San Miguel Energy Corp. (SMC) has revised its project cost to P53.079 billion from P5.079 billion for its newly-acquired 1,000 megawatt Sual coal-fired thermal plant to qualify for tax and fiscal incentives of the Board of Investments (BoI).

Based on its application with the BoI, the new independent power producer administrator of the Sual coal-fired thermal plant has committed to comply with the entire 25 percent minimum equity requirement by increasing its stockholders equity by P13.27 billion equivalent to 25 percent of the total project cost and shall submit proof of compliance before availment of income tax holiday. The additional equity shall include paid up capital stock, additional paid-in capital and unrestricted retained earnings and restricted retained earnings provided that such is intended for the project.

By revising its project cost, SMEC is able to reflect the P51.456 billion acquisition cost of the Sual power plant from Power Sector Assets and Liabilities Management Corp. (PSALM).

The revision of the project also enabled the company to meet the cost criterion of $1 million per megawatt to qualify for a pioneer status but with non-pioneer incentives.

As such, the energy unit for the diversifying San Miguel Corp. would be entitled to four year income tax holiday from its start of commercial operation in August, 2010 or date of actual commercial operation, whichever is earlier but in no case earlier than the date of registration.

The company is also entitled to an additional deduction from taxable income of 50 percent of the wages corresponding to the increment in the number of direct labor for skilled and unskilled workers in the year of availment as against the previous year if the project meets the prescribed ratio of capital equipment to the number of workers set by the BoI of $10,000 to one worker and provided that this incentive shall not be availed of simultaneously with the ITH.

The company is also entitled to the employment of foreign nationals in supervisory, technical or advisory positions for five years from date of registration.

Other incentives include importation of consigned equipment for a period of ten years from date of registration subject to the posting of re-export bond and zero duty on the importation of capital equipment, spare parts and accessories.

The energy investment unit of Asia ’s largest beverage company San Miguel Corporation has interests in various energy firms in the country.

Most of its acquired power plants come from PSALM, which privatizes government-owned power plants.

IPPs are contracted to supply electricity to state-run National Power Corp. When these are turned over to the private sector, the winning bidders will manage the contracted capacities of the government in IPP plants.