World Bank OKs $1.02 billion funding for water, energy security

MANILA, Philippines — The World Bank has approved a $1.02-billion financing package, consisting of a loan and grant, to support efforts to expand and improve access to electricity and water in the Philippines.

In a statement yesterday, the multilateral lender said that it has approved the Second Energy Transition and Climate Development Policy Loan (DPL) comprising a $1-billion loan from the World Bank’s International Bank for Reconstruction and Development and a $20-million performance-based grant from the Livable Planet Fund.

This is the largest amount of support approved by the World Bank for the Philippines.

The DPL builds on gains under the first operation, which established the legal framework for offshore wind, launched the reserve market, expanded retail energy competition and set the groundwork for sustainable local water services.

Through the newly approved DPL, the aim is to address the high and volatile cost of electricity by accelerating the deployment of homegrown energy solutions, while reducing reliance on imported fossil fuels.

This will be done by supporting measures to increase the country’s domestic energy capacity and mobilizing private investment, including the full operationalization of the Renewable Energy Market integration of electric vehicle charging into utility planning and the launch of the country’s first-ever offshore wind auction.

The auction targets 3.3 gigawatts of contracted capacity by 2030, which is enough to support millions of homes. It is also expected to mobilize $7 billion in private investment.

“The Philippines has everything it needs to power itself at lower cost – wind along its coasts, sunlight year-round and geothermal energy beneath its soil,” Zafer Mustafao?lu, division director for the Philippines, Malaysia and Brunei at the World Bank, said.

“This operation helps turn those natural advantages into reliable, affordable electricity for Filipino families and businesses,” he added.

Apart from supporting energy security efforts, the DPL also seeks to tackle long-standing challenges in the water sector, particularly financing and institutional capacity of local government units responsible for providing services.

By supporting cost-recovery tariff frameworks, a unified financing structure, as well as bulk water pricing regulations, the DPL aims to increase the number of local water providers with sustainable business plans from 10 to 100 by next year.

“At a time when global energy markets are deeply volatile, this DPL helps the Philippines take control of its own energy future, support growth and create jobs,” Mustafao?lu said.