THE Energy Regulatory Commission (ERC) said it would review the commission’s order that allowed National Grid Corp. of the Philippines (NGCP) to pass on to consumers its 3% franchise tax.
ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said during a Senate energy committee hearing on Wednesday that the regulator “has started deliberations on this franchise tax issue because there is an ERC resolution that allows the passing through of this franchise tax.”
Senator Sherwin T. Gatchalian, vice-chairman of the Senate’s energy panel, previously urged the ERC to stop allowing the system operator from passing to consumers the 3% franchise tax it is supposed to pay to the government.
Under ERC Resolution No. 7 series of 2011, the commission has allowed NGCP to pass on to consumers a 3% franchise tax on gross receipts derived from its operations.
Cynthia P. Alabanza, spokesperson of NGCP, said the resolution does not give a “special consideration” to the system operator as the 3% franchise tax is based on gross receipts, unlike a regular income tax, which will be derived from net income.
Ms. Alabanza further noted that even the resolution is not unique to NGCP as state-led National Transmission Corp. (TransCo) was also given the same ability to pass on the tax.
The consortium led by Henry Sy, Jr. and Robert Coyiuto, Jr. won in December 2007 the 25-year concession to run the country’s power transmission network. State Grid Corp. of China holds a 40% stake in NGCP.
NGCP took over the transmission system from the government in 2009. The concession was previously held by state-owned TransCo.
Separately, NGCP clarified in a statement the matter of “overly favorable franchise and concession,” by saying that it had to turn around an “ailing, aging, and underdeveloped transmission sector,” while growing its business.
“Simply put, we have offered better services at a lower cost, without burdening government with the obligation to source investments into such a critical sector of the energy industry,” it added. — Ashley Erika O. Jose
