Renewable energy investments in the country are not subject to the Constitution’s 40% foreign ownership restriction, the Department of Justice (DOJ) said.
In an opinion released over the weekend, the DOJ opined “that the Constitutional foreign ownership restriction on the exploration, development and utilization of natural resources only covers things that are susceptible to appropriation, thus excluding the sun, the wind, and the ocean”
The DOJ further explained that under Article XII Section 2 of the Constitution, the phrase “all forces of potential energy” should be interpreted to exclude “kinetic energy.”
The Department of Energy (DOE) explained that “potential energy” is “energy at rest”. In contrast “kinetic energy” is “energy in motion”, adding that renewable energy sources like solar, wind, hydro, and ocean or tidal energy are considered kinetic energy sources.
DOJ said that the Implementing Rules and Regulations (IRR) of Republic Act No. 9513 or the Renewable Energy Act of 2008 must be amended to conform with the released opinion.
Lotilla said the DOE will be working on the 40% equity limit on foreign investors included in the RE Law’s IRR.
“The DOE is preparing the necessary amendments to Rule 6, Section 19 of the IRR of the RE Law,” Lotilla stated.
The current ruling states “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.”