EO 30 and Energy Projects of National Significance

By now, most have probably heard or read about the Duterte government’s infrastructure and economic plans. Its long-term vision, Ambition 2040, aspires for Filipinos to enjoy a comfortable and secure existence as an upper middle-income economy, while Dutertenomics and the “Build, Build, Build” seek to usher in a golden age of infrastructure.

While much has been said about the country’s potential for economic growth, there hasn’t been quite enough on the integral role played by the energy sector in realizing that potential.

To support the economic and infrastructure plans the Philippines will have to nearly double its power generating capacity over the next decade or so.

In fact, during the recent ASEAN Senior Officials Meeting on Energy (SOME), Department of Energy Secretary Alfonso Cusi reiterated the Philippines’ need to increase its generating capacity by 44,000 MW by 2040 to support the projected increase in demand. No small feat considering that it takes three to four years to construct a power plant, not to mention the additional delays brought about by to the time it takes to secure the necessary permits before construction or the possible delays when securing the required regulatory approval to dispatch power after construction.

While President Rodrigo Duterte’s recent State of the Nation Address (SONA) could have been a platform for the administration to reiterate the role of a reliable and competitive power sector in the country’s industrialization plans, the President did not touch on the topic of power and energy this time around. However, about a month before his second SONA he did issue an executive order creating a task force to establish a simplified approval process for permits and licenses to fast track the implementation of big-ticket energy projects, setting into motion the fulfillment of a promise he made in his first SONA, a year ago.

President Duterte issued Executive Order (EO) No. 30 s. 2017 on June 28, creating the Energy Investment Coordinating Council (EICC) to spearhead and coordinate the national government’s efforts to harmonize and streamline the regulatory process for energy investments in the country. The EICC is chaired by the Department of Energy (DoE) and is composed of representatives from the Department of Environment and Natural Resources and its bureaus, Department of Finance, Department of Transportation, Department of Justice, as well as a handful of other and agencies relevant to the permitting process.

EO 30 furthermore directs these relevant agencies to act on applications for permits involving Energy Projects of National Significance (EPNS) within thirty days. What makes a project an EPNS was also defined in the Order as major DoE-endorsed energy projects and that are in consonance with specific goals of the Philippine Energy Plan (PEP), such as energy projects that represent significant capital investment, contribute to the country’s economic development, consequential economic impact, or have significant positive impact on the environment.

The issuance of EO 30 is a welcome development since it recognizes the urgent need to construct additional power plants to accelerate and promote rapid economic growth in an open competitive power market environment. Clearly, the order seeks to address the bureaucratic red tape that has hindered the entry of investments into the construction of power plants is worthy cause.

However, going through the text of the EO, it seems focused on streamlining the issuance of permits leading up to construction, but is not as explicit when it comes to the regulatory delays that may come up once the plants have already been constructed, such the delays in the approval of power supply agreements (PSAs) between generating companies and distribution utilities and the issuance of certificates of compliance (COCs) to plants before that can start operating.

Currently, there are over 90 PSAs pending approval by the Energy Regulatory Commission (ERC) since last year. These PSAs represent over 4,000 megawatts of additional power capacity that cannot be distributed to the lack of regulatory approval. The delays in the ERC approval of these agreements has already led to a group of manufacturers and businesses to call for immediate action on these PSAs, since the delays could lead to instability in power supply, threatening their operations.

It hardly makes sense to fast tracking the construction of new power plants, only to hold in abeyance the processing of the approval of the permits needed to supply their power to consumers. It not only contradicts the very objective of EO 30, but could potentially derail the country’s rapid economic growth. Hopefully, when the EICC convenes to craft the rules, regulations and processes for the implementation of the order that they see it the same way.

Some of the new energy policies and pronouncements of the current administration represent big steps towards creating a reliable and competitive energy sector in the Philippines. But while EO 30 may lead to the removal of some of obstacles along the way, several more steps still have to be taken if the sector is to sufficiently power the economic growth envisioned for the country.

Paco Pangalangan is the Secretary-General of CitizenWatch.