Gov’t opens up RE to foreign firms

The State may directly undertake such activities, or it may enter co-production, joint venture or co-production sharing agreements with Filipino citizens or corporations or associations at least 60 percent of whose capital is owned by Filipinos

To hasten the uncovering of the country’s vast indigenous resources, foreign investors or foreign-owned entities are now allowed to explore, develop, and utilize renewable energy available in the country such as solar, wind, biomass, ocean, or tidal energy. The Department of Energy announced on Wednesday that Secretary Raphael P.M. Lotilla, on 15 November, signed the Department Circular 2022-11-0034 to amend Section 19 of the Implementing Rules and Regulations of the Renewable Energy Act of 2008.

“With the impressive amount of interest the Department of Energy has been receiving both from the local and foreign investors in RE development, particularly in the offshore wind potential, the State can now directly undertake the exploration, development, production, and utilization of RE resources or it can enter into RE Service or Operating Contracts with Filipino and/or a foreign citizen or Filipino and/or foreign-owned corporations or associations,” Lotilla said in a press statement. Lotilla, however, pointed out that the appropriation of waters direct from the source still needs to be subjected to the foreign ownership restriction in the Water Code.

Limits remain

Rule 6, Section 19 (B) of the IRR of the RE Law provides that “the exploration, development, production, and utilization of natural resources shall be under the full control and supervision of the State.” It also stated that “the State may directly undertake such activities, or it may enter co-production, joint venture or co-production sharing agreements with Filipino citizens or corporations or associations at least 60 percent 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,” it added. According to the Energy Department, the amendment in the law was supported by an opinion rendered by the Department of Justice last 29 September that removed restrictions on foreign ownership regarding exploration, development, and utilization of natural resources in the country.

The DoJ, however, noted in the said opinion that the IRR of the RE Act of 2008 must be amended to conform to the opinion. The circular will be effective days upon its publication in two newspapers of general publication and filing with the University of the Philippines Law Center — Office of the National Administrative Register. The Philippines has a vast potential in RE development. With the entry of foreign investors, the DoE said it is confident to meet its goal of increasing the contribution of clean energy in our power generation mix by 35 percent by 2030 and 50 percent by 2040.