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Foreigners may now engage in exploration of PH’s renewable energy

FOREIGN citizens or foreign-owned entities may engage in the exploration, development, and utilization of the country’s renewable energy (RE) resources such as solar, wind, biomass, ocean or tidal energy following the amendment of Section 19 of the Implementing Rules and Regulations (IRR) of the Renewable Energy (RE) Act of 2008.

Energy Secretary Raphael P.M. Lotilla signed on 15 November 2022 Department Circular (DC) No. 2022-11-0034 which prescribes the amendment to Section 19 of Department Circular 2009-05-0008 titled Rules and Regulations Implementing Republic Act No. 9513, otherwise known as The RE Act of 2008.

The amendment stemmed from the Opinion released by the Department of Justice – Philippines (DOJ) on 29 September 2022 that constitutional foreign ownership restriction on the exploration, development and utilization of natural resources only covers things that are susceptible to appropriation, thus exclude the sun, the wind, and the ocean.

The DOJ, however, noted in the said Opinion that the IRR of the RE Act of 2008 must be amended to conform to the Opinion.

“With the impressive amount of interests the Department of Energy (DOE) 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/or foreign citizen or Filipino and/or foreign-owned corporations or associations”, Secretary Lotilla said.

The Secretary stressed, however, that the appropriation of waters direct from the source shall 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 further states 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 sixty percent (60%) 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 has been relaxed, we expect an increase of 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,” the Secretary said.

DC No. 2022-11-0034 will take effect fifteen (15) days upon its publication in two newspapers of general publication and filing with the University of the Philippines Law Center – Office of the National Administrative Register.

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