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Local coal get away tax-free in approved coal tax

Green groups slam DMCI for using ‘sneaky tactics’ to avoid regulation

December 12, 2017

QUEZON CITY – Advocates for consumers, accountability, and the environment expressed dismay over the ‘midnight exemption’ accorded to local coal mining companies from the new coal tax approved by both Houses of Congress.

The coal tax hotly contested by local coal mining proponents, particularly DMCI and Semirara Mining and Power Corp. (SMPC)’s Isidro Consunji, was recently approved through a bicameral session held last December 12. The mechanism will levy a P50 tax on both local and foreign coal to be used domestically as both a mechanism for revenue generation and for helping drive the country’s shift to renewable energy.

“Like a thief in the night, DMCI and SMPC have successfully influenced Congress to delete the approved provision including local coal in the coal tax,” said Atty. Aaron Pedrosa, Secretary-General of the multi-sectoral coalition Sanlakas. “This goes against the spirit of the proposed law, which would supposedly rein in the country’s continued reliance on coal for energy,” he added.

Pedrosa pointed out that the exclusion of local coal from the tax will only encourage the expansion of coal mining in the country. “Exempting local coal producers will incentivize indigenous coal production in the Philippines, contrary to our commitment to curb our emissions and to the detriment of the health, security, and livelihood of affected communities,” he emphasized.

Mining in Semirara, Antique is the oldest operating mine in the Philippines, and has invited resistance from local residents due to the destruction of environment and livelihood from the mining operations and expansion in the island. SMPC currently is the largest coal producer in the country.

“It remains to be seen whether the President will intervene in this blatant arm-twisting done by this coal company,” said Pedrosa. “We challenge him yet again to deliver on his supposed strong stance against oligarchs,” he stated further.

Gerry Arances, Executive Director for the Center for Energy, Ecology, and Development (CEED) noted how DMCI mogul Isidro Consunji was very vocal about coal tax, even threatening consumers with increased electricity prices if the mechanism should push through.

“The deletion of the provision proves the suspicion that Consunji, DMCI, and SMPC were not opposing the coal tax for the sake of consumers, but for their own business interests,” said Arances. “For forty years, Consunji has enjoyed the lack of taxation on coal while his workers in Semirara island suffered dismal, even fatal, working conditions,” he added, referring to the incident last July 2015 where nine (9) of the company’s workers and last February 2013 where another five (5) miners were killed.

Arances discussed that SMPC has profited billions from the 40 years of untaxed mining activity through an unfair revenue-sharing scheme. At present, the coal industry enjoys one of the most lopsided revenue-sharing agreements in the country, with coal companies able to deduct as much as 90 percent of gross proceeds from coal as expenses, the highest recoverable cost among extractive industry,” he added.

SMPC has also gained the ire of environmental groups due to its refusal to participate in the Extractive Industry Transparency Initiative (EITI) which aims to encourage accountability from the mining sector in terms of its operations and revenue.

“SMPC has never participated in the EITI despite calls from the Philippine EITI multi-stakeholder group, which includes the Department of Energy, the office mandated to regulate the company,” said Tina Pimentel of Bantay Kita. “This sneaky tactic further shows SMPC’s brazen disregard for government regulatory functions and its power to influence advocacy to serve their own interest,” she added.

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