In a press briefing yesterday, CE Casecnan president David Baldwin said they have decided to press for the tax reimbursement package because the government has disapproved a one-time settlement of $131million.
Under the proposed package, Baldwin said the government will pay CE Casecnan $45 million a year for the next 20 years.
CE Casecnan’s build-operate-transfer (BOT) agreement with the National Irrigation Administration (NIA) allows former to ask for a reimbursement of its tax payments, except income tax.
CE Casecnan said it had commenced international arbitration to require the NIA to perform its contractual obligation to reimburse certain taxes paid during the construction of the Casecnan multipurpose irrigation project.
The project has been in operation since December 2001, providing irrigation water for rice farmlands and electricity.
Baldwin took exception to allegations of violations in the BOT contract involving the project.
He said the project, went through extensive deliberations and negotiations, and was duly authorized and approved by the Philippine government through its relevant agencies and corporations. Negotiations on the contract were undertaken from 1993 to 1995.
Calling the project an engineering feat, Baldwin said the Casecnan dam was constructed at a significant lower cost of $700 million compared to the initial estimate made by the World Bank amounting to $1.7 billion to $2 billion. The project is expected to have a lifespan of 50 to 100 years.
According to Baldwin, CE Casecnan will be reimbursed its cost for the project over the next 20 years using a water tariff structure based on a study of water flows over a 30-year period.
"This payment scheme helps the government manage its monthly cash outlays," he said.