Tulfo: Review of NGCP's franchise tax is a must
Published Jul 12, 2023 08:26 am
Senator Raffy Tulfo on Wednesday, July 12, called for a review of the franchise tax of the National Grid Corporation of the Philippines (NGCP) amid delays in the completion of its 37 transmission projects.
Sen. Raffy Tulfo presides over the Senate Committee on Energy hearing on the Department of Energy’s (DOE) long-term plans to solve power supply shortages in the country. (Senate PRIB Photo)
Presiding over his Senate energy committee hearing on the Department of Energy’s (DOE’s) long-term plans to solve power supply shortages in the country, Tulfo pointed out that the NGCP projects had been delayed by 820 days or 2 years and 3 months. Adding insult to the injury, Tulfo said the NGCP has been passing its franchise tax to the consumers since 2011. “Perhaps it’s time for ERC (Energy Regulatory Commission) to revisit its Resolution No. 7, series of 2011. And since we’re at it, maybe it’s about time to revisit the franchise tax of NGCP and impose a regular income tax on them instead,” Tulfo said. But during the hearing, NGCP officials clarified that they merely stepped into the shoes of the National Transmission Corp. or TransCo. “The regulatory framework, the rate setting mechanism, the planning, implementation of projects, even the inclusion of income taxes or franchise tax in recoverable expenses—all these existed prior to our winning the the concession in an open, public, fair bidding process initiated by government,” Cynthia Alabanza, NGCP’s spokesperson said during the hearing. “We always abide by these rules, and strive to conduct our business with honesty, fairness, transparency, and with a view to public service,” Alabanza added. “We clarify that TransCo, when it ran the business, was allowed to recover its income tax. We merely stepped into its shoes,” she reiterated. Also during the hearing, Sen. Sherwin Gatchalian said the ERC’s show cause order against the NGCP for the substantial delay in the completion of 37 transmission projects is a welcome development, putting the regulatory agency on the right track to cultivate discipline among industry players. “As I have consistently emphasized in the past, the ERC must consistently demand accountability and enforce appropriate fines and penalties against erring industry players whenever applicable. The delay in the completion of these transmission projects has affected energy supply to consumers,” Gatchalian said. “I am confident that the show cause order would also help lead the ERC in identifying solutions that would deter delays in the completion of energy-related projects as we aim towards achieving sufficiency and stability of energy supply in the country,” he added. In addressing this particular issue, Alabanza pointed out that since 2009, the NGCP has completed a total of 56 projects and has invested P300-billion in the transmission system, far outspending government. According to Alabanza, a total of 3,729 circuit-kilomters of transmission lines, 28 new substations, and an additional 31,190 MVA (MegaVolt-ampere) of transformer capacity has been installed in the past 14 years. “But despite NGCP’s best efforts, delays in the completion of certain projects could not be avoided. The world is only beginning to recover from the disruption that 2 years of COVID-19 restrictions caused to the global supply chain. Delays in projects across all industries are still being felt,” she said. Meanwhile, Sen. Grace Poe lamented the reported subsidization of electric cooperatives by local government units (LGUs). “It's unacceptable that the LGUs are the ones subsidizing (the cooperatives) so they can fulfill their electrification,” said Poe, chairperson of the Committee on Public Services, in Filipino.
Sen. Raffy Tulfo presides over the Senate Committee on Energy hearing on the Department of Energy’s (DOE) long-term plans to solve power supply shortages in the country. (Senate PRIB Photo)
Presiding over his Senate energy committee hearing on the Department of Energy’s (DOE’s) long-term plans to solve power supply shortages in the country, Tulfo pointed out that the NGCP projects had been delayed by 820 days or 2 years and 3 months. Adding insult to the injury, Tulfo said the NGCP has been passing its franchise tax to the consumers since 2011. “Perhaps it’s time for ERC (Energy Regulatory Commission) to revisit its Resolution No. 7, series of 2011. And since we’re at it, maybe it’s about time to revisit the franchise tax of NGCP and impose a regular income tax on them instead,” Tulfo said. But during the hearing, NGCP officials clarified that they merely stepped into the shoes of the National Transmission Corp. or TransCo. “The regulatory framework, the rate setting mechanism, the planning, implementation of projects, even the inclusion of income taxes or franchise tax in recoverable expenses—all these existed prior to our winning the the concession in an open, public, fair bidding process initiated by government,” Cynthia Alabanza, NGCP’s spokesperson said during the hearing. “We always abide by these rules, and strive to conduct our business with honesty, fairness, transparency, and with a view to public service,” Alabanza added. “We clarify that TransCo, when it ran the business, was allowed to recover its income tax. We merely stepped into its shoes,” she reiterated. Also during the hearing, Sen. Sherwin Gatchalian said the ERC’s show cause order against the NGCP for the substantial delay in the completion of 37 transmission projects is a welcome development, putting the regulatory agency on the right track to cultivate discipline among industry players. “As I have consistently emphasized in the past, the ERC must consistently demand accountability and enforce appropriate fines and penalties against erring industry players whenever applicable. The delay in the completion of these transmission projects has affected energy supply to consumers,” Gatchalian said. “I am confident that the show cause order would also help lead the ERC in identifying solutions that would deter delays in the completion of energy-related projects as we aim towards achieving sufficiency and stability of energy supply in the country,” he added. In addressing this particular issue, Alabanza pointed out that since 2009, the NGCP has completed a total of 56 projects and has invested P300-billion in the transmission system, far outspending government. According to Alabanza, a total of 3,729 circuit-kilomters of transmission lines, 28 new substations, and an additional 31,190 MVA (MegaVolt-ampere) of transformer capacity has been installed in the past 14 years. “But despite NGCP’s best efforts, delays in the completion of certain projects could not be avoided. The world is only beginning to recover from the disruption that 2 years of COVID-19 restrictions caused to the global supply chain. Delays in projects across all industries are still being felt,” she said. Meanwhile, Sen. Grace Poe lamented the reported subsidization of electric cooperatives by local government units (LGUs). “It's unacceptable that the LGUs are the ones subsidizing (the cooperatives) so they can fulfill their electrification,” said Poe, chairperson of the Committee on Public Services, in Filipino.