Ecozones see strength in unity

Categories: Business Updates

Date Posted: 13 Aug 2014

Locators in economic zones are grouping their energy requirements and get as much as P2 in discounts per kilowatt-hour.
The Philippine Economic Zone Authority (PEZA) is proposing lower power rates to locators of ecozones, an initiative to help investors cope with high cost of production in the Philippines.
“High energy cost is the biggest stumbling block to foreign direct investments. With the looming power crisis as well as the threat of power rate increase, it is difficult to position the Philippines as an investment destination in Asia vis-a-vis its neighbors. High cost of power affect ecozone locators’ bottomline and viability,” Lilia de Lima, director  general of PEZA, said yesterday at the CEO Forum on Energy held at New World Hotel.
De Lima later said    PEZA is in discussion with the Energy Regulatory Commission for the possible inclusion of locators in privately-owned ecozones to an existing arrangement it has with public ecozones.
The arrangement allows locators in Baguio, Cavite and Mactan ecozones to aggregate their power requirements and negotiate with power generators for reduced rates.
De Lima said the present arrangement enables locators to save as much as P2 per kilowatt-hour (kWh), as locators in Cavite aggregate their demand of about 85 megawatt (MW) and Baguio at 40 MW.
The baseload rate is P4.15 per kWh while the shouldering peak rate is P4.75 per kWh. All-in rate comes to P7 compared to the regular rate P9 per kWh or a savings of P2 per kWh.
De Lima said there is no loss to power generators because they are assured of customers.
The proposal was approved in principle last year by the Department of Energy.
While big companies which require 1 MW of energy can directly transact with power generators because of their huge requirement, the proposal will enable smaller suppliers to be part of the aggregated rate.
Another energy-efficiency initiative of PEZA is to expand a 2012 memorandum of agreement with the European Chamber of Commerce of the Philippines for the so-called energy audit of their operations to include business process outsourcing (BPOs) which are located in information technology zones.
De Lima said the current MOA currently covers manufacturing firms in almost all ecozones. These enterprises are encouraged to use energy-efficient systems in their operations – from lighting to heating or cooling systems – and are regularly audited as to the actual savings they generate.
BPOs, though not as power-intensive as manufacturers, are  seen to benefit from the MOA since they operate 24/7 and employ half a million people.
De Lima said the estimated reduction in energy consumption by some manufacturers is about 20 to 30 percent.
At this week’s board meeting, PEZA will propose the grant of incentives – a preferential rate of 5 percent on gross income tax – to manufacturers of LED (light emitting diodes) which sell to ecozone locators provided they are also located in ecozones.
The sale to ecozone locators will be treated as constructive exports and not domestic sale.
De Lima said the last initiative is to encourage locators to set up LEED (Leadership in Energy and Environmental Design)-certified buildings.
For LEED-certified facilities, De Lima said PEZA plans to allow tax and duty-free importation of their construction materials.


Written by: Irma Isip


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