PE2 asks Senate panel to preserve EE fiscal incentives under CITIRA bill

  • Senator Pia S. Cayetano chairs a recent meeting of the Senate Ways & Means Committee. (Photo: piacayetano.ph)
    Senator Pia S. Cayetano chairs a recent meeting of the Senate Ways & Means Committee. (Photo: piacayetano.ph)

SENATE OF THE PHILIPPINES, Pasay City, 19 November 2019 – The Philippine Energy Efficiency Alliance (PE2) formally submitted earlier today a position paper to Senator Pia S. Cayetano, in her capacity as Chairperson of the Committee on Ways and Means of the Senate of the Philippines. The PE2 letter recommends that the Senate panel preserve the legislative intent of the fiscal incentives granted under Republic Act 11285, otherwise known as the Energy Efficiency and Conservation (EE&C) Act, as it reviews House Bill 4157, also known as the Corporate Income Tax and Incentives Rationalization (CITIRA) bill.

Officially transmitted by PE2 president Alexander Ablaza based on the draft and policy research by the PE2 legal team of Villaraza & Angangco Law, the PE2 position paper says, “It bears noting, however, that to this date, no entity has yet been able to avail of the incentives provided under the EE&C Law as its Implementing Rules and Regulations have yet to be finalized. Despite this, the availability of incentives and the proposed PhP37.8 Trillion in energy savings arising from investments supported by such incentives appears to be threatened by the proposed rationalization of incentives under the House CITIRA Bill.”

In previous meetings with and PE2 positions for various Government bodies, both executive and legislative, Ablaza proposed that EE&C fiscal incentives be excluded from the scope of incentive rationalization since not a single of peso in fiscal incentives has been tapped to catalyze a huge portion of the P 12 trillion energy efficiency capital gap of the local economy through 2040.

PE2 now tells the Senate committee that the House CITIRA Bill does not show any legislative intent to reduce the fiscal incentives available to Energy Efficiency projects under the EE&C Law, showing an intent to maintain the incentives available in the same way as the incentives are preserved for the Renewable Energy Act.

The new PE2 forwards two specific recommendations in order to affirm the legislative intent of ensuring the availability of incentives under Section 25 of the EE&C Law. PE2 believes that these recommendations, if incorporated in the CITIRA Law, would allow the Philippine economy to reap the desired PhP37.8 Trillion in energy savings arising from the effective implementation of the EE&C Law.

The first recommendation is the inclusion of an explicit sunset provision that extends the availability of the fiscal incentives under RA 11285 through a 15-year period commencing on 12 April 2019, when the EE&C Act was approved. The PE2 letter said, “PE2 would like to emphasize that unlike other industries whose incentives have long been available and may be due for incentive rationalization, the Philippine Energy Efficiency and Conservation industry is so young that the preservation of the incentives provided under the EE&C Law is essential to achieve the benefits intended when the EE&C Law was passed.”

The second recommendation was a minor revision to the CITIRA Bill definition of the Registered Enterprise to ensure that the legislative intent of the exemption of Article 32(1) of Executive Order 226 under Section 25 of the EE&C Law is preserved by clearly including entities that are up to 100% foreign-owned.

The legal team of the PE2 Policy Committee is composed of Attorneys Maria Concepcion P. Simundac, Richard Henrick I. Beltran and Efren R. Resurreccion II, all from Villaraza & Angangco Law.

About PE2

Philippine Energy Efficiency Alliance Inc. (PE2), is a non-stock, non-profit organization of energy efficiency market stakeholders.

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Republic Act 11285

R.A. 11285 - An Act Institutionalizing Energy Efficiency and Conservation, Enhancing the Efficient Use of Energy, and Granting Incentives to Energy Efficiency and Conservation Projects

RA 11285 - Text

RA 11285 - Signed

IRR - Signed

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