American investors joined the clamor calling for the lifting of foreign ownership limit in the renewable energy (RE) sector to be a priority policy to be pursued by the Marcos administration to attract more offshore capital flow, primarily for solar and wind farm projects in the country.
American Chamber of Commerce of the Philippines (AmCham) President Frank Thiel, who is also the Managing Director of Quezon Power (Philippines) Ltd. Co., said the easing of equity restrictions on RE investments would be one of the "policy wish list" that the foreign investing community will be lodging with the Energy Secretary of the incoming government leadership.
“One of the items that AmCham has focused on for some time pertains to the foreign ownership restriction on renewable energy. Perhaps that is an item where the new Energy Secretary can focus on,” he stressed.
Under prevailing legal set-up, foreign investors are limited to owning up to 40 percent equity in the corporate entities that will be developing or owning RE-derived power plant projects.
“Our collective view is that more foreign investments could take place if the restriction is lifted,” Thiel emphasized.
Apart from AmCham, other foreign business chambers, including the European Chamber of Commerce of the Philippines (ECCP), Nordic Chamber of Commerce of the Philippines, the Canadian, Australian, Japanese, South Korean as well as other Asian investors - have all repeatedly asked Philippine leaders in the energy sector to pursue legal measures that will ease their entry in the RE investment space.
Currently, the policy tenor being explored by the Department of Energy (DOE) to relax the prescribed foreign equity limit on RE would be a legal convention akin to the financial or technical assistance agreement (FTAA) that has already been applied to other RE technologies, primarily for hydro and geothermal ventures.
Energy officials are openly acknowledging that investments in the RE sector could flourish with more foreign capital because it is typically the foreign investors that have deeper pockets and have the most advanced technologies, as well as broader expertise on RE project developments.
As an industry player in the restructured power sector, Thiel also noted that the policy issue his company has been eyeing to be sorted by the new administration would be the regulations on competitive selection process (CSP) or the bidding being undertaken by the distribution utilities (DUs) in securing power supply agreements (PSA) for their supply portfolio buildup.
He primarily opined that “the ‘unsolicited bid’ language provision is distorting the intent of the CSP, and creating more confusion than not. Hopefully that can be removed going forward.”
Thiel qualified “We are fine competing under the CSP process. The unsolicited bid part, however, makes the process not only confusing, but opens it up to interpretation. It’s difficult for investors to get behind it.”
The CSP, which is a fiat sanctioned by a Supreme Court ruling, has to be carried out by DUs in the power sector so they can secure supply at the most competitive rate – and the outcome of that bidding is viewed to be more affordable when passed on to the consumers.