Tuesday, September 30, 2008 Senate set to approve Renewable Energy bill
IN A bid to lure more investors for renewable energy (RE), the Senate has decided to provide a longer income tax holiday and a fixed five percent gross income tax rate to companies that will venture in renewable energy.
Senator Juan Miguel Zubiri said the Senate will approve on Tuesday the RE bill or Senate Bill (SB) 2046 which is expected to "give us clean energy as it would spur further investments in the sector in compliance with international climate change conventions such as reduction of Green House Gases and reduce energy prices."
Under the RE bill, investors will be provided a seven years income tax holiday and fixed five percent corporate income tax rate to help them cope with the cost of the construction of the plants and operations.
"We all know that RE projects are very expensive as compared to fossil fuel-based energy plants and could scare away potential funders for these particular investments. However, the beauty of RE power plants is that the high investment costs are only at the beginning of the project during the building of its infrastructure, then costs taper off during operations since power is generated from cost-free renewable sources like wind, solar, hydro and geothermal. Don't need imported fossil fuels such as coal and bunker fuel to continue to operate," Zubiri said.
"Therefore, the Senate deemed it appropriate to provide the investors this tax holiday as well as lower corporate tax rates in order for them to survive the first phase of costly construction and operations thereby making the projects economically viable. This will definitely encourage large-scale investments in this environment-friendly RE industry in the country," he added.
On the other hand, Zubiri cited the rising prices of fuel in the international market which had been helpful in urging senators to finally pass the RE bill.
"Only the escalating price of petroleum in the world market effectively pressured legislators to tackle the renewable energy bill with urgency. Consumers who will adopt RE technologies for their own use will also enjoy incentives," the lawmaker lamented.
Aside from the tax holiday and lower corporate income tax, Zubiri said power and electricity from RE resources for generator's own consumption and/or free distribution in off-grid areas shall also be exempted from the Universal Charge under Section 34 of the Electric and Power Industry Reform Act or Republic Act 9136.
Likewise, the Senate also provided for government share equal to one percent (one percent) of the gross income of RE developers on sale of RE produced and other incidental income from RE generation, transmission and sale of electricity.
Also, intermittent RE resources are to be treated "must dispatch" and enjoy the benefit of priority dispatch.
The Energy Regulatory Commission shall amend Wholesale Electricity Spot Market rules, distribution and grid codes; while the Philippine Electricity Market Corporation and Transmission Corporation shall implement technical mitigation and improvements for safe and reliable electricity transmission.
President Gloria Macapagal-Arroyo has ordered for the development and utilization of the renewable energy resources to cut our dependence on imported fossil fuel, which reached a high of US$147 per barrel in July this year. (MSN/Sunnex)
