Energy Secretary Raphael Lotilla signed on Wednesday a department circular prescribing the amendments to the implementing rules and regulations of the Renewable Energy Act of 2008 that would effectively open the sector to foreign investments.
Lotilla signed Department Circular No. 2022-11-0034 which amends Section 19 of DC 2009-05-0008 or the IRR of Republic Act No. 9513, otherwise known as the RE Act of 2008.
DC No. 2022-11-0034 will pave the way for foreign citizens or foreign-owned entities to explore, develop and utilize the country’s renewable energy resources such as solar, wind, biomass, ocean or tidal energy, according to the department.
The amendment stemmed from the opinion released by the Department of Justice on Sept. 29 that constitutional foreign ownership restriction on the exploration, development and utilization of natural resources only covers things that are susceptible to appropriation, thus excluding the sun, the wind and the ocean.
The DOJ said the IRR of the RE Act of 2008 should be amended to conform to the opinion.
“With the impressive amount of interests 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 a foreign citizen or Filipino and/or foreign-owned corporations or associations,” Lotilla said.
The energy chief said, however, the appropriation of water direct from the source should continue to be subject to the foreign ownership restriction in the Water Code.
Rule 6, Section 19 (B) of the IRR of the RE Law stipulates that “the exploration, development, production and utilization of natural resources shall be under the full control and supervision of the State.”
It provides 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.
“The country has a vast potential in RE development. Now that the foreign equity restrictions in the RE sector have been relaxed, we expect an increase in 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.
DC No. 2022-11-0034 will take effect 15 days upon publication in two newspapers of general publication and filing with the University of the Philippines Law Center-Office of the National Administrative Register.