By: Alexander Ablaza, Philippine Energy Efficiency Alliance (PE2) President
The passage of the New Government Procurement Act (NGPA) certainly delivers the transformative and innovative procurement solutions which will address the deficiencies of the superseded procurement law, once known as the GPRA, especially in the area of energy efficiency procurement. We commend the DBM and the GPPB-TSO in their diligent efforts in the recent years to push and enable life cycle cost analysis to assess the total cost of ownership as a method to determine the most economically advantageous and responsive bid.
Under the previous GPRA procurement framework, it was extremely difficult for more energy-efficient technologies, systems and products to be selected solely on the basis of initial or upfront acquisition cost. Because of this, the government unknowingly purchased equipment for public facilities with higher life cycle costs due to the higher energy consumption through its economic life spans.
With the NGPA, government entities can now select more energy-efficient solutions because they can bid out on the basis of lowest total cost of ownership or least life cycle cost. Such energy efficiency procurement will translate to a significant reduction in government budgets for fuel and electricity consumption and in greenhouse gas emissions.
While these are all helpful to make the public sector more energy-efficient, PE2 hopes that the IRR will have more specific guidelines for the procurement of energy service company (ESCO) performance contracts, which will allow private sector investments in government energy efficiency projects. The energy efficiency sector likewise hopes that the procurement capacities of government entities be quickly developed so that these innovative modalities may be rolled out within the first two years of the IRR approval.
About the Author
Alex Ablaza has spent the last 25 years of his 40-year career accelerating energy efficiency and clean energy investments across 17 Asian markets, helping mobilize over USD 3 billion in capital. He leads efforts to scale energy efficiency through finance innovation, investment structures, and policy reform across Asia and the Middle East.
He chairs the Asia-Pacific ESCO Industry Alliance and the Philippine Energy Efficiency Alliance, and co-founded the Global ESCO Network. He also co-chairs a taskforce under the global Mission Efficiency coalition.
As founder and CEO of Climargy, he heads the world’s first private Super-ESCO aggregator of energy efficiency projects.
Mr. Ablaza holds a BS in Civil Engineering and a Master’s in Business Economics, and brings 37 years of project and corporate management experience.
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