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Govt to condone some of Pagbilao Power’s P6-B tax liabilities


The national government will condone a portion of P6 billion in back taxes owed by the Pagbilao Power Station in Quezon, which supplies energy to almost a tenth of Luzon, to save it from an auction, thus, keeping the faith of investors in the Philippines. The local government of Pagbilao and the provincial government of Quezon had pressured Team Energy Corp., the power plant owner, to pay real estate taxes, penalties, and other back taxes from 1997 to 2010 amounting to P6-billion. Otherwise, the local government said it will not renew Team Energy’s business permit, while the municipal government threatened to auction the 735-megawatt coal-fired plant in Isla Grande, Pagbilao come Jan. 26. A Cabinet secretary on Wednesday said the national government is obliged to shoulder the power plant’s debts. The Energy Conversion Agreement mandates the National Power Corp. (Napocor) to take on the obligations that government will impose, explained Presidential Communications Development and Strategic Planning Secretary Ricky Carandang. National Power Corp. (Napocor) had operated Pagbilao Power until it was privatized and had since changed managements more than twice until Japanese-controlled Team Energy took over the facility. Undermine investor faith "Obviously, if the auction happens, it will massively undermine investor faith in the Philippines and the investments that we are trying to get in, and it will eventually lead to higher electricity rates," Carandang said. "If Team Energy is forced to pay that, then eventually they will find some way to pass it on to consumers," he added. President Benigno Simeon Aquino III on Wednesday said he is mindful of the importance of the Pagbilao power plant. “Bubunuin po namin iyong problema para magkaroon ng hustong solusyon (We will tackle the problem to come up with a total solution)," the President said at the 65th anniversary celebration of the Liberal Party at Club Filipino in San Juan City. Carandang said some parties have proposed that the President intervene. The Local Government Code states in section 277: “The President of the Philippines may, when public interest so requires, condone or reduce the real property tax and interest for any year in any province or city or a municipality within the Metropolitan Manila Area." "So the President and Gov. [David] Suarez are working out the details of compromise... in order to continue those projects and maybe even fast-track them. In exchange, the tax liability will be extinguished," Carandang said. Pagbilao Power is capable of producing 16.8 million kilowatt hours (kWh) of electricity per day or over 6 billion kWh a year. Its output is fed into the Luzon grid via the 230-kilovolt transmission line and the Napocor sub-station in Tayabas, Quezon. — With Paterno Esmaquel II/VS,GMANews.TV

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