April 24, 2007
VAT RULING NO. 007-07
BIR Ruling No. 007-06
National Power Corporation
Quezon Avenue corner BIR Road
Diliman, Quezon City
Attention: Mr. Rainier B. Butalid
Vice President
Office of the General Counsel
Gentlemen :
This refers to your letter dated September 6, 2006 requesting for a ruling on whether the use of sub-transmission lines and the payment of the wheeling fee by NPC to HEDCOR, Inc. form an integral part of the sale of hydroelectric power by HEDCOR, Inc. to NPC such that the said wheeling charges are exempt from the VAT.
As represented, on January 30, 1993, a contract for a 25 year cooperation period was signed under a Build-Operate-Own (BOO) scheme between HEDCOR, Inc. and NPC for the Ampohaw and Bakun Mini hydro power plants. The mini hydro power plants are of the run-of-the-river type which means that they do not involve dam construction and need no fuel for its operation. HEDCOR, Inc. generates and sells power to NPC and such power is wheeled or transmitted through wood poles sub-transmission lines that are owned and maintained by HEDCOR, Inc. NPC pays...
