BusinessMirror September 19, 2020

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ROTARY CLUB OF MANILA JOURNALISM AWARDS

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A broader look at today’s business

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Saturday, September 19, 2020 Vol. 15 No. 345

EJAP JOURNALISM AWARDS

BUSINESS NEWS SOURCE OF THE YEAR (2017, 2018)

DEPARTMENT OF SCIENCE AND TECHNOLOGY

2018 BANTOG MEDIA AWARDS

PHILIPPINE STATISTICS AUTHORITY

DATA CHAMPION

P25.00 nationwide | 12 pages | 7 DAYS A WEEK

FEODORA CHIOSEA | DREAMSTIME.COM

Owning the sun

Lifting the 60/40 equity yoke on Renewable Energy investments, as advocated by DOE Secretary Alfonso G. Cusi, sparks an interesting debate on the ownership limits for RE.

‘I

By Pedro Maniego Jr.*

’M looking at allowing 100-percent investment or ownership in renewables.”

Energy Secretary Alfonso G. Cusi made this bold statement during an online forum of the Philippine Energy Independence Council in July. Cusi was also quoted having said he is “hoping it could be done with a circular through DOE, but if not, I will go through legislation. I will seek the help of the Joint Congressional Energy Commission to help expedite that so we can accelerate the development of renewables in our country.” We agree with Cusi. The need to attract investments in renewable energy (RE) is urgent. It’s high time we tackled the 60/40 equity requirement on RE projects and the way the ownership restrictions have befuddled investors and dampened clean energy investments in the country. Cusi posed a critical question: Can the equity requirement be lifted through a circular, without need of legislation? Our answer: Yes.

Leader to laggard

E

By Drew Armstrong | Bloomberg News

VERY effort to develop a new medicine is like launching a ship across the ocean to hunt for riches. Over the years, we’ve improved the hulls and masts, the maps are better, the sailors more experienced. But even so, vessels get turned back or new lands are barren. And, sometimes, a squall takes down the boat and all her crew. Continued on A2

Trump’s vaccine promises defy the lessons of pharmaceutical history

COMPARED to other Asian countries, the Philippines fares well in terms of RE share at 29 percent of installed capacity (in megawatts or MW) and 20.8 percent of power generation (in gigawatt hours or GWh) as of 2019. This is attributable to large hydropower and geothermal power plants, most of which were initiated during the Marcos administration. However, the 20.8-percent RE share in 2019 is less than half of the 44-percent peak RE generation share reached in 1996. The Philippines installed the first utility scale solar and wind power plants in Southeast Asia. When Cagayan Electric Power and Light Co. (Cepalco) completed its 1-MW solar photovoltaic (PV) project in 2004, it was at the time the largest solar power plant in the developing world. The Northwind Bangui Bay Wind Farm at 33 MW was completed in 2005. Both projects went into operations before the 60/40 equity was imposed. Republic Act 9513, also known as the RE Act, was enacted in 2008, ahead of other Asean countries. With its host of fiscal and nonfiscal incentives, the RE Act was hailed as one of the most comprehensive laws on RE development. Despite the RE Act’s incentives, other Asean countries have surpassed the Philippines in terms of RE development. According to the International Renewable Energy Agency, the installed RE power generation capacity of Vietnam, Thailand and Indonesia were 19 GW, 10 GW and 9.5 GW, respectively, in 2018. In contrast, the installed RE capacity of the Philippines has stagnated at around 7 GW since 2016. The Philippines has always lagged behind its Asean neighbors in attracting foreign direct investments (FDIs). In 2018 our country ranked fifth behind Singapore, Indonesia, Vietnam and Thailand with just $9.8 billion out of a total $155-billion FDI inflows to Asean. The 60/40 equity restriction was cited by many as a major obstacle to FDIs. On the other hand, Vietnam has met great success in attracting FDIs by allowing 100-percent foreign ownership in the power sector. In 2009 Vietnam only had two FDIs in RE projects with registered capital of $90.5 million. By 2016, Vietnam’s FDIs in RE reached a cumulative amount of $8.4 billion.

Construing that ALL forces of potential energy are owned by the State does not make technical sense.... While natural resources located within our national boundaries rightfully belong to the State, the same attribution cannot be applied to solar and wind energy.

VAMPY1 | DREAMSTIME.COM

Do the Constitution and relevant laws mandate 60/40 equity for RE projects?

TO determine whether the 60/40 equity requirement should be imposed on RE projects, we must start with the fundamental law of the land—the Constitution. Here is the relevant provision: Continued on A2

PESO EXCHANGE RATES n US 48.4540

n JAPAN 0.4626 n UK 62.8836 n HK 6.2522 n CHINA 7.1633 n SINGAPORE 35.7041 n AUSTRALIA 35.4102 n EU 57.3938 n SAUDI ARABIA 12.9187

Source: BSP (September 18, 2020)


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