Power Project Sites As Ecozones

The country’s economic managers are crafting a proposal to Congress that would re-classify the sites of power

projects and other vital infrastructure facilities as “domestic economic zones.”

This was disclosed to the media by Energy Undersecretary Josefina Patricia M. Asirit, noting that this will

help solve the tough issues confronting project proponents on securing permits from their prospective host

local government units.

“Based on the discussion of the economic managers, the DTI (Department of Trade and Industry) will do a study

on the establishment of domestic economic zones,” Asirit said.

The energy official specified that given the deadlocks on processes of securing permits and clearances for the

setting up of power projects, “there is recognition of the need to do this,” referring to the proposed bill.

She qualified that the propounded “domestic economic zones” will be differentiated from the existing “special

economic zones”. In the proposed legislative measure, she emphasized that the government will have to balance

the tax issues of the power project sponsors to that of the revenue-generation needs of the host communities.

“The tax incentives will have to be rationalized. It is being studied what would be the acceptable level of

assessment rates for real property tax (RPT) payments,” Asirit emphasized.

She added the proposed bill must also be harmonized with the provisions of the Local Government Code so it will

not jeopardize the devolution of function bequeathed to LGUs under that law.

Under existing policies, Asirit noted that the RPT assessment rates for real property tax payments for

independent power producers (IPPs) are not uniform so the LGUs hosting projects, including those in the special

zones, would typically grumble about the lean revenues they have been getting from projects.

Sections 216 and 218 of the LGC prescribed that the assessment rate level applied to certain special classes of

property, including all lands, buildings and other improvements owned and used by government-owned and

controlled corporations (GOCCs) rendering special public services in the generation and transmission of

electric power shall only be 10-percent of the fair market value of the machinery or equipment.

But for IPP projects which were not in contract with GOCCs like the National Power Corporation or the National

Irrigation Administration (NIA), the assessment rates have been set higher at 40 to 80-percent of their

machinery/equipment’s fair market value.

The energy official added that the IPPs also lodged this concern with the Joint Congressional Power Commission

(JCPC), with expectations that their issues with LGUs will eventually be provided clearer policy resolution.

Malacanang first considered issuing an Executive Order on the re-classification of infrastructure project

sites, but after assessing an apparent conflict with other laws, it opted to toss the policy-making task on

this sphere to the legislative branch.

https://www.mb.com.ph/articles/378235/power-project-sites-as-ecozones