The Department of Energy (DOE) is collaborating with two other national government agencies – the Department of Trade and Industry (DTI) and National Economic and Development Authority (NEDA) - on plans to relax foreign ownership restriction that hampers investment flow in the renewable energy sector.
Energy Secretary Raphael P.M. Lotilla indicated that addressing such infirmity in the policy terrain of RE investments shall be the among the core concerns that the department will have to bring up to its newly designated legal advisors.
“The Department of Trade and Industry, Secretary (Federico) Pascual has been supportive as well of this in particular; and NEDA which is the one that drafts and recommends the negative list for investments -- at least these two executive issuances need to be addressed and that’s why we would like to have the advice and guidance of our senior legal advisors,” the DOE secretary stressed.
The Foreign Investment Negative List demarcates the sectors or industries where foreign ownership and participation are regulated or have prescribed limits.
And while some quarters have been asserting that the 60:40 equity restriction to foreign investors in the RE sector had been purportedly rooted on the provisions of the 1987 Philippine Constitution, Lotilla opined that “I happen to disagree, because when we were working with Senator Miriam Santiago – she was Energy Committee Chair way back in 2007, she had agreed not to say anything in the law about a 60:40 requirement – there’s none in the law if you’re going to examine it.”
Nevertheless, Lotilla acknowledged that the 40-percent equity limit for foreign investors had been stipulated in the implementing rules and regulations (IRR) of Republic Act 9513 or the Renewable Energy Act of 2008.
“In the DOE’s implementing rules and regulations that was passed in 2008, there is a mention of that – so that’s why this particular issue has to be addressed at the soonest time possible if we are to clarify the investment environment,” the energy chief noted.
Under Rule 6, section 19 (B) of the RE Law’s IRR, it was stipulated that “the exploration, development, production and utilization of natural resources shall be under the full control and supervision of the State.”
It was similarly specified that “the State may directly undertake such activities, or it may enter into co-production, joint venture or co-production sharing agreements with Filipino citizens or corporations or associations at least sixty percent (60%) of whose capital is owned by Filipinos. Foreign RE developers may also be allowed to undertake RE development through an RE service/operating contract with the government, subject to Article XII, Section 2 of the Philippine Constitution.”
When asked if legislative action through the Joint Congressional Energy Commission (JCEC) could be a possible legal remedy to that capital flow-impeding ownership restriction, he stated that “I am sure where Congress can help reinfrorce the executive position or interpretation, then that would be cognizant on the importance of that.”
The constraint on foreign ownership had been perceived as one of the major factors why the Philippines has lagging behind neighbors in Asia when it comes to cornering investment-dollars in the RE sector.