The Maharlika Investment Corp. (MIC) is shifting its strategy for the Philippines’ planned strategic petroleum reserve, opting to finance storage infrastructure rather than purchasing fuel to avoid exposure to volatile global commodity prices.

Rafael D. Consing Jr., MIC president and chief executive officer, told lawmakers on Wednesday, April 15, that the sovereign wealth fund will prioritize the construction of “tank farms” and storage facilities.

The move was a pivot in how the $1.47 billion fund approaches energy security, focusing on long-term infrastructure yields rather than the fluctuating valuations of oil inventories.

“If Maharlika were to step in and support the strategic petroleum reserve fund by purchasing the inventory, we at MIC would be exposed to market risk,” Consing said during a hearing. “What we’re trying to do is avoid that exposure.”

The decision comes as the Philippines grapples with high energy costs and supply chain vulnerabilities. Consing described the shift toward storage and grid security as “reaction to the existing situation,” noting that the fund had not initially anticipated the severity of recent global oil shocks.

By partnering with the Philippine National Oil Co. (PNOC) and private sector players, the MIC intends to act as a capital provider for physical assets.

Consing said the fund expects to generate returns through long-term leases, while outsourcing the actual operations of the facilities to private firms.

Beyond long-term storage, the MIC is moving to address immediate liquidity constraints within the domestic fuel market.

Consing identified a “working capital issue” among downstream retailers, noting that while the Philippines has a 60-day storage capacity, only about 60 percent of that volume is currently utilized. Retailers, he said, are struggling to finance inventory at today’s elevated price levels.

To bridge this gap, the MIC plans to launch a working capital facility within 30 to 45 days. The facility is designed to help retailers secure supply, though Consing cautioned that the intervention would carry implications for supply and financing costs.

The fund is also expanding its footprint into power transmission to lower electricity costs in off-grid provinces like Mindoro and Palawan, which currently depend on expensive diesel-fired generation.

Consing said the MIC aims to finalize the acquisition of the transmission loop in Mindoro by the end of June. The goal is to upgrade the aging infrastructure to stabilize the grid, which the fund believes will catalyze further investment in renewable energy projects.

Consing emphasized that all current and future investments are being evaluated through a “national resilience” framework. This approach balances the Financial Investment Rate of Return (FIRR) with the Economic Investment Rate of Return (EIRR), weighing profitability against broader benefits to the Philippine economy.

Despite this mandate, Consing clarified that the MIC is not currently structured for “retail exposure,” ruling out direct subsidies for household solar systems at this stage.

Additional project details and formal investment announcements are expected in June following further coordination with the Department of Energy and the Department of Finance.