Gov’t studying technical option to broaden foreign ownership in RE projects

Published December 15, 2020, 6:00 AM

by Myrna M. Velasco

The government is currently studying if it can establish “technical justification” that will allow higher percentage of foreign investors’ shareholdings in renewable energy (RE) projects, primarily for wind and solar ventures.

That policy option is currently being studied by the Department of Energy (DOE) and the National Renewable Energy Board (NREB) — with the two agencies noting that their step must be in keeping also with the prescriptions of the Philippine Constitution relative to the exploration and exploitation of indigenous resources.

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“For solar and wind in particular, there are verifications that we need to get from the technical aspect if that would be an area that can also be opened to greater foreign participation,” NREB Chairperson Monalisa C. Dimalanta said.

At this point, she noted that there are no tangible precepts yet that they have been zeroing in – unlike in the case of geothermal, wherein that venture was classified as a “mineral resource” in the Renewable Energy Act that’s why it was already opened to 100-percent foreign participation.

For hydro, full foreign ownership is likewise allowed on the power plant development side; while the exploitation and use of the water resource has to be entrusted to an entity that is majority-owned by a Filipino company.

Conversely for solar and wind, Dimalanta emphasized that “without technical vetting that we can use, on that same ruling of the Supreme Court for example on a hydro project, we would not be able to use that.”

If the technical legal ground could not be firmed up, the NREB chairperson pointed out that the only way to widen foreign ownership in these emerging RE technologies shall be through Constitutional amendments. “At NREB, we studied this already…we may need some Constitutional amendments to open that area (wind and solar developments) for greater foreign participation,” Dimalanta stressed.

That view on propounded tweak in the Constitution was also raised by Energy Undersecretary Felix William Fuentebella, expounding that such would be the ultimate legal recourse the government could push for to allow 100-percent foreign ownership in solar and wind farm installations.

In many RE projects in the country, capital flow and technology deployments are often buoyed by foreign investors, but their project ownership limitation under the Philippine Constitution serves as a constraint in their desire to pump in more cash into the energy sector.

And since the country is currently promoting massive-scale RE installations to be underpinned by the Renewable Portfolio Standards (RPS), policymakers are also finding a way on how they could open up certain segments in the RE sector to greater foreign ownership.