The outbreak of the Middle East conflict, which resulted in disruptions to the global oil supply and caused the sharp increase in the price of crude oil per barrel, has profoundly altered the Philippines’ approach to energy security.

The fragility of the country’s energy security—due largely to our heavy dependence on imported and geopolitically volatile fossil fuels—came to the fore with the ongoing skirmish in the Middle East.

Yes Virginia, the crisis served as a harsh wake-up call, unmasking just how exposed we are to global supply lines, simply because we historically rely on the Middle East for about 98 percent of our crude oil imports.

The shockwaves severely hurt consumers almost instantly, triggering a rollercoaster trend in domestic pump prices, sharp increases in electricity bills, and causing inflation to skyrocket to well above seven percent.

“The timing has changed,” agreed Colin Chen, MUFG Bank Ltd. managing director and head of sustainable finance for the Asia-Pacific Asian Investment Banking Division, regarding the government’s approach to securing a reliable and consistent power source.

Now, the challenge is the level of urgency, which requires deep “political will,” as he underscored the entwined relationship between energy reliability and economic development. Ensuring a reliable, affordable, and uninterrupted energy supply is also deeply intertwined with Environmental, Social, and Governance (ESG) principles.

For him, the government is on the right track by pivoting to indigenous, locally available energy resources like solar, wind, hydro, and geothermal power, which are completely insulated from geopolitical blockades and upticks in global commodity prices.

One notable example is the program for electric vehicles (EVs), which provides both fiscal and non-fiscal incentives, including exemptions from the number-coding scheme, as well as priority and discounted registration.

The visiting Singapore-based banker observed that while the number of EVs on local roads is still relatively low, the shift will accelerate moving forward as energy security improves.

On a personal note, Mr. Chen admitted that he intends to be among those shifting to EVs. For now, however, he still drives a fossil fuel-powered vehicle and occasionally takes the bus to work.

MUFG is a staunch ESG advocate and has been supporting the sustainable energy transition projects of the country’s leading corporates through green loans, sustainability-linked financing, and renewable energy transactions across the Asia-Pacific region.

To date, MUFG’s major clients include San Miguel Global Power Holdings Corp., SN Aboitiz Power Magat Inc., and Prime Infrastructure Capital, which is wholly owned by Filipino billionaire Enrique K. Razon, Jr.

Specifically, MUFG was the issuing bank for the standby letter of credit/sustainable trade asset finance facility in favor of the Department of Energy. This secured San Miguel Global Power’s performance obligations for renewable energy developments, including floating solar and hydropower projects.

The bank also provided the financing facility for the first green finance arrangement of SN Aboitiz’s obligations related to a 50-megawatt floating solar project.

On the other hand, MUFG served as the green loan/ESG coordinator and equity standby letter of credit issuer, alongside 10 other financial institutions—including BDO Unibank, Metropolitan Bank and Trust Co., and Security Bank—for the ₱273.5 billion financing of Prime Infrastructure's pumped storage hydropower projects in Laguna and Rizal.

In Chen’s view, the opportunity to finance the country’s energy infrastructure remains vast.