HOUSE Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) pushed for key provisions to accelerate investments that would shift the country’s power supply away from coal generation in the Philippine Downstream Natural Gas Industry Development Act (House Bill No. 8456) which the House of Representatives is set to approve on 3rd reading during the week of the State of the Nation Address.
Salceda, a principal author of the measure, wrote the tax provisions and key economic portions of the bill, including tax incentives that would encourage immediate infrastructure investments in the liquefied natural gas (LNG) sector.
“This will expedite the shift away from coal. Right now, we rely on coal for 65% of our electricity needs. It’s cheap and baseloadable. Renewable energy is slowly getting there. But we need emissions reduction now. LNG is that transitional fuel – that reduces emissions while providing baseload power,” Salceda said.
Salceda adds that “because we have proven reserves of Natural Gas in the West Philippine Sea, LNG also has potential to bring us to more energy independence.”
Salceda pushed for the following incentives which were adopted in the final version which the House approved:
First, the sale of LNG and the local purchases of the sector are VAT zero-rated, akin to the VAT privileges of the local renewable energy sector. Salceda said that, “until 2038, when coal shall have been displaced significantly, LNG is a carbon avoidance scheme. It produces less than half the emissions of coal power.”
Expenses for converting a power plant from coal to LNG are also chargeable as a capital expenditure, and are therefore subject to a 150% deduction, pursuant to the CREATE Law.
“The conversion incentive will be crucial for plants like Ilijan, which aim to convert from coal to LNG. That has the highest potential to make more coal plants shift to more emissions-friendly LNG.”
Salceda also pushed for a longer income tax holiday for LNG projects by pushing for their inclusion under Tier III of the CREATE Law.
