POLICIESGuidelines for the Endorsement of Energy Efficiency Projects to the Board of Investments for fiscal Incentives

Department Circular No. Dc2021-05-0011

Signed on May 11, 2021

Article II Section 20 of the 1987 Constitution provides that the State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.

The energy-efficiency program is focused on the major energy-intensive sectors. The major users of electricity are the industrial sector (29.12 percent), residential (28.6 percent), and commercial (21 percent) while losses are at 15.2 percent. For the oil-consuming sectors, the biggest are power (37 percent), industrial (23 percent), and transport (13 percent).

The Department Circular aims to provide fiscal incentives to the Energy efficiency projects to the private sector and private enterprise.

To promote RA 11285 as a way of life and doing business, the Department circular encourages the respective companies under the private sector to implement Energy Efficiency projects to be a part of their business plan.

In doing so, it would help the companies from the private sector to cut down on their energy consumption which is a major part of operating expenses in some companies. Energy-intensive companies that fall under the type 2 designated establishments would greatly benefit from Department Circular DC2021-05-0011.

During the annual National Energy Week celebration, which is observed in the first week of December, all companies who have submitted energy consumption reports are evaluated to determine the recipients of the Don Emilio Abello Awards. The Awards are given to outstanding companies and energy managers who have undertaken or are responsible for implementing energy efficiency and conservation programs to achieve substantial savings in their energy consumption. These companies and energy managers serve as role models for ensuring productive and efficient use of energy.

Between 1992 and 1999, the combined savings of the awardees have reached PHP 3.4 billion. Last year alone, the total savings of the 20 companies cited reached PHP 3.4 billion. Today, with world oil prices on a strong upswing once again, these companies are reaping the benefits of being insistent, and consistent, in avoiding wasteful use of energy. Savings of this magnitude could sell the difference for ensuring corporate survival especially at a time when companies are just emerging from the debilitating effects of the Asian financial crisis.

The Department Circular explains that energy efficiency projects are categorized into two; Simple and Complex whereas Simple Energy Efficiency Projects refers to those projects that involve new installation, upgrading or retrofitting of a specific equipment or devices in a system while Complex Energy Efficiency Projects refers to those projects that involve new installation, retrofitting or upgrading of system or a combination of a systems.

Section 5 of the Department Circular enumerates the different qualifications of the Energy Efficiency Projects for registration so that these projects may be entitled to the Fiscal Incentives. DOE will then endorse the projects that passed the technical and economic evaluation criteria found in Section 9.

The summary of application requirements is found on Section 7 depending on what type of project it is categorized. The Department Circular shows the overall application procedure and processing of application for the issuance of the certificate of endorsement to BOI with reference to the process flow found in Annex D.

Section 10 of the Department Circular shows the obligations under the issued endorsement that the company must comply. If these obligations are not complied, companies shall be held liable of the following prohibited acts found in Section 13. Upon determination that any person or entity has committed any of the prohibited acts, the DOE may consider any of the following measures found in Section 14 prior to imposition of fines and penalties. The schedule of fines and penalties is found on Annex H of the policy.