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This page features the full text of
Republic Act No. 7156
"Mini-Hydroelectric
Power Incentive Act"
AN
ACT GRANTING INCENTIVES TO MINI-HYDROELECTRIC POWER DEVELOPERS AND FOR
OTHER PURPOSES.
REPUBLIC
ACT NO. 7156AN
ACT GRANTING INCENTIVES TO MINI-HYDROELECTRIC POWER DEVELOPERS AND FOR
OTHER PURPOSES.
Section
1. Title. — This Act shall be
known as the "Mini-Hydroelectric Power Incentive Act."
chanrobles virtuallaw libraryred
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.
Sec.
3. Declaration of Objectives.
— The objectives of the framework being established for the development
of mini-hydroelectric power generation are as follows:
(1) To
encourage entrepreneurs to develop potential sites for hydroelectric
power
existing in their respective localities;
chan
robles
virtual law library(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; chanrobles virtuallaw libraryred
(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 by 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. chanrobles virtuallaw libraryred
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 the electric power produced by utilizing the
kinetic
energy of falling or running water to turn a turbine generator; chan
robles
virtual law library(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 a turbine generator producing electricity; and (c) has
an installed capacity of not less than 101 kilowatts nor more than
10,000
kilowatts.chanrobles virtual law library
(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 that 101 kilowatts nor more than 10,000 kilowatts;chanrobles virtuallaw libraryred
(4) "Mini-hydroelectric
power developer" or "developer" shall refer to any individual,
cooperative,
corporation or association engaged in the construction and installation
of a hydroelectric-power-generating plant 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 needs, home gardens and watering of lawns or
for domestic animals; chanrobles virtuallaw libraryred
(6) "Municipal
use" shall refer to the utilization of water for supplying the water
requirements
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.chanrobles virtual law library
chan robles
virtual law library
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; chan
robles
virtual law library(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: chanrobles virtuallaw libraryred(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; chan
robles
virtual law library(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 mini-hydroelectric power development
in
all suitable sites in the country; chanrobles virtuallaw libraryredchan
robles
virtual law library(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 and 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. Sale of Power. — The mini-hydroelectric
power developer must first offer to sell electric power to either the
National
Power Corporation (NPC), franchised private electric utilities or
electric
cooperatives at a price per kilowatt-hour based on the NPC's or the
utility's
avoided cost which shall refer to the costs of the affected grids had
NPC
generated the equivalent electric power itself before disposing the
power
to third parties. The NPC shall allow the mini-hydroelectric developer
to deliver its generated electricity to the developer's customers
through
existing NPC lines so as to serve such third parties under terms which
are to be mutually agreed upon or, if no agreement can be reached,
under
terms set by the OEA. chanrobles virtuallaw libraryred
chan robles
virtual law library
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.chanrobles virtual law library
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.cralaw:red
Sec.
10. Tax Incentives. — Any person,
natural or judicial, 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 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; chanrobles virtuallaw libraryredchan
robles
virtual law library(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 mini-hydroelectric 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
through
the NPC grid or through existing electric utility lines; and chanrobles virtuallaw libraryred
(6) Income
Tax Holiday. — For seven (7) years from the start of commercial
operation,
a registered mini-hydroelectric power developer shall be fully exempt
from
income taxes levied by the National Government.
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.chanrobles virtual law library
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.chanrobles virtual law library
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.cralaw:red
Sec.
13. Official Development Assistance.
— The provision of Executive Order No. 230 of 1986, on the power of the
NEDA Board, and 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
this 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.chanrobles virtuallaw libraryred
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.cralaw:red
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.cralaw:red
Sec.
16. Effectivity. — This Act shall
take effect fifteen (15) days after its publication in at least two (2)
newspapers of general circulation.chanrobles virtuallaw libraryred
Approved:
September
12, 1991
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Copyright©1998-2006 by
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Publishing Company
All Rights Reserved
Since 19.07.98
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