Energy Technology Expert

Philippine Renewable Energy News Bulletin 3 – September 19, 2009

The passage of the Philippine Renewable Energy (RE) Law and its Implementing Rules and Regulations (IRR) is expected to promote the development of the renewable energy industry in the Philippines.  After almost a long 10 year wait, this important piece of legislation has passed deliberations in both chambers of the Philippine Congress and Senate and was signed into law by President Gloria Macapagal Arroyo.

(Please email me for download copy of RE Law – mars_ocampo@yahoo.com or energydataexpert@gmail.com)

Department of Energy (DOE) Assistant Secretary Mario Marasigan said the use of renewable energy could lower power rates.  Fiscal and non-fiscal incentives for projects under the Renewable Energy Act could help reduce electricity rates.

He said the Energy regulatory Commission (ERC) would see to it that benefits of the RE Law would trickle down to the consumers.  “It’s the role of the ERC.  The reduction will definitely be felt by the consumers.  The ERC will determine the impact of all these incentives.

Taking into consideration the tariff cuts spelled out in the IRR of the RE law will likely bring down electricity rates.

“For instance, if a wind energy project is selling P7 per kWh and after applying the tariff incentives in the RE law, it went down to P4-4.50 per kWh, then it will be translated to lower rates to end-consumers.  It depends on the ERC’s discretion.  All rate-related issues are addressed by the ERC”, he said.

Fiscal Incentives for RE resource developers:

1) 1% of gross income on RE development projects

2) income tax holiday for 7 years

3) corporate income tax of 10% of net taxable income (versus 32-35%)

4) 10-year exemption from customs tariff duties on imported capital equipment

5) net operating loss carry over

6) accelerated depreciation

7) zero percent (0%) value added tax (VAT) rate

8) cash incentive for missionary electrification (UC ME Subsidy = full cost recovery rate – subsidy approved retail rate)

9) special realty tax

10) tax exemption on custom credits, and

11) tax credit on domestically sourced capital equipment

12) 10-year duty free importation on capital equipment

13) VAT exemption of all types of agricultural equipment and machinery

14) tax rebates on purchase of RE components

For more details about oil and energy pricing, energy technology information and renewable energy investment opportunities in the Philippines, please visit my website:

http://www.energytechnologyexpert.com

Marcial T. Ocampo

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