Full foreign ownership of RE projects OKd

MANILA, Philippines — Foreign equity restrictions in the country’s renewable energy (RE) sector has been lifted following the Department of Energy’s issuance of the amended rules of the RE Act of 2008.

Energy Secretary Raphael Lotilla signed on Nov. 15 Department Circular 2022-11-0034, amending Section 19 of the implementing rules and regulations (IRR) of the RE Act.

With the amendment, the DOE said foreign citizens or foreign-owned entities may engage in the exploration, development, and utilization of the country’s RE resources such as solar, wind, biomass, ocean or tidal energy.

“The country has a vast potential in RE development. Now that the foreign equity restrictions in the RE sector has been relaxed, we expect an increase of investments in the sector which would certainly contribute to our economy, provide jobs to our people, and help meet the goal of increasing the RE in the power generation mix of 35 percent by 2030 and 50 percent by 2040,” Lotilla said.

The amendment stemmed from the opinion released by the Department of Justice (DOJ)   on Sept. 29, stating that the exploration, development and utilization of inexhaustible renewable energy source are not subject to the 60:40 foreign equity limitation as provided under Section 2, Article XII of the Constitution.

The DOJ said that constitutional foreign ownership restriction on the exploration, development and utilization of natural resources only covers things that are susceptible to appropriation, thus exclude the sun, the wind and the ocean.

The DOJ, however, said that the IRR of the RE Act of 2008 must be amended to conform to the opinion.

“With the impressive amount of interests the DOE has been receiving both from the local and foreign investors in RE development, particularly in the offshore wind potential, the government 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 foreign citizen or Filipino and/or foreign-owned corporations or associations,”  Lotilla said.

However, Lotilla said the appropriation of waters direct from the source was still subject to   foreign ownership restriction under the Water Code.

The DOE said the department circular would take effect 15 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 agency earlier said the intention of the circular was not to change any of the classifications of renewable energy or change any process, but just to remove the restriction in ownership.

It had also assured the public that opening the RE sector to full foreign ownership would not be to the detriment of Filipino developers.

The agency said opening the market or investment for foreign resources does not mean that foreign investors are given preference.

“It is stated in the Constitution that we do give preference to Filipinos, whether in the utilization of our natural resources or in investments.  Applications goes through legal, technical, and financial review in order to protect our interests,” the DOE said.