MANILA, Philippines — The economic cluster of the Cabinet will formally tackle in their meeting this week the proposed extension of the electricity rate discounts that shall be granted to locator-businesses in economic zones.

Energy Secretary Rene D. Almendras disclosed that the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BoI), being the lead agencies for the program, will do the presentation to the Cabinet.

It was confirmed by parties involved in the discussions that the earlier pronouncement of the Power Sector Assets and Liabilities Management Corporation (PSALM) on the rate discount program’s extension “is still scheduled for presentation to the Economic Cluster on January 11, 2012.”

A meeting was scheduled at the Department of Trade and Industry (DTI) last week to “thresh out the implementation details,” a source said.

The remaining concerns delve with those on projected kilowatt hour (kWh) volumes that must be covered as well as the duration of the program. That could mean then that from the initially agreed three months for the program to momentarily stay, the longer one-year extension is still not final.

“The result of that meeting will then be presented to the Cabinet’s economic cluster,” a source privy to the on-going discussions noted.

When the ecozone special rate program was first introduced, it translated to a rate cut of more than P1.00 per kilowatt hour (kWh) – that was then based on the agreement inked by state-run National Power Corporation with the Manila Electric Company. The ecozone rate pact was subsequently re-assigned to PSALM following NPC’s privatization.

Based on previous pronouncements made by PSALM, it has been adamant on stretching the program’s duration because this could further contribute to its financial hemorrhage.

The company’s calculation indicated that for a nine-month extension of the program, this will redound to P10 billion worth of losses.

But businesses, especially the locators in the ecozones, are not receptive of the idea of not having any “rate relief” at this point especially so since the much-anticipated kick-off of open access that should have given them the upper hand on their power supply sourcing strategies, has been suffering further delays.

The tight supply situation, especially in the Luzon grid, is not also offering a comforting scenario because this could mean further upticks in electricity rates.