The Philippine government, through the Department of Energy (DOE), is advancing a policy re-casting that will allow full or 100-percent foreign ownership in renewable energy (RE) projects.
That will be a shift from the current 60:40 equity arrangement in the RE development sphere, constitutionally favoring Filipinos to own 60-percent interest in RE project corporate vehicles/project companies, and only the balance of 40-percent can be granted to foreign investor-partners.
The 60:40 equity sharing deal had always been one of the tricky concerns and viewed as a “limiting factor” on planned capital flow from foreign firms for the array of RE installations in the Philippines.
But as the country wades through the roller coaster jaunt of the coronavirus pandemic and makes headway into a “new normal” investment paradigm, Energy Secretary Alfonso G. Cusi disclosed that one of the policy re-alignments he will push for is allowing full entry of foreign investors in the RE sector.
“I’m looking at allowing 100-percent investment or ownership in renewables,” the energy chief stated at the “Innovation in Energy” forum of the Philippine Energy Independence Council (PEIC), emphasizing that while the main focus at this point is on geothermal, he is advancing that policy modification to actually cover all RE technologies.
Cusi reiterated that while the Philippines’s dominance on geothermal energy development had already been slithering from the country’s grip, which he considers a ‘regretful development’, he noted that his target is for the government to pick up the pieces and then strengthen capital funneling in that sub-segment of the energy sector.
Apart from geothermal, the country has also been aggressively pursuing investment-enticements in other RE developments such as hydro, solar, wind, biomass, waste-to-energy and ocean thermal energy conversion (OTEC) technologies.
“That will be for all RE, I just cited geothermal as an example because we’ve been ahead in that…this is an area that I have been looking at,” Cusi stressed.
The strategy on the propounded policy revision, he said, is either to execute it via a Circular to be issued by the DOE; or he will go through legislative maze given Constitutionality issues being raised also on the exploration and development of State resources.
“I’m hoping it could be done with a Circular through DOE, but if not, I will go through legislation. I will seek the help of the Joint Congressional Energy Commission to help expedite that so we can accelerate the development of renewables in our country,” Cusi averred.
The energy secretary added “we really need to attract investors. This is an opportunity to do catch-up work.”
He nevertheless qualified that aspirations for billions of investment-dollars in the energy sector is “easier said than done because we know in the country, that’s in the hands of the private sector, investing is not with the government in the generation or transmission.”
A parallel policy fortification that the DOE has been sorting out is extending the duration of RE service contracts that shall be awarded to investors. RE service contracts currently have a tenor of 25 years and could be renewed for another 25 years, subject to terms and conditions.
“Another that I am looking at changing the policy - to help in reducing the tariff, is probably for new contracts to be given a longer period but with a lower return,” he said, adding that these parameters are being currently studied by the department.