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April 24, 2007VAT RULING NO. 007-07BIR Ruling No. 007-06National Power CorporationQuezon Avenue corner BIR RoadDiliman, Quezon City Attention: Mr. Rainier B. ButalidVice PresidentOffice of the General CounselGentlemen :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...