Aboitiz Power asks court to stop sale of assets by Ilocos Sur town

MANILA, Philippines — Aboitiz Power Corp. is seeking court backing to stop an Ilocos Sur municipality from selling the real properties of its run-of-river hydropower project in the province due to tax delinquency.

In a disclosure to the Philippine Stock Exchange yesterday, AboitizPower said its wholly-owned subsidiary Luzon Hydro Corp. (LHC) filed a petition with the Ilocos Regional Trial Court (RTC) to enjoin the sale of real properties located in Alilem, Ilocos Sur.

LHC made an offer to the provincial government of Ilocos Sur to pay real property tax (RPT) computed in accordance with the provisions of Executive Order 60.

EO 60 allows the reduction and condonation of real property taxes and penalties assessed on power generation facilities of independent power producers (IPPs) under build-operate-transfer (BOT) contracts.

The reduction and condonation cover all liabilities for RPT, including any special levies accruing to the special education fund for calendar year 2017 and prior years.

Last Aug. 13, the President issued EO 88 which specifies the terms under EO 60 and confirms the reduction of the IPPs RPT obligations for all years up to 2018.

However, the provincial government rejected LHC’s offer, which was slapped by the office of the municipal treasurer of Alilem, Ilocos Sur with RPT delinquency of P446.03 million from 2002 to August this year.

The municipal treasurer then issued a notice of publication and auction sale covering the real properties of LHC, consisting of industrial machineries and buildings.

LHC, however, questioned the correctness of the amount assessed as RPT delinquency and asked the court to prevent the auction sale of the assets covered by the warrants of levy issued by the municipal treasurer of Alilem.

“The action will seek the enforcement of the executive orders issued by the Office of the President directing the reduction of RPT on property, machinery and equipment and directly used by IPPs under (BOT) contracts (however denominated), and condoning related RPT interest and penalties,” AboitizPower said.

The Aboitiz firm was also backed by the Power Sector Assets and Liabilities Management Corp. (PSALM), which issued a letter to the Municipality of Alilem urging it to reconsider the auction of the levied assets, in consideration of the ownership rights and interest of the government over the levied assets.

LHC owns, operates and manages the 70-MW Bakun AC run-of-river hydropower plant located in Amilongan, Alilem, Ilocos Sur.

The plant was constructed and operated under the government’s BOT scheme, which means the 254 gigawatts per hour of energy produced by the Bakun AC hydro plant annually is delivered and taken up by the National Power Corp. (Napocor) pursuant to a 25-year power purchase agreement (PPA).

The Bakun PPA also requires LHC to transfer the Bakun AC hydro plant to Napocor in February 2026, free from liens and without the payment of any compensation by the state-run firm.