The Philippine Economic Zone Authority endorsed to the Energy Department three regions where economic zones can avail of lower power rates as incentive for hosting manufacturing and service operations.
The regions are Davao (Region 11), Caraga (Region 13) and the Autonomous Region of Muslim Mindanao (Region 15).
Peza director general Charito Plza said the Energy Department committed to reduce power rates in Mindanao economic zones to P2.50 per kilowatt-hour from the prevailing P6 kwh.
“The Energy Department is going to provide the lowest cost of power to ecozones of Mindanao and asked us to recommend the first three regions where economic zones have operations. So we came up with Regions 11, 12 and the ARMM. Caraga and ARMM are two of the poorest regions in the country. We also see this as a strategy to allow the influx of investors in Davao to also consider locating in Caraga and ARMM,” she said.
Peza noted that the offer of lower power rates by the Energy Department was not yet firm after the agency made the proposal only because of excess supply in certain regions.
However, Peza is optimistic the proposal will eventually become an established scheme not only with the first three economic zones in Mindanao but several others where operations are heavy and brisk.
Peza noted that lower power rates would help attract more projects from Middle East investors, especially those from Saudi Arabai and Qatar who had openly expressed their preference for Mindanao.
The power subsidy to be given to Mindanao ecozone investors is not dependent on the amount of investments of the projects.
“Regardless of the amount (of projects), the subsidy is open to all investors who may want to avail of the offer. The subsidy will be coursed through Peza. We haven’t formally discussed this proposal but from what I understand, the department will provide either power subsidy or very low cost and until when do we get to implement this incentive,” Plaza said.
The lower rates will become effective once the applicants formally sign a contract with the economic zone.
“Another way is we have a franchise authority wherein we encourage developers to provide their own power, water, telecommunication and they will be treated like other locators, eligible for same incentives. They should be able to provide lower cost of power since they are also enjoying incentives,” Plaza added.
Earlier, the national government approved the power subsidy requested by Texas Instruments, Hanjin Heavy Industries and Construction Philippines Inc. and Phoenix Semiconductor Philippines Corp. amounting to a combined P15 billion.
The subsidy covers a 10-year period.