19 July, 2019
On 8 March 2019, Philippine President Rodrigo Duterte signed the law that would streamline the permitting process of power generation, transmission, and distribution projects in the Philippines. This is considered a landmark anti-red tape measure seeking to modernise and streamline the permitting process of power projects in the Philippines. The law will take effect 15 days after its publication in at least two national newspapers of general circulation.
Implications for business in the Philippines
The passage of this law is expected to modernise and streamline the permitting process behind power infrastructure projects. The elimination of red tape, which often discouraged foreign firms from entering the power generation industry, will restore investor and business confidence in the Philippine energy sector.
At the same time, the law is aimed at encouraging foreign investors with the capacity to build cutting-edge power plants to enter the market and stimulate competition in the Philippine energy generation industry. Increased competition would drive down generation costs, which could result in the reduction of consumer electricity prices.
Significant provisions of the Law
The law will apply to all new power generation, transmission, or distribution projects throughout the Philippines, all national government departments, agencies, local government units (“LGU”), government-owned and controlled corporations (“GOCC”) and other entities involved in the Permitting Process of energy projects.
Establishment of Energy Virtual One Stop Shop (“EVOSS”)
To implement the law, an EVOSS will be established and will be under the supervision of the Department of Energy (“DOE”). In summary, the EVOSS is an online paperless platform where prospective energy developers can apply, monitor, and receive all the needed permits and applications, submit all documentary requirements, and even pay for charges and fees. It will allow the single submission and synchronous processing of all required data and information, and will provide a single decision making portal for the approval of new energy generation projects. Specifically, the EVOSS will have the following characteristics, among others:
- recognise the legal effect, validity, and enforceability of electronic documents submitted for applications of energy projects;
- utilise an online payment system for all fees and taxes imposed for applications of energy projects;
- provide a secure and accessible paperless processing system for all energy developers;
- provide a secure and accessible system for all government agencies involved in the Permitting Process of energy projects to interoperate with respect to a unified permitting process, uniform templates, mandated processing time, updating and monitoring of all documentary requirements, and other aspects of the processing system;
- operates as a 100% virtual storage and rules driven system built as an integrated shared service of government agencies, LGUs, GOCCs, and other entities involved in the Permitting Process of energy projects; and
- comprises of a technology platform and an operations management software platform for government agencies, LGUs, GOCCs, and other entities involved in the Permitting Process of energy projects to build their defined processes and forms within a strict timeframe using published standards.
Administrative Liability for Public Officers
Furthermore, all government agencies involved will be required to follow a strict timeframe to act on pending applications. The failure of an agency to act within the prescribed timeframe will result in the automatic approval of an application while potential administrative sanctions may be imposed against inefficient public officers to penalise the delay.
As discussed, with the proper implementation of the EVOSS, the law is expected to generate significant investments in the Philippine power industry and encourage competition in such market, which will ultimately drive down electricity costs to consumers in the long term. This will effectively result in an increase in the disposable income of the ordinary Filipino, who may use the increased savings for further consumption or investment in business.
 The comprehensive procedure undertaken in order to put up an energy project, which includes but is not limited to the following phases:
- business registration;
- acquisition of an operating contract or service contract;
- pre-development; and
- construction of a power plant up to and including the date of commercial operations.
The Permitting Process also covers the documentary requirements, taxes, and fees from all government agencies involved in such procedure. However, the operational phase of the project is excluded.
For more information, please contact:
Felix T Sy, Partner, Insights Abodago Philippines (a member of ZICO Law)