4 | february 2011

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The Business Paper of the New Economic CorridorSubicCentral

The Subic Bay Metropol-itan Authority (SBMA) has assured investors here that electric power supply in this free port

will be sufficient this year, even as the rest of the country may possibly face outages in summer when power demand will be at its peak. SBMA Administrator and CeO Ar-mand Arreza gave the assurance, citing that Subic’s power generation capacity has been boosted by the re-commissioning in late December of the 116-megawatt diesel power plant here. “There is a lot of fear and appre-hensions that within two years, the country as a whole would face energy shortage starting 2011,” Arreza said. “But as always, the SBMA has taken the necessary steps ahead of whatever problem that may disrupt the robust economy in the Subic Bay Freeport.” “Now, with the upgraded diesel power plant, the growth of busi-nesses here will surely remain un-hampered,” Arreza added. According to the SBMA chief, the five-year lease contract for the 10-hectare property where the Subic

diesel power plant is located, was auctioned and later awarded to One Subic Power Generation Corp. (OS-PGC), as the contract among the SBMA, National Power Corp. (Na-pocor), and former plant operator enron Power Corp. expired in 2009. OSPGC then entered into a Power Administration and Management Agreement with Trans-Asia Oil and energy Development Corp. (Trans-Asia), which will be responsible for the administration and manage-ment of the entire generation output of the leased diesel power plant. The Subic power plant was built in 1994 by the Napocor through a build-operate-transfer (BOT) contract with enron. OSPGC and its partners held the ceremonial start-up of the power plant in December, with Arreza as guest of honor. The event was also graced by OSP-GC chief Dennis Uy, who is also presi-dent of Phoenix Petroleum Corp. of the Udenna group; OSPGC chief operating officer Jose Manuel Quimson; Trans-Asia vice president Ritz Santos; and National Grid Corp. of the Philippines chief engineer Wilson Martin.

During the start-up ceremonies, Arreza also expressed satisfaction over the partnership among the SBMA, OSPGC and Trans-Asia, saying that it would ensure that the facility “is run smoothly, profitably, but at the same time responsibly.” OSGPC’s Uy meanwhile said the ceremonial start-up marks another milestone for the Udenna Group of Companies. “We thank the SBMA for trusting us and awarding us the rights to operate the power plant,” Uy added. Meanwhile, Arreza said during the SOFA that the SBMA is already working with Subic enerzone to bid out the supply agreement which is up for renewal this year. We are and hopefully we should be able to do with very minimal increases in the power tariffs. Arreza said that the SBMA is seek-ing to complete the 600 megawatt coal plant in Redondo by late 2013. This will set SBMA to be self-suffi-cient and will eliminate transmis-sion charges over the long turn. Finally, the SBMA wanted to tap and develop renewable sources of power which will be placed along the ridge of the Redondo mountains for wind possibly 50 to 100 megawatts. “If the feasibility study goes well,

it should be up and running by2014 or 2015. And solar,at Tipo, with a capacity of almost 200 megawatts,” Arreza said. After conducting ocular surveys and initial data gathering in Subic, Sunnew subsidiary, Subic Wind Power Corporation, has also decided to build a solar energy project that would yield from 100 to 200 mega-watts of energy. These renewable energy projects will not only bring the Subic Freeport at the forefront of the green energy movement, but will also help stabi-lize power supply in the Luzon grid. As we all know, Subic has long been a net power consumer, but with this project we’re now entertaining the prospect of Subic as a net power producer. “And what makes us more ex-cited about this project is the fact that both wind and solar power are clean energy. So, this will also help us reduce the carbon footprint of the Subic Bay Freeport,” Arreza said. At the same time, this will also establish the Freeport as a pioneer in renewable energy systems. In fact, I think we would be the very first free port in the country with renewable energy facilities.

The Subic Bay Metropoli-tan Authority (SBMA) an-nounced the release of P55.9 million to adjacent

local government units (LGUs) as part of their share in the revenues earned by the agency in the opera-tion of the Subic Bay Freeport and Special economic Zone (SBFSeZ). SBMA administrator and CeO Ar-mand Arreza said the funds were re-leased in accordance with the new tax collection scheme implemented starting August 2010. This allowed the SBMA, instead of the Bureau of Internal Revenue (BIR), to directly collect two percent of the five percent corporate tax paid by business locators in Subic. Arreza noted that the new scheme facilitated the release of shares to LGUs, which are classified as either “contiguous” or “affected” under Re-public Act No. 7227, which created the SBFSeZ. he also noted that about half a million residents of the seven mu-nicipalities and one city adjacent to the free port would benefit from the revenue share. “This is exactly what we have in mind when we moved for a new tax collection scheme—to hasten the process and to directly give the LGUs the share they deserve,” Ar-reza said. he added that the LGU share should substantially help spread development from the Subic Free-port to neighboring communities, which contribute their manpower

and other resources to the success-ful operation of the free port. The recipients in Zambales are: Olongapo City, which received P14.3 million; and the municipalities of Subic, with P7.9 million; San Anto-nio, P4.9 million; San Marcelino, P6.7 million; and Castillejos, P4.6 million.

In Bataan, three municipalities re-ceived their shares, too: Morong, with P4.9 million; hermosa, P5.6 mil-lion; and Dinalupihan, P7 million. The LGU share is divided according to population (50 percent), land area (25 percent), and equal sharing (25 percent).

“Aside from this, we have further good news for our neighbor LGUs,” Arreza said on Wednesday. “We are making the release twice a year for the convenience of the LGUs, and, ac-cordingly, we have scheduled the next distribution of shares on August 1.” Previously, Subic locators remit-

ted their corporate tax, or five per-cent of their gross income earned, straight to the BIR, which automati-cally would remit payments to the national treasury. Thereafter, the Department of Budget and Management (DBM) would release the two percent share to the concerned LGUs. however, since the creation of the SBMA in 1992, the LGU share, which was then set at 1 percent, was only distributed for a few years. In 2001, the total LGU shares amounted to only P30.99 million. Re-public Act No. 9400, which amend-ed RA 7227, provides that of the 5 percent corporate tax, two percent should be allotted for LGUs and three percent to the national treasury. According to SBMA senior deputy administrator Ramon Agregado, the P55.9 million released by the SBMA is only 90 percent of the actual share. he explained that the SBMA retained the remaining 10 percent “to take care of any possible tax refunds” for a prescriptive period of two years. Agregado added that the remain-ing 10 percent would only be released to the LGUs after the prescriptive period lapsed, and upon audit of the BIR. The LGU share is intended to help finance development projects, pro-vide for basic support services in health, education, and peace and or-der, and other livelihood programs to improve living conditions, public health standards and the urban en-vironment.

SBMA releases P55.9-M in LGU shares

SBMA administrator Armand Arreza (middle) and SBMA senior deputy administrator Ramon Agregado (right) release the LGU shares to (from left): Castillejos Mayor Jose Angelo Dominguez, San Marcelino mayor Jose Rodriguez, and Morong mayor Cynthia Estanislao.

SBMA assures investors of adequate power supply