Alyssa Marie Bautista

2011-01172

Ma. Leneth A. Reyes

2012-29567

BS Geodetic
Engineering
UP Diliman

The State of
Philippine Energy
A Case Study Report

Abstract
The paper aims to analyze the state of Philippine energy by looking at
different national factors. On top of this, the researchers aim to correlate
existing energy laws in the country with the present conditions of the
economy and environment with regard to energy consumption. It can be
stated that there is an inadequacy in the laws to control the exploitation of
natural energy sources found in the country. The country could have
developed facilities and processes which could efficiently extract these
sources for the countrys own use. Laws could have been made to take better
control of these goods. In effect, the country was left to depend on exported
energy sources which are far more expensive. In addition to this, no law has
yet to be legislated that is satisfactory enough to overlook the present
condition of the environment due to the increasing consumption of energy
brought about by industrialization. In conclusion, it has to be a necessary act
at the moment to conduct new surveys and studies that would justify the
present needs in the control of energy consumption and sources exploitations
and also, lessening the impact of these to the environment.

Introduction
The Philippines is a net energy importer in spite of low consumption levels
relative to its Southeast Asian neighbors. The country produces small
volumes of oil, natural gas, and coal. Geothermal, hydropower, and other
renewable sources constitute a significant share of electricity generation.
In 2011, total primary energy consumption in the Philippines was roughly 1.3
quadrillion British thermal units (Btu). Oil constituted roughly 41% of total
consumption, coal made up 22%, biomass made up 19%, and the remainder
came from natural gas and various renewable sources.
In this case study, we would like to analyze the effectiveness of the
Philippines Legal Framework for Energy Exploitation, Development and
Utilization. This includes Oil Exploration and Development Act of 1972, Coal
Development Act of 1976, Philippine Renewable Energy Act of 2008 and
Philippine Biofuels Act of 2006.

Existing Laws
Oil Exploration and Development Act of 1972
This act aims to ensure a continuous, adequate, and economic supply
of energy with the end in view of ultimately achieving, self-reliance in the
country's energy requirements through the integrated and intensive
exploration, production, management and development of the country's
indigenous energy resources, and through the judicious conservation,
renewal, and efficient utilization of energy to keep pace with the country's
growth and economic development and taking into consideration the active
participation of the private sector in the various areas on energy resource
development; and (b) to rationalize, integrate, and enhance productivity in
power energy without sacrificing ecological concerns.
Coal Development Act of 1976
The purposes of this Act are to promote and accelerate the
exploration, development, exploitation, production and utilization of coal
resources.
The Government, through the Energy Development Board, shall be
responsible for the exploration, development and production of coal
resources. The Energy Development Board shall establish coal regions, and in
each region it shall establish areas available for coal operating contracts.
Section 7 gives provisions on existing permitteess and lessees. Obligations of
operators under coal operating contracts and minimum terms and conditions
are defined in sections 9 and 11. Incentives shall be granted to operators, and
to enterprises or industries which will convert their existing oil fired plant
facilities into coal burning facilities

Philippine Renewable Energy Act of 2008

This act gives incentives to investors and energy producers to build RE
power plants instead of fossil fuel-based systems. The legislation aims to
accelerate the development and use of the nation's RES through fiscal and
non-fiscal incentives for investors. It also assures investors in wind, solar,
ocean, run-of-river hydro power and biomass a secure market in electricity
generated from these clean sources through feed-in tariffs. Other incentives
include duty-free importation of equipment, tax credit on domestic capital
equipment and services, special realty tax rates, income tax holidays, net
operating loss carry-over, accelerated depreciation and exemption from the
universal charge and wheeling charges. The bill also seeks to institutionalize
a Renewable Portfolio Standard requiring the country's electric utilities to
obtain a certain portion of their electricity from clean, home-grown RES.
Philippine Biofuels Act of 2006
The act mandates the government to reduce the countrys
dependence on imported fuels, to phase out the use of harmful gasoline
additives, to rather use biofuels, and to create an incentive scheme. With the
creation of a National Biofuel Board (NBB), it shall monitor the Biofuel
Program and ensure the sufficient supply of sugar to meet the domestic
demands.

The State of Philippine Energy

Similar to most other developing countries, the Philippines engaged in a wideranging process of economic liberalization in the 1990s, which saw the
massive expansion in the private ownership as well as operation of key
economic sectors such as water, infrastructure and electricity. It was hailed as
a natural remedy to decades-long crony capitalism under the former Marcos
regime. As far as power-generation is concerned, the transition to a marketeconomy culminated in the passage of Republic Act 9136, or the Electric
Power Industry Reform Act, better known as EPIRA, in 2001.
After the power crisis in the early 1990s, the government set out to
restructure and privatize the power sector to ensure adequate electricity
supply and investment in energy infrastructure. The Electric Power Industry
Reform Act (EPIRA) of 2001 set into motion the break-up and eventual
privatization of state-owned enterprises. NPCs assets designated for
privatization were organized into two state holding companies: the National
Transmission Corporation (TransCo), and the Power Sector Assets and
Liabilities Management Corporation (PSALM), which assumed control of NPCs
power plants. Under EPIRA measures, the government was also required to
sell its equity stake in the Manila Electric Company (Meralco), the countrys
largest electricity distribution company that serves the island of Luzon and
the metropolitan Manila area. By 2007, 10 of 23 hydro and coal-fired thermal
plants had been privatised, amounting to some 43% of the privatization target
of 70% of the overall NPCs assets that would signal open access and retail
competition. This has earned valuable funds for the government, some
US$2.682 billion, though lower than FDC and government targets. Generation
of electric power is now competitive and open in the country. The Power
Reform Law did not introduce any radical changes to the distribution sector.
Both the transmission and distribution of electricity are regulated common
carrier businesses, requiring a national franchise.
This was landmark legislation, which promised to lower electricity costs,
expand the country's capacity for energy production, and enhance the
efficiency of its transmission by supplanting the Rate of Return on Base
(RORB) system with a Performance-Based Regulation (PBR) regime. In reality,
however, the increasingly privatized electricity sector would be dominated by
the country's leading business families, which turned electricity production
into one of the most profitable businesses in the country -- at the expense of
the overall economy and public welfare.
However, total final energy consumption in 2008 amounted to 22,770 ktoe.
The transport sector in the country contributed most to this, with 33.4% of
TFC being attributed to the sector. The industrial and residential sector
contributed 27.6% and 27.1% respectively, with the remainder being
attributed to the commercial and agricultural sectors. Total primary energy
supply per capita was 0.45 ktoe in 2008. The government is committed to
promoting energy efficiency standards in all sectors, with projected savings of
229 million barrels of fuel oil equivalent (Mbfoe), and 50.9 million tonnes of
CO2 available.

Total installed electricity capacity (2007): 15,800 MW Thermal: 79% Hydroelectric, Other renewables: 21% Total primary energy supply (2008): 41,067
ktoe Oil and products: 32.7% Geothermal/Solar: 22.5% Comb. renew. and
waste: 18.6% Coal/Peat: 16.4% Natural gas: 7.8% Hydro-electric: 2.0% The
Philippines energy consumption per capita remains low among the APEC
member countries. Due to its relatively small indigenous energy reserves and
growing consumption, the Philippines is a net importer of energy, particularly
of oil, coal and natural gas. An effort to limit coal imports by 20% to reduce
the countrys dependence on imported energy sources has led to expanded
exploration for new oil and gas reserves, aiming to increase them by
approximately 20%. Part of the strategy is thus to prioritise use of natural gas
for power generation.

The heavy dependence on imported fossil fuels for power generation in the
Philippines leaves the country vulnerable to price shocks in the international
markets. Considerable indigenous geothermal resources are in the process of
being fully developed, but until such a time as this occurs, imported fossil
fuels will continue to dominate the energy mix. Despite current electricity
generation being sufficient to meet demand, export capacity is limited, and
the expansion of generating capacity in the country is primarily focused on

coal power.

Conclusion
The Philippines, despite being always praised as a country blessed with
natural resources, is still suffering from energy crisis. Though it is not a
petroleum-rich country, other forms of energy source such as solar, wind,
hydro and geothermal can still be improved as an alternative for fuel. These
energy sources, aside from the fact that they are clean and safe, are much
cheaper and are readily available in the Philippine environment.
From the four existing laws that we have, the Biofuels Act was not given much
attention. If executed wisely and with consisted funding from the government,
Biofuels Act would serve as an alternative for coal usage. It is also cleaner and
safer to use.
Though these laws aim to support our energy consumption, it is still a bad
move to resort to privatization of our power sector. As of now, Philippiness
topped as the country in Asia with the most expensive electricity rate. This
has always been a big setback for the Filipinos. What we did not see with
privatization is that these private sectors that have ruled over our energy
resources prioritized profits over capacity-building and accessibility.
The key problem with the privatization process in the developing world is its
inherent vulnerability to regulatory capture -- the process by which major
businesses and special interests co-opt a weak, post-transition state in order
to control profitable, strategic enterprises, which were previously held by the
government.

References
Biofuels Act of 2006 (RA 9367) | Clean Air Initiative. (n.d.). Retrieved February 8, 2015, from
http://cleanairinitiative.org/portal/node/1572
Blikom, L. (2013, March 13). LNG in the Philippines - DNV GL Blog - Energy of the FutureDNV GL Blog
Energy of the Future. Retrieved February 8, 2015, from http://blogs.dnvgl.com/lng/2013/03/lng-in-thephilippines/
Energy Profile of Philippines | ci:grasp. (n.d.). Retrieved February 8, 2015, from http://cigrasp.pikpotsdam.de/countries/2/energy_profile
Heydarian, R. (2013, December 23). Philippines Electricity Crisis: How Regulatory Capture Undermines
Emerging Markets. Retrieved February 8, 2015, from http://www.huffingtonpost.com/richard-javadheydarian/philippines-electricity-crisis_b_4490680.html
ISIS/WWW System. (n.d.). Retrieved February 8, 2015, from http://faolex.fao.org/cgi-bin/faolex.exe?
rec_id=051962&database=faolex&search_type=link&table=result&lang=eng&format_name=@ERALL
Republic Act No. 7638. (n.d.). Retrieved February 8, 2015, from
http://www.doe.gov.ph/pecr5/index.php/coal/coal-fiscal-legal/82-republic-act-no-7638
U.S. Energy Information Administration - EIA - Independent Statistics and Analysis. (n.d.). Retrieved
February 8, 2015, from http://www.eia.gov/countries/country-data.cfm?fips=rp