A COURT approved the deal signed between a hydropower unit of Aboitiz Power Corp. and an Ilocos Sur town seeking a compromise over a property tax issue.
The listed power company told the stock exchange, Monday, that Luzon Hydro Corp. (LHC) settled a tax dispute with the Municipality of Alilem after the Regional Trial Court (RTC) of Tagudin issued its judgment on July 27 validating all recommendations listed in their deal.
The two parties met on Feb. 14 to discuss the settlement of their tax row. They later came up with a compromise agreement on July 22 and filed the signed deal with the RTC for its judgment a day after.
To recall, the renewable energy firm received in December last year a notice of real property tax (RPT) delinquency from the Alilem town government, which seek to collect P82.25 million in unpaid tax and accrued penalties for seven of the company’s properties between 2004 and 2019. The local government also put up five of those assets in an auction.
In response, LHC on Dec. 13 requested a temporary restraining order and preliminary injunction in a petition for prohibition and mandamus against the municipality to prevent the sale.
It had sought the implementation of Executive Order No. 60, which cuts the RPT on assets by independent power producers under build-operate-transfer (BOT) contracts and disregarding tax-related interest and penalties.
Upon the receipt of the town’s order, the Aboitiz power unit made a standing offer to the Ilocos Sur provincial government to pay its property tax computed based on the President’s order. However, the tender of payment was rejected.
The state-led Power Sector Assets and Liabilities Management Corp. (PSALM) had also asked the municipality to reconsider the auction of the said assets to consider its ownership rights and interests over them.
LHC runs the 70-megawatt Bakun AC hydropower plan in Alilem. The plant was constructed under the government’s BOT scheme, which means that the electricity it is producing is taken up by the National Power Corp. under a power purchase deal for 25 years from February 2001. In 2026, the government will seize the ownership of the plant.
Its generated power is also required to be dispatched to the Luzon grid.
On Monday, shares in AboitizPower fell by 3.51% to close at P24.75 each. — Adam J. Ang