PE2 supports BOI review of EE guidelines for expanded scope

  • PE2 officers Alexander Ablaza and Theresa Acedillo-Lapuz, BOI-RBIS Director Nestor Arcansalin and BOI energy specialists jointly review the energy efficiency guidelines during PE2-BOI meetings on 7 August 2018 (left photo) and 3 August 2018 (PE2 photos by Luigi Eusebio).
    (From left) PE2 officers Theresa Acedillo-Lapuz and Alexander Ablaza, and BOI-RBIS Director Nestor Arcansalin jointly review the energy efficiency guidelines during the PE2-BOI meeting on 7 August 2018 (PE2 photo by Luigi Eusebio).
  • PE2 supports BOI review of EE guidelines for expanded scope (PE2 photos by Luigi Eusebio)
    PE2 president Alexander Ablaza (standing), BOI-RBIS Director Nestor Arcansalin and RBIS energy specialists jointly review the energy efficiency guidelines during the PE2-BOI meeting on 3 August 2018 (PE2 photo by Luigi Eusebio).

MAKATI CITY, 7 August 2018 – The Philippine Energy Efficiency Alliance (PE2) is proactively supporting the Board of Investments (BOI) in the review of the Energy Efficiency (EE) Guidelines under the approved 2017 Investment Priorities Plan (IPP) that were publicly released by BOI on 8 March 2018. PE2 met BOI Director Nestor Arcansalin of the Resource-based Industries Service (RBIS), supervising investment specialist Dennis Jesus O. Panga and senior investment specialist Mario Pocholo M. Orense, both of the RBIS Energy Division, through separate meetings in the BOI offices on 3 August and 7 August 2018. PE2 was represented by its president Alexander Ablaza, treasurer Theresa Acedillo-Lapuz and member services and communications manager Luigi Andrei G. Eusebio.

During both meetings, Ablaza emphasized that the guidelines circulated on 8 March 2018 were extremely limiting, prone to abuse and largely explain why, in the last two quarters, no application for the registration of an EE project has been filed with the BOI. He nonetheless added, "The Alliance is pleased that the original guidelines called for a quarterly review, and that the BOI remains receptive to PE2 inputs as they perform their first review of the EE Guidelines."

PE2 summarized the key recommendations forwarded to BOI in its position papers dated (in reverse chronological order) 2 Feb 2018, 18 Dec 2017, 17 Nov 2017, 3 July 2017, 21 April 2017 and 15 Dec 2016. PE2 shared the view that reverting to and reviewing BOI’s EE Guidelines as of 8 Nov 2017, and then revising the guidelines to ensure that the:

  • Universal list of EE measures is made eligible
  • EE project would be treated as the sole IPP activity (and not the facility owner or host entity)
  • Minimal energy savings thresholds of 15% (project boundary) or 5% (facility-wide) are set
  • Income tax holiday (ITH) is fixed at 6-years (and not 4-years for pure modernization projects)
  • Commercial, industrial (and even public) sector host entities are covered, whether IPP-eligible or not
  • ITH incentives are based on total project cost (not just 30% of capital equipment)
  • ITH incentives for ESCO or third-party investments are treated the same way as other energy projects (revenue-expenses cash flows)
  • Third party investors providing upfront capital such as ESCOs and equity provider are eligible Proponents
  • Proponents will be allowed to apply for multiple EE projects with separate project accounting books
  • Energy audits will be required, but type of energy audit will depend on size and complexity of EE project:
    • Level 2 energy audit (for simple projects like EE lighting retrofits)
    • Detailed energy audit (for EE projects with projects costs up to PHP 250 mln)
    • Investment-grade audit (for EE projects with project costs above PHP 250 mln)
  • Application Form includes new portions recommended in PE2 mock applications
  • Duty-free importation of capital equipment and zero-rated VAT (if permissible under applicable policy framework) are included

The BOI RBIS team was optimistic that the scope of the guidelines could be expanded, but the authority of the BOI board of governors under E.O. 226 will need to be reviewed and checked if ITH bonus years beyond the normal ITH cap of 4 years could be granted. PE2 also asked BOI not to apply a second IPP filter. PE2 has repeatedly manifested its position that EE projects is by itself the IPP-eligible economic activity, and that the facility owner or host entity of the EE project should no longer be screened for IPP eligibility.

PE2 understands that the BOI has no authority to relax Article 32 of E.O. 226 which rigidly requires the minimum 60% Filipino ownership of all projects or economic activities applying for BOI registration.

As the agreed next step, PE2 will be writing BOI Managing Head, Undersecretary Ceferino S. Rodolfo, to request a meeting with BOI’s Technical Working Group for Energy Efficiency, which is composed of BOI Governors Henry T. Co and Napoleon E. Concepcion, Board Secretary, Atty. Marjorie O. Ramos-Samaniego, and Director Arcansalin, to pave the way for the BOI board review and approval of the expanded EE Guidelines.

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