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Under new legislation Philippines could allow foreign ownership in geothermal projects

Maibarara Geothermal Plant, Philippines (source: Maibarara Geothermal Inc.)
Alexander Richter 29 Dec 2017

Under new draft legislation, geothermal development could become open to foreign ownership in the Philippines.

Reported before the new year, the Department of Energy in the Philippines has issued a solicitation notice to industry on a proposal that seeks to amend current rules on governing the transparent and competitive system of awarding renewable energy service contracts.

In the draft circular, the DoE has included geothermal and biomass projects as renewable energy technologies that may be owned by foreign corporations.

“In the case of the exploration, development or utilization of biomass and geothermal resources, the applicant may either be a Filipino or foreign, natural or juridical, citizen,” according to the draft, which has a January 2018 target issuance date.

The proposed department circular (DC) amends DC 2009-09-0011 or the guidelines governing a transparent and competitive system of awarding renewable energy or operating contracts. The old circular, which was issued on July 12, 2009, also provides for the registration process of renewable energy developers.

Under DC 2009-09-0011, only the development of geothermal resources is listed as open to foreign ownership.

The draft circular also does away with the “blocking system” of subdividing the Philippine territory by the DoE into blocks of half minute of latitude and half minute of longitude. Each block is an area of 81 hectares with a designated block number, which is used exclusively in identifying the coverage of a contract area.

The DoE has given industry participants until Jan. 3, 2018 to submit their filings.

The draft circular has retained much of the qualification set for who may apply for renewable energy (RE) contracts, or a service agreement between the government, through the President or the DoE, and an RE developer over an appropriate period as determined by the department. That period gives the developer the exclusive right to explore, develop or utilize a particular RE area.

For contracts covering all RE resources and including hybrid systems, the applicant must be a Filipino or, if a corporation, must be a Filipino corporation with at least 60% of its capital owned by Filipinos and duly registered with the Securities and Exchange Commission, except for geothermal and biomass development.

A provision on the eligibility of an RE applicant — or any entity, whether individual or juridical, local or foreign, including joint venture or consortium of local, foreign, or local and foreign firms — has required the President’s approval on geothermal resource development.

“Consistent with Article XII, Section 2, of the 1987 Philippine Constitution and applicable existing laws, any foreign-owned corporation duly authorized to operate in the Philippines may apply for an RE Contract in the nature of a financial or technical assistance agreement for large-scale exploration, development or utilization of geothermal resources, subject to the approval of the President,” the draft states.

Republic Act No. 9513, or the “Renewable Energy Act of 2008,” provides the policy of the state to encourage and accelerate the exploration, development and increase the utilization of renewable energy resources such as, but not limited to, biomass, solar, wind, hydropower, geothermal and ocean energy sources, and including hybrid systems.

Source: Business World Online