DOE allows 100% foreign ownership on huge geothermal projects; Infrawatch says it’s unconstitutional

October 28, 2020

Foreigners with at least $50 million capitalization could now own up to 100 percent of large-scale geothermal exploration, development, and utilization projects in the Philippines, according to the Department of Energy.

In a statement on Tuesday, Energy Secretary Alfonso Cusi said under the Financial and Technical Assistance Agreements (FTAAs), the Philippine government and foreign contractors could enter into large-scale geothermal projects. The President should sign the FTAAs.

"While we have initially embraced a technology neutral policy, our periodic assessment of our country's energy requirements is paving the way for innovative adaptations in our policy direction,” Cusi said.

The Energy chief said he signed recently a Department Circular providing the guidelines for the third Open and Competitive Selection Process (OCSP3) in the awarding of Renewable Energy Service Contracts.

“From an investment perspective, OCSP3 allows for 100 percent foreign ownership in large-scale geothermal exploration, development, and utilization projects,” he said.

But Terry Ridon of think-tank Infrawatch PH said the DOE's move was unconstitutional.

"The 1987 Constitution and the Mining Act prohibits foreign firms from entering into large scale geothermal projects for one simple reason. Geothermal energy is not a mineral resource, but a force of potential energy," he said in a statement on Wednesday.

Ridon, Infrawatch PH convenor and former House energy committee member, cited that under the Mining Act of 1995, geothermal energy is excluded from the list of substances defined as minerals, together, including coal, petroleum, natural gas and radioactive materials.

The statute remains the specific governing law relating to the exploration, development and exploitation of mineral resources, not the Renewable Act on which the energy department policy is based, he said.

Under the 1987 Constitution, a distinction is made between minerals and forces of potential energy, which is what geothermal energy essentially is, Ridon explained.

"As such, the government cannot enter into financial and technical assistance agreements with foreign-owned corporations for the development of large-scale geothermal projects. The Constitution is clear that the President can only sign FTAAs relating to minerals, petroleum and other mineral oils," Ridon stressed. Celerina Monte/DMS