PE2 and DOE officials discuss EE incentives

PE2 and DOE officials discuss EE incentives

TAGUIG CITY, 21 June 2018 — The Philippine Energy Efficiency Alliance (PE2) met with senior officials of the Department of Energy (DOE) to discuss means to align respective positions and legislative approaches related to the inclusion of fiscal incentives in the pending energy efficiency and conservation (EE&C) bill.

DOE was represented by the entire team of management officials with direct oversight over EE&C issues – Senior Undersecretary Jesus Cristino P. Posadas, Assistant Secretary Robert B. Uy, Energy Utilization and Management Bureau (EUMB) Director Jesus T. Tamang, Energy Efficiency & Conservation Division (EECD) Chief Artemio P. Habitan and EECD senior specialist Antonio M. Nabong. PE2 was represented by its president Alexander Ablaza. The meeting was held as a result of PE2’s written request to DOE Secretary Alfonso G. Cusi on 29 May 2018, seeking an aligned position on incentives under the EE&C bill.

Ablaza explained the urgency of enabling third party capital flows through fiscal incentives for EE&C project investments and how this could mobilize as much as two-thirds of the P 12 trillion EE&C capital requirement through 2040. PE2 emphasized that the appropriate strategy should not only push for the retention of the bill provisions on fiscal incentives, but moreso 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.

PE2 shared its views with the DOE officials 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 maintaining the current incentive language in Senate Bill no. 1531, which is still fully anchored on E.O. 226, will likely result in the undesired inclusion of EE&C in the rationalization scope of the TRAIN-2 bill.

Ablaza updated DOE with the status of PE2 coordination with the management of Department of Finance (DOF), especially with its Strategy, Economics and Results Group led by Undersecretary Karl Kendrick T. Chua. DOE’s Usec. Posadas also shared with the Alliance the DOF comments on the fiscal incentive provisions of the EE&C bill for the House Committee on Ways and Means.

DOE was pleased with PE2’s position that EE&C is actually a tax revenue generator instead of causing leakage in the country’s internal revenue system, supported by PE2’s projected 231% reflow of incentives back to the national Treasury as additional tax revenues. Usec. Posadas said that EE&C incentives should be justified by the significant economic returns and impacts, which PE2 estimates to be valued in the double-digit peso range for every peso of “foregone revenue” invested by Government through the granting of fiscal incentives.

PE2 encouraged DOE to prepare an aligned position for the House Committee on Ways and Means and have it submitted before the Third Regular Session of the 17th Congress commences in mid-July 2018.

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