2012 Investment Priority Plan of the Philippines

The Philippine Chamber of Commerce and Industry (PCCI) has called on the Board of Investments (BOI) to retain the energy sector, or at least power supply projects, especially those located in missionary areas, in the 2012 Investment Priority Plan (IPP).

The business group, with the support of major industry players and stakeholders, made this recommendation as the review of this year’s IPP is underway.

PCCI said the incentives provided to projects listed in the IPP are helpful in attracting investors and in reducing capital costs, which ultimately redound to the benefit of consumers.

In the case of power generation, PCCI president Miguel Varela stressed that capital costs account for about 70 percent of the total fixed costs of a power plant.

Varela said the continuation of incentives could address three things: reduce the final power rate that will be charged to electricity end-users; encourage the building of urgently needed new generation capacity; and facilitate the attraction to private investors considering that importation of capital equipment is one of the major cost burdens during the start-up operations.

PCCI noted that with the economy poised to grow by five to seven percent this year and beyond, power supply must be able to keep up with demand.

The Power Development Plan (PDP) has noted that with peak demand assumed to grow annually at 4.5 percent for the planning period 2011-2030, a total of 10,450 MW is needed for the Luzon grid; 2,000 MW for the Visayas grid; and 1,950 MW for the Mindanao grid.

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