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Senate approves bill on LGU access to proceeds from energy development

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THE Senate on Monday passed on third and final reading the bill lifting the restrictions of local government units’ (LGUs) on the use of proceeds from the development and utilization of energy resources.

Senate Bill No. 1789 seeks to amend a provision in Republic Act No. 7160 or the Local Government Code to allow LGUs full control on how their share from the proceeds will be spent.

The bill was approved with 20 affirmatives, no negative vote, and no abstention. It was introduced and sponsored by Senator Juan Edgardo M. Angara, chair of the Senate committee on local government.

Under the present LGC, at least 80 % of the proceeds from “the development and utilization of hydrothermal, geothermal and other sources shall be applied solely to lower the cost of electricity in the LGU where a source of energy is located.”




Mr. Angara said the restriction in the law has limited the efficient use of the LGU’s resources, which may have been used to non-priority projects to lower electricity costs if only to utilize the funds.

The proposed measure allows the LGUs to use such proceeds to critical projects identified in their medium-term and annual investment programs.

“The goal of this bill is to revive the ‘fiscal autonomy’ provided in the Local Government Code to LGUs, particularly on provisions regarding hydrothermal, geothermal, and other sources of energy. What is the purpose of dividing the share of the national wealth to LGUs if they are not allowed to identify how to utilize it?” Mr. Angara said. — Camille A. Aguinaldo