BOI won’t endorse PNOC project just yet

The Board of Investments will only endorse the Philippine National Oil Co.’s (PNOC) combined gas-fired power plant and iron and steel-making facility project worth P70.785 billion after the power firm completes its feasibility study, top government officials who requested anonymity said over the weekend.

The PNOC is trying to get the BOI endorsement even before it completes the feasibility study for the project.

"The BOI is wary of giving its endorsement before the feasibility study is completed as PNOC may use the endorsement as a means of getting incentives and financing for the feasibility study itself," sources explained.

They said the Presidential Iron and Steel Committee, an inter-agency body tasked to implement the Iron and Steel Act, had earlier said that it will endorse the PNOC project only if it will be bankrolled by private investors and an independent study will confirm its viability.

A BOI endorsement for the PNOC project will make it easier for the power firm to seek incentives under the Iron and Steel Industry Act.

The incentives could include access to official development assistance (ODA) financing, tax credits on domestic capital equipment, priority in foreign currency deposit unit (FCDU) loans, as well as tariff protection.

According to the PNOC’s plans for its combined gas-fired power plant and steel-making facility, the project will be financed entirely through loans.

PNOC plans to borrow the bulk or 85 percent of the project’s financing requirement abroad while the rest will be sourced locally. – Marianne Go