MANILA - By the middle of this month, companies in heavy industries will enjoy reduced power rates with the implementation of a new executive order, a ranking energy official said Wednesday.

Executive Order 796 or the Industry Competitive Fund (ICF) paves the way for the allocation of some P1.6 billion that will lower electricity rates for power-intensive industries.

Energy Secretary Angelo Reyes said the budget, which will be sourced from proceeds of the value-added tax, will be given as "incentive" to companies, depending on their level of contribution to the economy.

"We need to give incentives through lowering of power rates of big power users. We saw the need to incentivize these companies to attract new investments into the country," Reyes said.

Reyes noted the ICF will be replenished as needed at the discretion of the Department of Finance (DOF) and the Deparment of Budget and Management.

He added a committee will implement the EO when it takes effect by mid-June, 15 days after publication. The said committee will be created and co-chaired by the Department of Energy and the DOF.

"The committee will evaluate the application of each company based on a set of criteria. The committee will decide how much will be the reduction in power rates that one company can enjoy. The level of incentives will depend on the size of the company and their contribution to the economy," Reyes said.

Philippines has one of the highest power rates in Southeast Asia, with approximately 30 percent of industries' total operational budget going to electricity bills.

Reyes said the EO was in response to the clamor of big power users to make Philippine electricity rates as competitive as in neighboring countries.

The EO "shall cover existing and future eligible combined preferred generation, transmission and distribution rates granted by the National Power Corp., National Transmission Corp., and the Philippine Economic Zone Authority in accordance with their respective policies, rules, regulations, subject to the ICF criteria."

The creation of the ICF was approved by President Gloria Arroyo last year.