Danish investors who are staking huge capital in the country’s renewable energy (RE) sector are batting for clear and transparent rules that shall be instituted by the Philippine government on foreshore and seabed lease arrangements, primarily for offshore wind (OSW) farm installations.

In an interview, Denmark Ambassador to the Philippines Franz-Michael Mellbin noted that the unresolved concerns on foreshore lease as well as on the utilization of seabed for offshore wind farm projects have been emerging as a troubling concern for foreign investors, especially those which signed up for service contracts with 100-percent foreign equity.

The envoy, nevertheless, qualified that the current comfort level of investors rests on the fact that the government, primarily the Department of Energy (DOE), has been giving assurance that these concerns will be squarely addressed in the policy-framing as well as on regulatory enforcements.

“It is correct to say these things need clarification, but I am also happy to say that the government has made it very clear that it is aware of these problems and need to be solved; and that they want to ensure that there is a clear transparent process toward approvals,” the ambassador stressed.

Foreshore would refer to the parcel of land that demarcates high and low water marks – and that typically stretches at least 20 meters from the interior limit of the shoreline.

The lease on foreshore has been igniting dilemma for foreign RE service contractors because of the Philippine Constitution’s prohibition on ownership of land by foreigners, hence, this is a major concern currently being sorted by the DOE in collaboration with the Department of Environment and Natural Resources (DENR).

The other major concern of RE investors touches on seabed lease because some components of offshore wind facilities will be installed at ocean floors, hence, the regulatory regime on that sphere must also be cleared up.

“These things need to be clarified – there’s a need to chart a clear pathway forward and what regulations shall be set for these issues; and how do you get approvals from specific agencies,” Mellbin conveyed.

The ambassador further indicated that when the lease agreements are entered into with investors, it is also crucial to define the rules of the government agencies involved – specifically the local government units (LGUs) which may be claiming jurisdiction over project sites.

In line with that, Mellbin specified that the rules must be very straightforward in delineating the specific government agency that will serve as counterparty in the warranted lease agreements.

“Because there’s a tradition in this country for local government units to also access authority in the near-coast area; and that needs to be clarified – which will have authority because coast is important,” the Danish envoy pointed out.

At this stage, it has been sounded off by the DOE that a legal opinion has to be sought from the Department of Justice (DOJ) to clarify the legal grounds for regulations that must be applied to these lease agreements.

Following that process, it is targeted that a memorandum of agreement (MOA) shall be signed by the energy department with the DENR to explicitly identify the roles that each agency will carry out when it comes to foreshore and seabed lease covenants for RE projects.

Mellbin further opined that for the service contract-holders and the foreign investors, “what’s important is: whoever is responsible must set clear rules to follow; and that the procedures are transparent and predictable.”