Generation companies (gencos) focused on non-renewable energy (RE) technologies stand to benefit the most from the impending passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, according to a stock brokerage firm.
In a recent briefing for investors, COLFinancial.com cited that the bill, which awaits Pres. Rodrigo Duterte’s approval, would lower non-RE gencos effective tax rate from 30% to 25%. RE power plants, on the other hand, will not be affected given that they currently enjoy a preferential income tax rate of ten percent.
The report particularly mentioned the Lopez-owned First Gen Corporation will benefit the most in the short-term since its liquefied natural gas power plants and non-RE businesses account for about 65% of net profits.
Aboitiz Power Corporation is also seen to be a major beneficiary since its non-RE plants, which no longer enjoy income tax breaks, account for around 52% of net profits. AboitizPower, the country’s leading genco, previously indicated that it aims to raise its RE capacity to achieve a 50:50 clean energy portfolio by 2030.
Consunji-led Semirara Mining and Power Corporation (SMPC) will also benefit, though this would be felt more in next few years after the expiration of the income tax holidays enjoyed by its power plants and mining operations. SMPC owns and operates the Calaca Coal-Fired Power Plant in Batangas.
“This year, only the Calaca units 1 and 2 which account for 51% of profits will enjoy a lower tax rate. Calaca unit 3 and 4 still has one year before its income tax holiday expires,” the briefing reads.
Ayala’s AC Energy (ACEN) will benefit the least, according to COLFinancial, since its coal and oil-based plants account for only 37% of net profits. ACEN’s RE plants here and abroad will not be affected by the bill’s passage.
Photo from First Gen website.