Lopez-led EDC says tax reform to hurt renewables

ENERGY Development Corp. (EDC) has called on the government to rethink its plan to remove the incentives currently enjoyed by renewable energy developers, a move which it called misguided the wrong direction for the energy industry.

“I think it’s a misguided policy to remove the incentives from renewable energy just as we need to transition into clean energy,” EDC President and Chief Operating Officer Richard B. Tantoco told reporters during the National Sustainability Summit for Millennials and Gen Zs at the University of Asia and the Pacific over the weekend.

He said from an “energy and sustainability standpoint” the proposed policy could put the company and the entire industry at risk.

EDC produces 1,472 megawatts (MW) of power from hydro, solar and wind resources, apart from its 1,200 MW of geothermal capacity.

“We’re headed in the wrong direction,” he said, adding that he does not mind being quoted on behalf of the company, which was recovering from the devastation of Typhoon Urduja in December last year.

Mr. Tantoco was referring to the government’s so-called Trabaho bill, the second phase of its tax reform program that seeks to lower the corporate income tax.

The bill, the Department of Finance (DoF) said, also corrects the country’s “convoluted” incentives scheme for businesses. The proposed legislation has been approved by the House of Representatives on third and final reading.

The DoF said the “pro-investment” tax reform package would ensure that fiscal incentives remain but performancebased or must commit to meeting targets such as job creation, export sales, countryside growth and research and development.

“If you remove the fiscal incentives, the impact on renewable energy is like you’re taxing it 10 times of coal,” Mr. Tantoco said, adding that renewables are what the country needs to begin its transition from coal-fired power plants.

He described the current times as a period of uncertainty for energy companies.

“It’s a major uncertainty because people are looking at their numbers and then they don’t know whether they’re gonna have 10% income tax or 30[%]. They don’t know if they’re gonna be able to import without duties or with duties. [What] they’re gonna have in the meantime is insecurity,” he said.

“Definitely today with the specter of the bill hanging over the industry’s head, we will see investments slow down,” he added.

The DoF said incentives should also be time-bound, thus tax perks are not granted indefinitely. It said the perks should also be targeted so that only industries that provide multiplier benefits to the economy will be given incentives. It also wants incentives to be transparent to ensure recipients report the perks they get to the government and the public.

EDC Chief Executive Officer Federico R. Lopez said the company had voiced out its views on the removal of the incentives, and that the DoF had been listening.

Mr. Lopez, who is also CEO of First Philippine Holdings Corp., said locators in the holding firm’s industrial park are on a wait-and-see mode ahead of the final outcome of the proposed tax reform. —