DOE and DOF continue to work toward common stand on EE&C incentives

Tax Calculator - DOE and DOF continue to work toward common stand on EEC incentives

MAKATI CITY, 21 June 2018 — The Philippine Energy Efficiency Alliance (PE2) continues its close dialogues with senior officials of the Department of Energy (DOE) and the Department of Finance (DOF) toward a possible common position and legislative approach related to the inclusion of fiscal incentives in the pending energy efficiency and conservation (EE&C) bill.

After reaching out to DOE Secretary Alfonso G. Cusi on 29 May 2018, PE2 president Alexander Ablaza is expected to meet DOE Senior Undersecretary Jesus Cristino P. Posadas and Energy Utilization and Management Bureau (EUMB) Director Jesus T. Tamang later today, 21 June 2018, to explore the possibilities of aligning each organization’s strategy in support of the legislative process for the pending EE&C bill and to secure a DOE position for the Committee on Ways and Means of the House of Representatives on the much-needed fiscal incentives for EE&C project investments, especially those that will have to funded through third-party capital flows. PE2 is to propose a strategy that would not only push for the retention of the bill provisions on fiscal incentives, but just as well link this recommendation with the ongoing deliberations on the Package 2 legislation proposed under the Government’s Tax Reform, Acceleration and Inclusion program, otherwise known as the TRAIN-2 bill.

Ablaza said, “PE2 believes that TRAIN-2 will effectively supersede certain incentive provisions of previous laws, such as E.O. 226 or the Omnibus Investment Code of 1987, and that leaving the current incentive language in the EE&C bill fully anchored on E.O. 226 may carelessly include EE&C in the rationalization scope of the TRAIN-2 bill.”

On a parallel track, the DOF Office of the Secretary has officially acknowledged receipt of the 9 May 2018 position letter of PE2 to DOF Secretary Carlos G. Dominguez III and Rep. Dakila Carlo E. Cua, and has referred said position statement to DOF Undersecretary Karl T. Chua, who leads DOF’s Strategy, Economics and Results Group (SERG). PE2 has likewise reached out to DOF-SERG Assistant Secretary Teresa S. Habitan and recently appointed DOF-SERG Assistant Secretary Antonio Joselito G. Lambino II. In its conversations with DOF, PE2 makes it clear that EE&C is a new project type, economic activity or asset class that has not yet benefited from Government fiscal incentives and should therefore not be subject to Government’s incentive rationalization efforts.

Ablaza explains, “Although PE2 is now in discussions with the 17th Congress and the Board of Investments (BOI) to expand the incentive package in addition to the BOI guidelines published on 8 March 2018, it can be clearly said that EE&C investors or developers have not yet meaningfully tapped incentives to mobilize third party capital investments in EE&C projects.”

Responding to Usec. Chua's requests, PE2's Ablaza has offered to present the financial model which proves that EE&C is actually tax revenue generator, instead of being a tax leak with the economy's internal revenue system.

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  • Philippine Energy Efficiency Alliance, Inc. (PE2)
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