Full foreign capital in RE projects to bring ‘more supply, lower power prices’

THE Philippines is expected to benefit from newer, cutting-edge technologies after the legal opinion issued by the Justice department that said investments in “inexhaustible” renewable energy (RE) are not subject to foreign ownership limits.

“The opinion of foreign ownership restrictions on renewable energy investments in the Philippines encourages more foreign direct investment into the country,” Emmanuel V. Rubio, president and chief executive officer of Aboitiz Power Corp., said in an e-mail interview on Oct. 25.

Earlier this month, the Department of Energy (DoE) said that investments in the RE sector might be eased after the legal opinion of the Department of Justice (DoJ) that said exploration, development, and utilization of RE sources are not subjected to the 60:40 foreign equity limitation.

As mandated by Section 2, Article 12 of the 1987 Constitution, the state may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60% of whose capital is owned by Filipinos.

After the DoJ legal opinion, the DoE drafted a revised implementing rules and regulations (IRR) of the Renewable Energy Act of 2008, which limits foreign capital in RE projects to 40%.

Mr. Rubio said that with the DoJ opinion, “with more competition in the industry, consumers can look forward to more supply and lower power prices.”

DoE Energy Assistant Secretary Mylene C. Capongcol told BusinessWorld in a Viber message on Oct. 28 that the department targets to release the revised IRR by mid-November.

“We are now collating the comments received and preparing the draft,” she said, adding that the next step is to work with the DoE’s legal service “for the finalization of the revised IRR.”

Alternergy Holdings Corp.’s Vice-President and General Counsel Janina A. Bonoan told BusinessWorld said in an interview last week that the department is set to take out some provisions of the RE Act to lift restrictions on foreign ownership in RE investments.

“We have a consultation with the DoE regarding the proposed provisions on the amendments of the RE law, so they issued draft amendments to the RE law which then deleted Section 19 of the RE [law] IRR,” she added.

Section 19 of the RE law’s IRR states that all forces of the potential energy and other natural resources are owned by the state and should not be alienated.

“The State may directly undertake such activities, or it may enter into co-production, joint venture or co-production sharing agreement with Filipino citizens or corporations or associations at least 60% of whose capital is owned by Filipinos,” Section 19-B. of the RE law’s IRR states.

It also says that foreign RE developers may also be allowed to undertake RE development through an RE service or operating contract with the government.

ACEN Corp. Head of Corporate Communications and Sustainability Irene S. Maranan said that the company expects the legal opinion to help increase investments in renewables.

“This is a welcome move as it could attract more investments in renewables, and help attain the country’s goal to reach 35% share of renewables by 2030,” Ms. Maranan said in a Viber message on Friday. — Ashley Erika O. Jose