Cheap power option for mega projects readied

Lilia de Lima, director-general of the Philippine Economic Zone Authority, said the government is near to resolving the issue of granting cheap power  to select mega projects in special economic zone.

De Lima said the option being considered is different from an earlier plan to extend the so-called industry competitiveness fund (ICF) which gives preferential power rates as incentives to Hanjjn Heavy Industries Philippines in Subic and Texas Instruments and Phoenix Semiconductors in Clark.

“We are coming close to a conclusion which would be positive and fair to all. The investors have been waiting for this,” said De Lima.

De Lima refused to disclose further details except to say that the formula departs from an earlier plan to set aside a certain amount from the General Appropriations Act (GAA).

The government has been preparing a program that would effectively continue the ICF by providing it with a strong legal support.

The ICF, which expired in March 2011, was granted to Hanjin, Texas Instruments Philippines and Phoenix Semiconductors as a quid pro quo and incentive for these big projects which hired a lot of workers.

One of the companies, Phoenix Semiconductors, is entitled up to 2020.

He said the plan is to allocate it in the GAA.

The three were given cheap power under the ICF support through executive orders signed by then President Arroyo

In coming up with the extension plan, the government previously wanted to tap other hydro power plants like Bakon and Casecnan to source fuel on subsidized rate following the privatization of Angat. These two operate more expensively than Angat, according to reports from the Power Sector Assets and Liabilities Management and the National Power Corp.

This means the government would have to shell out more to continue the ICF.

Based on computations, with Angat as the source of power, all-in cost would be below P5 per kilowatt-hour and above P5 for the two other hydro power plants.

Hanjin, Texas Instruments and Phoenix Semiconductors had been working out a plan with the government on how the ICF would  be extended after it expired.

Under the 10-year ICF program, Texas enjoyed the power rate subsidy for four years already and has six more years to go while Hanjin had availed itself of the ICF for three years and Phoenix enjoyed the discount for one year.

The three were paying a preferential P2.15 per kwh under the expired ICF.

source: Malaya