Philippine Energy Policy Attracts Scores of Investors, Both Domestic and Foreign

By Dominick DalSanto

MANILA, Philippines – “Fortune favors the bold” might as well be the motto of the Philippines regarding their energy policy and their efforts to achieve their goals. However, a bold plan is only the first step to achieving the colossal task of weaning an entire country off its dependance on foreign-sources fossil fuels. The logistics of the effort are proving to be more than a challenge for even the most developed of nations. How the Philippines are stepping up to the challenge and the level of importance placed on a clear, comprehensive and decisive energy plan can be a lesson for other countries to emulate.

Renewable energy development in the Philippines is vital because the nation is one of the fastest growing in Asia, with over 92 million residents. The population of the Philippines is expected to keep growing substantially in coming years due to high birth rates. As population and economy continue to grow, meeting the increased demand for electricity will pose a difficult challenge for the island nation. The cost of transmitting power and transporting fuel to the more than 7,000 islands of the Philippine archipelago and to isolated missionary areas is very high. Philippines has the highest electricity rate in Asia, followed by Japan. With this in mind, the government has decide to take action now to begin reduce its reliance on costly fuel imports and tap its vast potential for renewable, locally produced energy.

Government, Corporate, and Private Efforts Working Together

The Government of the Philippines says that it views the development of renewable energy sources of national importance. To that effect, the Philippine Department of Energy (DOE) has set goals for the country regarding the development of renewable energy (which have been codified in several laws). According to the Philippine Energy Plan 2009 − 2030, the country plans to increase renewable energy capacity by 100% by 2020, to have renewables account for 50% of all energy by 2030,  increase non-power contribution of renewable energy to the energy mix by 10 million barrels of fuel oil equivalent (MMBFOE) in the next ten years and keep self-sufficiency level at 60%. To meet these goals the DOE aims to substantially increase geothermal, hydroelectric sectors, as well as biomass solar and ocean power. It also plans to be the number one wind energy producer in South-East Asia.

To meet this goal, the government has begun working with developers to begin tapping its extensive wind energy potential, estimated to theoretically contain over 70,000 MW of potential capacity. It has taken steps to encourage private developers and investors, both foreign and domestic. These methods include offering a feed in tariff to increase return on investment, and offering assistance in researching and developing potential new sources.

The favorable renewable energy business climate fostered by the government is beginning to have the desired effect. The Philippines is now attracting sizable amounts of investment for renewable energy development. Potential investors and developers, both domestic and foreign are now jumping at the chance to get in on the action.

Domestic and International Investors and Developers Pouring Into The Philippine Renewable Energy Market

One of the leading renewable energy companies operating in the Philippines is Philippine Hybrid Energy Systems, Inc. (PHESI) The company is currently developing several renewable energy projects in the Philippines, the largest and most current being its 48MW wind farm in the province of Oriental Mindoro. PHESI, Inc. which is connected with US-based developer BreezElectric, has worked for years developing renewable projects in the country, including several of the largest hydroelectric installations.

In addition, the company counts among its directors international developers Armando “Andy” De Rossi and Samuel DalSanto. De Rossi, a native of Italy, that has called the Philippines home for over 40 years, is one of SouthEast Asia’s leading infrastructure developers, having completed projects in the Philippines, Laos, Vietnam, and Malaysia. Samuel DalSanto of Oceanside, California, USA, a third generation of industrial businessman, got his start working at the ground level of the family business Baghouse.com, a leading industrial pollution control technology manufacturer and service provider, before eventually becoming Chairman of Baghouse.com. Now Samuel serves as the CFO of PHESI, working very closely with De Rossi to raise capital for the company’s projects.

The company, which has several infrastructure projects lined up, is actively seeking capital investment from a variety of sources. While raising the capital needed for such a large project is a daunting task, the company’s projects, specifically the Oriental Mindoro wind farm, is attracting lots of interest, from international firms, and investors, even to local celebrities.

Yilmaz Bektas, the former husband of Filipino superstar Ruffa Gutierrez is considering making a substantial investment in PHESI, Inc. Recent reports say that Bektas, whose marriage to former runner-up Miss World Gutierrez is still regular tabloid fodder throughout the Philippines, recently met with PHESI, Inc executives to discuss investing on behalf of his family business Bektas Group of Companies. Continuing the government’s active role in the developmental process, the meeting also included Department of Energy Undersecretary, Atty. Jay Layug, Jr., and Congressman Rodolfo Valencia, Representative of the 1st District of Mindoro. Though the details have yet to finalize, De Rossi says he is confidant that these and other potential local investors “truly care about the Philippines. They are passionate about what we do because our projects will stimulate local economies as well as provide a clean and abundant source of renewable energy for future generations to come.”

While these investors are some of the more interesting, they are by no means the only ones interested in the project. “I am very happy to have met the Bektas family and pleased to hear about their enthusiasm for the Mindoro project” states PHESI CFO Samuel DalSanto. “At this time, we are reviewing other credible offers by a variety of investors and investment companies. I, along with the Board of Directors of PHESI need to review all such proposals to determine the best terms for the company before finalizing any such deal.”

Whats The Lesson? Comprehensive Energy Policy And Favorable Business Climate Draw Investors

Clearly, the government’s efforts to encourage investment and development of the nation’s renewable energy resources are finding success. “The government of the Philippines has a clear plan to address its energy needs for the future, and they have made it a priority now to take steps to ensure their country is not held back in the future by the high cost of fossil fuels for power in their country. “Obviously, the government’s attitude towards growing the renewable energy sector plays a large role in why the Philippines are so attractive from a developer’s and investor’s viewpoint” says Samuel Dalsanto. “Add to that the ease of doing business here in what is normally in other countries such a difficult to enter market due to over-regulation, and the high rate of return for investors here, makes the Philippines one of the best places for renewable development in the world.”

While the Philippines are a long way from reaching their renewable energy goals, it is more than commendable that they have set ambitious, but reasonable goals in their energy policy, even while many other countries lack even a national energy plan. In addition, rather than being a patchwork of different attitudes and competing ideologies, the plan is backed up by concrete actions on the part of the government to support the development of its vast renewable energy resources by both domestic and international firms and investors. The favorable business climate and efforts to increase the ease of doing business in notoriously over-regulated power generation sector contribute to the overall attraction for stake-holders.

With this in mind, other countries will need to match or best the Philippine efforts if they are to attract similar investment. “As it stands now, no one has a better overall potential than the Philippines. Until someone else comes along with better reasons to entice us to go elsewhere, we see ourselves working here in the Philippines for the foreseeable future.”


Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>