Taxpayers subsidizing power bills

FILIPINO taxpayers have been subsidizing the electricity bills of four multinational electronics companies to the tune of P7.96 billion since 2014, leftist lawmakers said  Thursday.

During budget deliberations at the House of Representatives, Bayan Muna Reps. Isagani Carlos Zarate and Neri Colmenares lambasted the subsidy arrangements or sovereign guarantees granted to Texas Instruments amounting to P2.1 billion and Hanjin Heavy Industries and Construction Philippines Inc., Samsung, and Phoenix Semiconductor Philippines Corp. for a total of P5.86 billion.


The four multinational companies operate in the Baguio City Economic Zone and Clark Special Economic Zone.

The P2.1-billion subsidy for Texas Instruments is incorporated in the proposed 2016 budget of the Philippine Economic Zone Authority, an agency attached with the Department of Trade and Industry.

The P5.86 billion was allocated under President Benigno Aquino III’s lump sum appropriations for Special Purpose Funds and unprogrammed funds, Colmenares said.

“This is the height of callousness and hypocrisy; the Aquino government is bleeding the Filipino consumers dry from too many taxes, yet it is liberally giving away money to this big multinational corporation,” Zarate lamented.

Peza deputy director general for policy and planning Tereso Panga confirmed the Texas Instruments subsidy.

According to Panga, the subsidy to TI was sourced from the national budget since 2014 as mandated by EO 666, which directed government corporations such as the National Power Corp. and National Transmission Commission to provide TI discounted generation and transmission rates for 10 years.

The subsidy will last up to June 2017, as an incentive for its $1-billion investment in the economic zones, Panga said.

TI was the country’s No. 1 exporter, he added.

In 2007, Zarate said, Peza signed a contract with the state-owned NPC for the supply and delivery of electricity to TI at a discounted rate of $ 0.0491 (P2.30) per kilowatt hour for the first six years and $0.06 for the next 10 years.

Zarate said Texas Instruments pays only about a third of the amount regularly paid by ordinary consumers in Metro Manila.

“Computing from the discounted rates given by the government to TI, it only pays about P2 per kwh for generation and transmission of electricity. In today’s rates, Meralco consumers pay even more, at the rate of P5.80 a kwh in generation and transmission charges,” Zarate said.

“Why is the government giving a P2.1-billion subsidy to the rich, while refusing to remove the VAT on power so that electricity costs can come down?” Zarate said.

“Paying for the electricity of rich, foreign companies is an aberration. The Filipino people are burdened to pay outrageous amounts for electricity, while the government subsidizes these foreign companies.”

“The P2,105,959,000 subsidy to Peza under the 2016 NEP [National Expenditures Program] shall be utilized to pay the NPC, which continues to supply the electricity of TI at a discounted rate,” said Panga, in a letter to Zarate. A copy of the letter was furnished The Standard.

“Specifically, it shall cover the cost of electricity that NPC will supply TI in BCEZ for 2016 and the outstanding arrears due to NPC because of the depletion of the Industry Competitive Fund,” Panga added.

Panga said the ICF was created under EO 796, series of 2009, and is supposed to reimburse various government agencies for the financial impact that they incurred in the grant of special power rates as stated in EO 666.

“The government decided not to replenish the fund after the depletion of its initial funding of P1.6 billion but instead directed the concerned Investment Promotion Agencies to honor the obligation and implement mitigating measures at their level and seek funding support in the GAA,” he added.

“As the embedded distribution utility in BCEZ, Peza also waived the collection of distribution charges as authorized in the said EO.”

Citing a document from Peza, Zarate said the Texas Instruments since 2007 has only paid a total of P2.55 billion in taxes.

“That is about the same amount as the electricity subsidy that the government is giving it in one year alone,” he said.

“The government is gravely indifferent on the wide clamor for tax reforms and the lowering of income tax, yet it continues to enter into such onerous contracts with private entities. This government is certainly not working towards the interests and welfare of the people, but is making it a paradise for foreign investors. The Filipino people should not suffer the additional burden of paying their electric bills,” Zarate added.

Zarate said the subsidy to Peza was also allotted in the 2015 General Appropriations Act as part of the Special Provisions providing for the allotment in the Support to Government and Owned Corporations of the Unprogrammed Fund.

The Peza, Subic Bay Metropolitan Authority and the Bases Conversion Development Authority were granted P5.6 billion in payment of subsidies and incentives.

During the budget deliberations Colmenares also lambasted similar subsidy arrangements or “sovereign guarantees” granted to Hanjin Heavy Industries and Construction Philippines, Inc., Samsung, and Phoenix Semiconductor Philippines Corp. which operate in the Baguio and Clark economic zones.

“At total of P5.86 billion is paid to subsidize the electricity consumption of these corporations,” Colmenares said.

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