The committee will evaluate the application of each company based on a set of criteria," Reyes said. “The committee will decide how much will be the reduction in power rates that one company can enjoy." Companies will have to submit their requests for rate reduction while the committee will identify companies that will be qualified to receive reduced rates. The fund will also be used to “cover existing and future eligible preferred combined generation, transmission and distribution rates granted by" the Napocor, the Power Assets and Liabilities Management Corp. (Psalm), Transco, and PEZA" in accordance with their policies, rules, regulations, subject to the ICF guidelines. - GMANews.TV