If approved, NSC will be entitled to various incentives including tax breaks that will allow the company to pay a lower five-percent income tax in lieu of other taxes that it will otherwise have to pay.
Banking sources said the application is likely to be approved as part of the incentive package that the government had conceded to give the steel company once bailed out by investors.
Aside from tax breaks, NSC will also be able to import capital equipment at lower tariff, allowing it to cut upgrading and maintenance costs.
According to the source, the classification as a special economic zone had always been part of the rehabilitation plan for NSC because its creditors and investors asked for easier terms during its rehabilitation period.
The acquisition by the Indian company Global Infrastructure Holdings Ltd. Inc (GIHLI) had allowed NSC to restructure its outstanding debt with its creditors but the company still has about P620 million worth of local taxes that it owes the government of Iligan City.
Sources said this particular obligation has not been resolved and the city government has not actually agreed to waive payments for NSC’s local tax arrears.
Sources said the NSC will have to wait until the city government settles down after the elections, before negotiations could resume and determine how the company would pay its arrears, if at all.
According to the source, NSC is spending at least P2 million every month just to maintain its facility in Iligan City and it has been estimated to cost at least P15 million just to reopen the plant for operations.
The source explained that the Iligan City government had initially agreed to waive NSC’s back taxes but it could still call on these obligations and initiate discussions with prospective investors on its own.
NSC was supposed to have been liquidated years ago but it was ordered revived by President Arroyo who made a campaign promise to reopen the plant in Iligan City where she grew up.