Finance chief says Enrile power bills to cost gov’t P21 billion

THE GOVERNMENT stands to lose about P21 billion in foregone revenues should Senate President Juan Ponce Enrile’s twin-power bills, designed to cut electricity prices, become law, Finance Secretary Margarito B. Teves told reporters yesterday.

Mr. Enrile’s Senate Bill (SB) 3282 seeks to reduce electricity rates by cutting to a flat 3% government royalties from the exploration, development and production of the country’s indigenous sources of energy from the current 60% of net proceeds from natural gas development, 60% of net proceeds from geothermal development and 30% of net proceeds from indigenous coal.

SB 3147, meanwhile, seeks to impose a franchise tax of 3% on gross distribution income on power utility firms in lieu of all other taxes, duties and fees.

"In terms of royalties, P14 billion, for franchise tax, it’s P7 billion," Mr. Teves said when asked of estimated revenue losses from both measures.

The finance chief, however, said that the initial estimates will still have to be validated further.

Regarding the possible increased economic activity to be generated by the projected reduction of power rates, Mr. Teves said the department will also study it.

"We’ll take note of that and try to see the timing of this versus the benefits, as suggested," he said.

Mr. Enrile said in a forum with the foreign press last Tuesday evening that the potential benefits outweigh any cost to government.

"The impact of a significant reduction in electricity prices, in a country reputed to have one of the highest power rates in the region, will be greatly felt," Mr. Enrile had said. "The ultimate effect will far outweigh the reduction of the royalty of government." — Jose Bimbo F. Santos

Source: bworldonline.com