DOJ: Renewable energy sector excluded from foreign investment cap

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Metro Manila (CNN Philippines, October 2) — Foreign ownership in the renewable energy market is not covered by the so-called 60-40 investment rule, according to the Department of Justice (DOJ).

Citing DOJ Opinion No. 21 series of 2022 issued Sept. 29, the Department of Energy (DOE) said Sunday 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 legal opinion further stated that the investment cap only seeks to "preserve for Filipinos limited and exhaustible resources."

The DOJ also noted that the phrase "all forces of potential energy" under Section 2, Article XII of the Constitution does not include kinetic energy, such as renewable energy sources being harnessed.

Meanwhile, the DOJ said "appropriation of waters, direct from the source, for power generation" should continue observing the 60-40 equity rule.

However, it noted that the DOE still has to amend the implementing rules and regulations (IRR) of the Renewable Energy Act of 2008 to conform to the opinion.

"We express our appreciation to DOJ Secretary Crispin ‘Boying’ Remulla and his legal team for this favorable development which will pave the way for the opening of foreign investments in renewable energy development," Energy Secretary Raphael Lotilla was quoted as saying in a statement.

Lotilla said the DOE would start looking into the 40 percent equity limit for foreign investors.

"The DOE is preparing the necessary amendments to Rule 6, Section 19 of the IRR of the RE Law,” the energy chief added.

Lotilla said this was a "welcome development" as he stressed the crucial role of the private sector in boosting the country's renewable energy space.

The national government targets to increase the share of renewable energy in the power generation mix to 35 percent by 2030 and 50 percent by 2040.