31 January 2013

Budget allocation eyed for locators’ subsidy

The government will seek budget allocation to continue the subsidy enjoyed by three big projects in Clark and Subic.

Outgoing Trade Undersecretary Cristino Panlilio said the government is preparing a program that would effectively continue the industry competitiveness fund (ICF), providing it with a strong legal support like including it in the succeeding general appropriations act (GAA) of the country.

The ICF, which expired in March 2011, was granted to Hanjin Heavy Industries Corp. Philippines in Subic Freeport, Texas Instruments Philippines in Clark Freeport Zone and Phoenix Semiconductors Philippines Corp.

Panlilio said the program is very specific to these projects and is not open-ended.

The subsidy was a quid pro quo and as an 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.

Panlilio added that government is trying to negotiate a rate acceptable to both parties. The suggested rate has to be approved by the Department of Budget and Management, after which it would have to be approved by President Aquino.

“The reason why we are (extending) that is because we want to ramp up manufacturing,” Panlilio said.

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

The government is now looking for other hydropower plants like Bakun and Casecnan to source fuel from on a subsidized rate following the privatization of Angat. These two operate more expensively than Angat per reports from the Power Sector Assets and Liabilities Management and the National Power Corp.

But the government still finds these two power plants as liable for the ICF but the power that they would produce would be more expensive than if the power is sourced from Angat.

This means 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 hydropower plants.