Amid a prolonged global oil crisis, the Philippines is poised to secure fresh grant and loan financing from bilateral as well as multilateral partners to support power-sector reforms and the transition to more renewable energy (RE) sources.

United States (US) aid agency Millennium Challenge Corp. (MCC) announced that its board of directors will meet on June 24 to consider, among other matters, its proposed threshold program with the Philippines focused on energy-sector reforms.

The forthcoming MCC grant comes as the country remains under a state of national energy emergency amid persistent oil price and supply shocks caused by the intensifying conflict in the Middle East. The Philippines is considered among the most vulnerable economies in Asia to such disruptions due to its heavy reliance on imported fuel.

To recall, Manila Bulletin reported last month that MCC had earmarked a $60-million grant under a Philippine threshold program aimed at enhancing energy security and reducing barriers to investment in the power sector.

Unlike loans, grants do not require repayment by recipient governments. A smaller-scale MCC threshold program is designed to help countries undertake policy, regulatory, and institutional reforms that could pave the way for larger development assistance programs in the future.

The Philippines was the beneficiary of a $434-million MCC compact—a full-scale grant—during the administration of former president Benigno Aquino III to support infrastructure, fiscal reforms, and poverty-reduction projects.

This time, the energy focus comes as the Marcos Jr. administration pushes reforms aimed at improving power-sector resilience, modernizing regulation, and accelerating the country’s RE transition.

The Energy Regulatory Commission (ERC) has already been holding discussions with MCC representatives on possible support for regulatory modernization, digitalization, tariff analysis, consumer protection, records management, and efforts to address longstanding regulatory bottlenecks.

Recent ERC-MCC discussions also covered reforms involving rate resets, tariff regulation, power supply agreement (PSA) approvals, capital expenditure (capex) applications, market operations monitoring, and broader operational efficiency improvements, the regulator said in a social media post last month.

Beyond the upcoming MCC grant, the Philippines is also lined up to receive substantial loan financing from multilateral lenders for energy-transition reforms.

Manila Bulletin reported earlier that the World Bank’s Washington-based board is scheduled to approve this coming June 25 the Philippines Second Energy Transition and Climate Resilience Development Policy Loan (DPL), part of a broader $1.02-billion financing package.

Of the total financing, $800 million would be extended by the World Bank Group’s (WBG) International Bank for Reconstruction and Development (IBRD), alongside a $20-million grant from its Fund for Innovative Global Public Goods (GPG) Solutions.

IBRD is the WBG’s lending arm for developing countries like the Philippines. Meanwhile, a DPL is a fast-disbursing loan that supports policy and institutional reforms rather than financing specific infrastructure projects.

According to World Bank documents, this fresh financing would support reforms to scale up the adoption of clean energy technologies, increase the security, flexibility, and competition of electricity markets, as well as improve water management across competing uses.

The new loan also will build on reforms initiated under the Philippines First Energy Transition and Climate Resilience DPL, the $800-million World Bank financing greenlit last year.

The remaining $200 million would come from parallel co-financing by the China-led Asian Infrastructure Investment Bank (AIIB).

Manila Bulletin reported this week that the AIIB is preparing its counterpart climate policy-based financing package to co-finance the same World Bank-backed reform program, which would be up for approval by its Beijing-based board in November this year.

Together, the World Bank and AIIB financing packages will support reforms aimed at accelerating private-sector investment in RE, promoting energy efficiency (EE), supporting the electrification of transportation, improving electricity market competition, strengthening reserve and ancillary services markets, as well as enhancing water-sector governance.

Separate documents also showed that the Manila-based Asian Development Bank (ADB) has two energy-related loan facilities in its lending pipeline for its host country, both of which will be implemented by the Department of Energy (DOE).

One is the $461-million National Total Electrification Support Program, which aims to provide equitable as well as affordable electricity access nationwide by expanding transmission and distribution networks as well as deploying RE systems, particularly solar power, in missionary and off-grid areas.

The second is the $210-million Accelerated Implementation of Government Energy Efficient Projects, which seeks to promote energy efficiency and conservation in public buildings.

The ADB would conduct fact-finding missions for these planned loans this year ahead of their scheduled board approval next year.