Franchise tax is miniscule than system’s loss — Celso PDF Print E-mail
Thursday, 10 March 2011 15:40

Mayor Celso Lobregat has expressed surprise why some sectors are training guns on the pass on franchise tax charge which is only pittance as compared to the system’s loss charge which comprises almost half of the monthly bill of each consumer of the Zamboanga City Electric Cooperative (Zamcelco).

If and when the franchise tax charge will be passed on to the consumers, the charge would only be P.0136 (centavos) per kilowatthour (KWHR) based on the approved rate of the Energy Regulatory Board (ERB). On the other hand, the system’s loss charge is P.9799/KWHR.

“They (Zamcelco officials) should not be pointing fingers on the city government (for collecting the franchise tax), they should lower the system loss and run Zamcelco more efficiently and effectively,” the mayor told City Hall reporters yesterday.

Citing an electric bill of a City Hall employee, whose consumption the past month reached 752 KWH with total charges of P1,511.73, Mayor Lobregat explained the huge  disparity between the proposed franchise tax charge and the system loss charge. Of the total amount (P1,511.73), charge for the system’s loss of P.9799/KWHR (P.9799x 752 KWHR) is equivalent to P736.88 whereas, the franchise tax charge, if effected soon, would only be P.0136/KWHR (P.0136x752) which is equivalent to more or less P10.00.

“So for this bill of P1,511.73, system loss charge is P736.88 and if franchise tax charge will be included (based on the ERC approved rate) the charge will only be P10. So that will be P10 as compared to P736.88 so why concentrate on the P10? Let us focus on where the issues should be focused that is—the system’s  loss charge of P.9799”, the mayor emphasized.

He stressed that the P.0136/KWHR charge for franchise tax is miniscule as compared to the system’s loss charge of P.9799/KWHR. “So in this bill of P1,511.73, if you include the franchise tax charge it will be P1,531 but if you take away the system’s loss of P736.88, it will only be P700 (plus), so where does it hurt?”

The chief executive said the monthly electric bill burdens consumers because of the system loss and not on the expected franchise tax charge. “It hurts because of the system loss, so let us not try to masquerade and say that the city government should not have charged the franchise tax because it will only amount to P.0136/KWH but the system loss charge is P .9799/KWHR.

Zamcelco officials are apparently putting the blame on the city government for adding burden to the consumers by strictly collecting the franchise tax from the cooperative. A few months back, the cooperative acquired a bank loan to pay some P43 million in franchise tax including surcharges covering the period 1998-2009. To repay the loan, Zamcelco has sought ERC’s authority, which was consequently granted, to pass on the charge to the consumers and based on the commission’s order, the pass on rate will be P0.136/kwhr for a period of 6 years.

During the interview, the mayor took time out to explain how the cooperative came to pay the amount of P48 million in full even if the city government, following negotiations, has formally agreed to allow the payment to be done in a period of 6 years.

Initially, Mayor Lobregat said, the city has agreed that the amount be paid in a period of 5 years but the cooperative bargained to 6 years to which the city government agreed. All these, he said, were manifested in formal letters to the cooperative.

“We told them that they can pay in 6 years and then all of a sudden they (Zamcelco) secured a loan paying interests, and then they paid everything in full”, he said adding “nobody told them to pay everything in full and so now they went to the ERC trying to charge what they paid and so we oppose because we said we were giving you a schedule of payment of 6 years and you paid everything in full”.

On the other hand, Lobregat said the city government acknowledges and will definitely pay its debt to Zamcelco for power consumption as soon as the supplemental budget for 2011 is approved.

The problem, he said arose when electric rates increased last year. Government agencies have specific appropriation or budget for a particular year but this budget was approved the year before and with the rate increase last year, the budget or appropriation for electric consumption has already dwindled by the end of the year, thus, the need for additional funds.

“So we will include that in the supplemental budget and we will pay that and we acknowledge that (the debt). There was a rate increase and so we have to appropriate some more”, the mayor added. — Sheila Covarrubias