Napocor, Transco eye electrification of 30K unserved, off-grid areas this year

Robie de Guzman   •   March 26, 2021   •   535

MANILA, Philippines – State-owned National Power Corp. (Napocor) and the National Transmission Corp. (Transco) are looking to add 45.31 megawatts of power capacity, 71.3 circuit kilometers (km) of transmission lines and build 45.0 MVA substation facilities this year to provide electricity to some 30,000 unserved households, the Department of Finance (DOF) said.

In a report to Finance Secretary Carlos Dominguez III, Napocor said it will also add 11 Small Power Utilities Group (SPUG) plants providing 24/7 electricity to unserved areas, as part of its missionary electrification project in 2021.

As of end-2020, Napocor said that 1,080,242 households in missionary areas already have electricity while 473,845 remained unserved.

Despite the work suspensions due to several powerful typhoons and the COVID-19 pandemic last year, Napocor said it was able to surpass its 2020 target of providing electricity to unserved areas by 8,587 households for increase in operations and 2,433 households for new areas.

Napocor said it plans to narrow this gap this year by providing electricity to 28,972 households, which will cut its backlog on unserved areas to 444,873 households.

Meanwhile, the DOF said that Transco targets to complete the power development plan (PDP) for the interconnection of unserved and underserved island municipalities this year.

“It is expected to come up with the studies and plans that will provide the general framework for the interconnection, by the end of the year,” the DOF said in a statement.

The department added that Transco also eyes to complete its PDPs for the Palawan island grid and implement the PDP for the Cagayan Economic Zone Authority this year.

As of September 2020, Transco’s current assets amounted to P10.59 billion, up by 20 percent from the previous year’s record of P8.83 billion. Its total assets–comprising receivables, trust assets, plants, and equipment—dropped 2.8 percent from P326.39 billion in 2019 to P325.31 billion in 2020.

Transco reported budgetary savings of P503.86 million in 2020, with the bulk of its unspent funds coming from unrealized capital expenditures of P360.12 million. The firm collected P108.96 million in right-of-way (ROW)-related capital expenditures last year and filed 76 expropriation cases.

As of end-2020, Transco’s cash and investment balance amounted to P1.22 billion.

Preliminary data show that Transco has identified around P31.18 million from discontinued, deferred, or reduced programs and activities for COVID-18 related expenditures and disbursed P24.16-million of this amount, the DOF said.

P3B revenues collected from pork imports under reduced tariff, increased MAV system

Robie de Guzman   •   November 23, 2021

MANILA, Philippines – The Bureau of Customs (BOC) has posted collections amounting to P3 billion from swine meat imports under a reduced tariff system, the Department of Finance (DOF) said.

In a statement, the DOF said that the BOC reported 197 million kilograms (kg) of pork imports from April 7 to Nov. 12 this year.

However, the bureau estimated that it has foregone some P3.4 billion in revenues as of November due to the decreased tariff scheme.

The reduced tariff system was implemented in the second quarter of this year to boost the supply of pork and stabilize its retail prices in the domestic market.

To recall, President Rodrigo Duterte had issued a series of executive orders (EOs) that took effect starting April 7 to lower pork import tariffs and increase the allowable import volumes of the meat to help stabilize the domestic supply and prices of this food staple for the benefit of Filipino consumers.

Executive Order (EO) No. 128, which lowered pork import tariffs to 5 percent within its minimum access volume (MAV) and 15 percent outside MAV for the first three months, was in effect from April 7 to May 14.

EO 134, which superseded EO 128, set tariffs on pork imports under the MAV to 10 percent for the first three months, and 15 percent in the next nine months.

For imports outside the MAV, the tariffs are 20 percent for the first three months and 25 percent in the succeeding nine months.

The one-year effectivity of EO 134 began on May 15, 2021.

“To compute for the effect of the two EOs, we multiplied the dutiable value of meat by 25 percent—less 5 percent and 15 percent—which were already paid for EO 128, and multiply the dutiable value by 20 percent and 15 percent for EO 134. The result showed a revenue loss of P3.4 billion,” BOC Commissioner Rey Leonardo Guerrero said during a recent meeting with DOF.

Guerrero said the volume of pork imports started spiking in March and continuously grew in April to May, but dropped starting June.

The volume of pork imports in April, the month when the two EOs took effect, grew 500.46 percent, from 4.07 million kg in the same month last year to 24.45 million kg.

“This dramatic increase in pork import volumes continued in May, when a total of 36.5 million kg entered the country, representing a 506-percent hike from the 6.02 million kg imported during the same period in 2020,” the BOC said.

In June, the bureau said that pork imports reached 33.62 million kg, which was 531.39 percent more than the 5.32 million kg brought into the country during the same period last year.

“Pork imports continued its steady drop in July, when volumes totaled 31.18 million kg, which was 370.4 percent more than the 6.63 million kg, recorded in the same month of 2020,” it added.

The agency also noted that in August, pork imports increased 271.59 percent year-on-year, and dropped to 164.55 percent in September and 78.47 percent in October.

The volume of pork imports was 6.41 million kg in August 2020 and 23.82 million kg in August 2021; 9.73 million kg in September 2o20 and 25.73 million kg in September 2021; and 10.85 million kg in October 2020 and 19.36 million kg in October 2021.

From November 1-12, pork imports of 7.47 million kg were lower by 11.64 percent compared to last year’s 8.46 million for the same period.

Suspension of fuel excise tax ‘detrimental’ to PH economic recovery – DOF

Robie de Guzman   •   November 15, 2021

MANILA, Philippines – The proposed suspension of excise taxes amid rising fuel prices will be inequitable and will threaten the country’s recovery and growth prospects, the Department of Finance (DOF) said Monday.

DOF Undersecretary and chief economist Gil Beltran issued the statement following calls by some groups for the suspension of fuel excise taxes after prices of petroleum products spiked for several consecutive weeks.

“The unrealized public spending and investments from the foregone revenues will be detrimental to our economic recovery and long-term growth,” Beltran said.

“A more equitable way to address the impact of higher fuel prices is to provide targeted support to the vulnerable groups, particularly the transportation sector, which the government has already committed to do,” he added.

The DOF estimates that suspending all fuel excise taxes and value-added tax (VAT) on fuel excise will result in foregone revenues amounting to P147.1 billion or around 0.7 percent of the gross domestic product (GDP) in 2022.

If the tax suspension covers only the fuel excise taxes and the VAT on fuel excise under Republic Act (RA) No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the government is estimated to lose P119.5 billion or around 0.5 percent of GDP in the same year, it added.

While consumption will be slightly higher at an estimated incremental of 0.6 to 0.7 percentage point, growth will actually be lower by 0.1 to 0.2 percentage point, if the excise tax and VAT on it are suspended, the department further stated.

Beltran also stressed that higher income households are estimated to benefit from the suspension more than lower income households.

“With the suspension of fuel excise taxes, we will lose the improvements we made under TRAIN in making the tax system more equitable, in which those who are more financially capable pay more taxes,” he said.

The DOF noted that higher income households are estimated to benefit 60 percent more than lower income households from the suspension of fuel excise taxes.

With the tax relief that would accompany the suspension of fuel excise taxes, the disposable income of the top 10 percent of households is estimated to increase by around 0.63 to 0.82 percent on average in 2022, it added.

Meanwhile, the disposable income of the bottom 50 percent of households is estimated to increase by only around 0.34 to 0.45 percent.

Beltran said a more equitable way to address the impact of higher fuel prices is to “provide targeted support to the vulnerable groups, particularly the transportation sector.”

The government earlier said it will release P1 billion fund for cash grants to 178,000 public utility vehicle drivers for the remaining months of the year through the Land Transportation Franchising and Regulatory Board (LTFRB).

Once spent, the cash grants are estimated to result to an incremental P2.9 billion pesos-worth of growth in the economy, the DOF said.

Makati subway project to get tax incentives – DOF

Robie de Guzman   •   November 8, 2021

MANILA, Philippines — The rail operations of the Makati City Subway project will be granted a four-year income tax holiday followed by five years of enhanced deductions and duty exemption on importation for the construction, operation, management, and maintenance of the project, the Department of Finance (DOF) said Monday.

In a statement, the DOF said the Fiscal Incentives Review Board (FIRB) has approved the grant of tax incentives for the P81-billion Makati City subway project, which is expected to begin commercial operations in January 2026.

 The DOF said the board approved the tax incentive grant last month.

“In deciding to approve the project, the FIRB took into consideration the projected increase in economic productivity of P24.4 billion per year once the subway system becomes operational in 2026,” the DOF said.

“This will be monitored, along with the other projected benefits, in accordance with the principle of granting incentives based on merit or performance embodied in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law,” it added.

Finance chief Carlos Dominguez, however, clarified that this package of incentives is confined only to the activity applied for, which is the rail operation.

“The incentives approved will not apply to the other business activities that would be generated from the subway operations, such as the lease of retail areas and advertising, which should be subject to the regular corporate income tax rate and other applicable taxes,” the DOF said.

The subway project is seen to help ease traffic congestion by providing an alternative transport service to up to 700,000 commuters, and reducing the volume of vehicles plying the city streets.

Throughout the deliberations for the project, Dominguez also said that the Makati City government and the Department of Transportation should work out the details of how to connect the proposed subway to the Metro Manila Subway project of the national government, the DOF said.

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