Republic Act No. 7156
AN ACT GRANTING INCENTIVES TO MINI-HYDROELECTRIC POWER DEVELOPERS AND
FOR OTHER PURPOSES
Be it enacted by the
Senate and House of Representatives of the
SECTION 1. Title. – This Act
shall be known as the “Mini-Hydroelectric Power Incentives Act”.
SEC. 2. Declaration of Policy.
– It is hereby declared the policy of the State
to strengthen and enhance the development of the country’s indigenous and self-reliant
scientific and technological resources and capabilities and their adaptation to
the country in order to attain energy self-sufficiency and thereby minimize
dependence on outside source of energy supply.
In pursuance thereof, it is further declared
that mini-hydroelectric power developers shall be granted the necessary
incentives and privileges to provide an environment conducive to the
development of the country’s hydroelectric power resources to their full
potential.
SECTION 3. Declaration of Objectives.
– The objectives of the framework being established
for the development of minihydroelectric power generation are as follows:
(1) To encourage entrepreneurs to develop
potential sites for hydroelectric power existing in their respective localities;
(2) To encourage entrepreneurs to develop
potential sites for hydroelectric power existing in the country by granting the
necessary incentives which will provide a reasonable rate of
return;
(3) To facilitate hydroelectric power
development by eliminating overlapping jurisdiction of the many government
agencies whose permits, licenses, clearances and other similar authorizations
issued by various government agencies as presently required for such
development, and vesting in one agency the exclusive authority and
responsibility for the development of mini-hydroelectric power;
(4) To apportion a part of the realty and
special privilege taxes and other economic benefits of the hydroelectric power
potential to the respective localities where they are established; and
(5) To provide a contractual framework wherein
some stability of conditions can be relied upon for long-term financing
purposes.
SEC. 4. Definition of Terms.
– As used in this Act, the following terms shall be understood, applied and construed as follows:
(1) “Hydroelectric power” shall refer to
electric power produced by utilizing the kinetic energy of falling or running
water to turn a turbine generator;
(2) “Mini-hydroelectric power plant” shall refer
to an electric-power-generating plant which: (a) utilizes the kinetic energy of
falling or running water (run-of-river hydro plants) to turn the turbine
generator producing electricity; and (b) has an installed capacity of not less
than 101 kilowatts nor more than 10,000 kilowatts;
(3) “Mini-hydroelectric power development” shall
refer to the construction and installation of a hydroelectric-power-generating
plant and its auxiliary facilities such as transmission, substation
and machine shop with an installed capacity of not less than 101 kilowatts nor
more than 10,000 kilowatts;
(4) “Mini-hydroelectric power developer” or
“developer” shall refer to any individual, cooperative, corporation or
association engaged in the construction and installation the of a
hydroelectric-power-generating plant and with an installed capacity of not less
than 101 kilowatts nor more than 10,000 kilowatts;
(5) “Domestic use” shall refer to the
utilization of water for drinking, washing, bathing, cooking, or other
household need, home gardens and watering of lawns or domestic animals;
(6) “Municipal use” shall refer to the
utilization of water for supplying the water requirement of the community; and
(7) “Irrigation use” shall refer to the
utilization of water for producing agricultural crops.
SEC. 5. Agency in Charge. –
The Office of Energy Affairs, hereinafter
referred to as the OEA, shall be the sole
and exclusive authority responsible for the regulation, promotion
and administration of mini-hydroelectric power development and the
implementation of the provisions of this Act.
SEC. 6. Powers
and Duties of the OEA. – The OEA
shall exercise the following powers and duties:
(1) Within six (6) months from approval of this
Act, promulgate, in consultation with the National Water Resources Board
(NWRB), such rules and regulations as may be necessary for the proper
implementation and administration of this Act;
(2) Process and approve applications for
mini-hydroelectric power development, imposing such terms and conditions as it
may deem necessary to promote the objectives of this Act, subject to the
following standards, namely:
(a) The applicant must be a citizen of the
Philippines or a corporation, partnership, association or joint stock company,
constituted and organized under the laws of the Philippines, at least sixty
percent (60%) of the stock or paid-up capital of which belongs to citizens of the
Philippines;
(b) The applicant must prove that the operation
of the proposed mini-hydroelectric project and the authorization to do business
will promote the public interest in a proper and suitable manner and, for this
purpose, within six (6) months from approval of this Act, formulate, in
consultation with the National Economic and
Development Authority (NEDA), the National
Electrification Administration (NEA), and the Department of Trade and Industry (DTI),
standards to measure the technical and financial capability of the developer;
and
(c) The applicant must be financially capable of
undertaking the proposed mini-hydroelectric project and meeting the
responsibilities incident to its operations;
(3) Charge reasonable fees in connection with
the filing, processing, evaluation, and approval of applications for
minihydroelectric power development in all suitable sites in the country;
(4) Exclusive authority to issue permits and
licenses relative to mini-hydroelectric power development;
(5) Require the developer to post a bond or
other guarantee of sufficient amount in favor of the Government and with surety
or sureties satisfactory to the OEA upon the faithful performance by the
contractor of any or all of the obligations under the pursuant to the contract
within sixty (60) days after the effective date of the contract; and
(6) Generally, exercise all the powers necessary
or incidental to attain the purposes of this Act and other laws vesting
additional powers on the OEA.
SEC. 7.
SEC. 8. Non-exclusive Development.
– Development of less than fifty percent (50%) of the hydroelectric power
potential of the proposed site shall be non-exclusive. The OEA, after a thorough review and evaluation
of its technical and economic viability, may grant the development of the site
to its full power potential to any qualified developer: Provided,
That first option shall be given to the original developer: Provided,
further That, in case the original developer forfeits his option to pursue
development of the hydroelectric power resource to its full potential, it shall
be reimbursed by the successor developer of the value of its investment based
on the declared value of the development for real estate tax purposes over the
immediately preceding three (3) years or, in case the declared value over said
period differs, on the average value thereof.
SEC. 9. Mandatory Restoration Work.
– In all cases where the proposed mini-hydroelectric
power development entails the closure or stoppage of existing water outlets,
passageways, connections, conduits, apertures or the like from the water
source, it shall be mandatory for the developer to restore or reengineer such
water outlets, passageways, connections, conduits, apertures or the like on its
account or expense, and in such manner that existing users or appropriators shall
not be permanently deprived of their use or appropriation.
SEC. 10. Tax Incentives. – Any person, natural or juridical, authorized
to engage in mini-hydroelectric power development shall be granted the
following tax incentives or privileges:
(1) Special Privilege Tax Rates. – The tax payable by all grantees to develop
potential sites for hydroelectric power and to generate, transmit and sell
electric power shall be two percent (2%) of their gross receipts from the sale
of electric power and from transactions incident to the generation,
transmission and sale of electric power.
Such privilege tax shall be made payable to the Commissioner of Internal Revenue or his duly
authorized representative on or before the 20th day of the month following the
end of each calendar or fiscal quarter;
(2) Tax- and Duty-free Importation of Machinery,
Equipment and Materials. – Within seven (7) years
from the date of award importation of machinery and equipment, materials and
parts shipped with such machinery and equipment including control and
communication equipment shall not be subject to tariff duties and value added
tax: Provided,
That the said machinery, equipment, materials and parts: (a) are not
manufactured domestically in reasonable quantity and quality at reasonable
prices; (b) are directly and actually needed and will be used exclusively in
the construction and impounding of water transformation into energy, and
transmission of electric energy to the point of use; and (c) are covered by
shipping documents in the name of the duly registered developer to whom the
shipment will be directly delivered by customs authorities: Provided,
further, That prior approval of the OEA
was obtained before the importation of such machinery, equipment, materials and
parts was made;
(3) Tax Credit on Domestic Capital Equipment – A
tax credit equivalent to one hundred percent (100%) of the value of the
value-added tax and customs duties that would have been paid on the machinery,
equipment, materials and parts had these items been imported shall be given to
an awardee-developer who purchases machinery, equipment, materials and parts
from a domestic manufacturer: Provided, That such machinery, equipment,
materials and parts are directly needed and will be used exclusively by the
awardee-developer: Provided, further, That prior approval by the OEA was obtained by the local manufacturer. Provided,
finally, That the sale of such machinery, equipment, materials and parts
shall be made within seven (7) years from the date of award;
(4) Special Realty Tax Rates on Equipment and
Machinery. – Any provision of the Real Property Tax Code or
any other law to the contrary notwithstanding, realty and other taxes on civil
works, equipment, machinery and other improvements of a registered
minihydroelectric power developer shall not exceed two and a half percent
(2.5%) of their original cost;
(5) Value-added Tax Exemption. – Exemption from the ten percent (10%)
value-added tax on the gross receipts derived from the sale of electric power
whether wheeled through the NPC grid
or through existing electric utility lines; and
(6) Income Tax
SEC. 11. Disposition and Allotment of Special Privilege Taxes. – If the mini-hydroelectric
power development is located in a city sixty percent (60%) of the
special privilege taxes collected shall accrue to the city and forty percent
(40%) to the National Government.
If the mini-hydroelectric power development is
located in a municipality, thirty percent (30%) of the special privilege taxes
collected shall accrue to the municipality, thirty percent (30%) to the province and forty percent (40%) to the National Government.
SEC. 12. Term of Contract. –
The term of contract shall be for a period of twenty-five (25) years extendible
for another twenty five (25) years under the same
original terms and conditions: Provided, That said awardee has complied
faithfully with all terms and conditions of the award.
SEC. 13. Official Development Assistance. – The provision of
Executive Order No. 230 of 1986, on the power of the NEDA
Board, and the rules and regulations governing the evaluation and
authorization for the availment of Official Development Assistance
notwithstanding, the privatization of the mini-hydroelectric power plants as
provided for in the Act shall be eligible for foreign loans and grants without
further evaluation by the NEDA Board,
subject to Section 21, Article XII of the Constitution.
SEC. 14. Reporting Requirements.
– The OEA shall submit an annual report
to the Congress of the Philippines with respect to the implementation of this
Act.
SEC. 15. Repealing Clause. –
All laws, decrees, executive orders, rules and regulations, or parts thereof
inconsistent with this Act are hereby repealed, amended
or modified accordingly.
SEC. 16. Effectivity. – This
Act shall take effect fifteen (15) days after its publication in at least two
(2) newspapers of general circulation.
Approved,
September 12, 1991
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