(NAR) VOL. 11 NO.2 / APRIL – JUNE 2000
WHEREAS, Executive Order No. 462, Series of
1997, enables the private sector to participate in the exploration,
development, utilization and commercialization of ocean, solar and wind
(OSW) energy resources for power generation and other energy uses;
WHEREAS,
it is in the national interest to accelerate the development and
utilization of OSW energy resources by encouraging greater private
sector investment and participation in the implementation of new
renewable energy (NRE) activities and projects;
WHEREAS,
in line with the government's poverty alleviation thrust especially in
remote rural areas, the use of NRE resources will be prioritized in
electrifying off-grid barangays;
WHEREAS, considering the
important role of the private sector, market-driven approach should be
adopted in the development and utilization of NRE resources;
WHEREAS,
hybrid systems (i.e., using both NRE and conventional) should be
pursued for power generation with special consideration to the technical
and economic aspects of the project.
NOW, THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order:
SECTION
1. Sections 1, 2, 14 and 16 of Executive Order No. 462, Series of 1997,
are hereby respectively amended to read as follows:"Section 1. Exploration, Development and Utilization of OSW Energy Resources.
Subject to existing rights, the government, through the Department of
Energy (DOE), shall engage in the assessment, field verification,
harnessing, development and utilization of ocean, solar and wind (OSW)
energy resources through the participation of the private sector under
production sharing contracts awarded by the Secretary of the DOE, after
due consultation with the host communities and local government units
concerned, through public bidding or negotiation. The production sharing
contractor must meet DOE standards for technical and financial
capability."
"Sec. 2. Scope of Production-sharing Contracts. Production-sharing contracts as herein authorized, shall be applied to projects meeting all of the following criteria:
- Harnesses
OSW resources in lands of the public domain and/or offshore waters
within the Philippine territory, contiguous zone and exclusive economic
zone and exclusive economic zone. All lands or offshore waters covered
by contracts granted under this Order shall be subject in public
easements established or recognized by existing laws;
- Has a net electric output of more than MW for sale to an electric utility.
Projects
that do not meet all of the above criteria shall be considered as
Private OSW Projects and shall be subject to Section 3 thereof.
"Sec. 14. Government Share.
Considering the prospectivity of generating profit from the operation
of the contract, a government share (GS) shall be determined through
bidding or negotiation between the DOE and the contractor. The GS shall
include a signature bonus and production bonus. The signature bonus
shall be given to DOE at the date of signing of the Pre-Negotiated
Commercial Contract upon the issuance of a "Letter of Confirmation" of
the commercial feasibility of the project by the Secretary of the DOE.
The government shall waive the signature bonus on the first project to
reduce the pre-operating cost burden on the OSW production sharing
contractor. The production bonus shall be paid to the DOE at the end of
each calendar year during the commercial phase of the project and shall
be applied only after the project has fully recovered its pre-operating
expenditures. Moreover, to protect the welfare of electricity consumers,
the GS shall be limited to values that shall not result in electricity
prices higher than the contracted selling rates to electric utility in
the area where project is located. The production bonus shall not exceed
utility in the area where project is located. The production bonus
shall not exceed 15% of net proceeds where net proceeds is equal to the
sum of gross sales less operating and maintenance costs."
"Sec. 16. Assistance to OSW Developers. In addition to the incentives and privileges under existing laws, the DOE shall assist OSW developers in the following areas:
- Obtain
all applicable fiscal and non-fiscal incentives, including registration
as pioneer industry under the Board of Investments.
- Allow
OSW developers to charge the cost of assessment, field verification and
feasibility studies of such other sites to its current commercial
projects to encourage the development of more OSW resources in other
sites.
- Secure access to lands and/or offshore areas where OSW energy resources shall be harnessed.
- Undertake
a regular study that will provide the basis for the proper valuation of
intermittent electrical energy generation from OSW resources and
reflect future developments, taking into consideration the vast
differences in scale and application of OSW energy resources."
Sec. 2. Implementing Rules and Regulations.
The DOE, in coordination with concerned government agencies, shall
issue amendments to the existing rules and regulations within sixty (60)
days after effectivity of the Order.
Sec. 3. Effectivity.
This Executive Order shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.
Done in the City of Manila, this 23rd day of April in the year of our Lord, Two Thousand.
(Sgd.) JOSEPH EJERCITO ESTRADA
By the President:
RONALDO B. ZAMORAExecutive Secretary