A New Law For Geothermal Industry In The Philippines

Abstract

The present industry policy which governs geothermal energy development in the Philippines seems to be unfavorable to attract private sector participation. This is evident in the presence of only two field developers since geothermal exploration begun in the 1970s. The current fiscal incentives being enjoyed by these developers are not enough to warrant continuous sustainable exploration and development of this resource. Presidential Decree 1442, which was signed in 1978, institutionalized the Geothermal Service Contract scheme between the government through the Department of Energy and the interested field developer. Under the scheme, the State owns the resource and has full control and supervision over the exploration, development and utilization of geothermal resource which may directly undertake such activities or enter into a co-production, joint venture or production sharing agreements. The system provides for the development and exploitation of the resource for 25 yrs. extendible for another 15 yrs. while exploration period is negotiable. It is, therefore, the purpose of this paper to determine the impacts and applicability of the present law on geothermal development and the need to pass a new legislation that will provide better incentives for the development of indigenous energy resources such as geothermal.