Energy Sector Permits Full Foreign Ownership in Geothermal Projects
A department circular has paved the way for full foreign ownership in the geothermal segment of the energy industry but under the conditions of power projects and integrated steam resource development. Energy Secretary Alfonso G. Cusi has signed the order, saying that this was under the third Open and Competitive Selection Process (OCSP3) in the awarding of renewable energy (RE) service contracts.
Cusi said, “From an investment perspective, OCSP3 allows for 100-per cent foreign ownership in large scale geothermal exploration, development and utilization.”
As classified by the energy department, the entry of the foreign investors must be underpinned by the Financial and Technical Assistance Agreements (FTAAs).
Cusi said, “FTAAs may be entered into between foreign contractors and the Philippine government for the large-scale exploration, development and utilization of natural resources, and are signed by the President.”
National Renewable Energy Board (NREB) Chairperson Monalisa C. Dimalanta explained that since geothermal is categorized as a mineral resource under the Renewable Energy (RE) Act, “the Constitution allows FTAA for exploration, development and utilization of petroleum, mineral and mineral oils…so it (foreign ownership) is allowed in geothermal as long as an integrated operation for upstream (which is the exploration part) to downstream (which is the power generation segment).”
She added, “The policy is for integrated power operations, at least under the RE Act, and not sure on just the upstream part. Because even the government share is based on energy sales. But we can study that for non-power applications,”
There are, of course, oppositions. Former Congressman and InfraWatch Convenor Terry L. Ridon said, “Geothermal energy cannot be considered as a mineral resource. The exploration, development and exploitation of mineral resources, not the RE Act on which the energy department policy is based.”
The lawmakers also remarked on the 1987 Constitution, “A distinction is made between minerals and forces of potential energy, which is what geothermal energy essentially is.”