The Department of Energy (DOE) on Wednesday welcomed the Bangko Sentral ng Pilipinas (BSP) decision allowing banks to increase the single borrower limit (SBL) by 15 percent and the phased reduction of sustainable asset reserves to zero as incentive for lending to renewable energy proponents.
The top up adjustment brings the SBL to 40 percent of any lender’s networth between now and December 2025 and cut the mandatory asset reserve to only one percent on the first year and zero percent on the second year. Reserve assets held for non-renewable energy financing purposes are subject the normal three percent charge.
Energy Secretary Raphael Lotilla, said the BSP incentive package complements that taken by the DOE to accelerate the Philippine Energy Transition Program involving the deployment of renewable energy projects that meet the target of at least 35 percent RE share in electricity generation by 2030 and 50 percent by 2040.
The energy transition program requires the development of a green and smart power grid to accommodate and manage the additional RE capacity, the building or expansion of the necessary port infrastructure to support offshore wind and other marine-based energy resource development projects and theprovision of an avenue for voluntary early decommissioning or repurposing of existing coal-fired power plants.
“These would entail big investments where private sector funds, including equity investments, green bonds or loans would be needed. We are therefore pleased with this development noting that clean energy investments over the next decade will be carried out by the private developers,” Lotilla said.
The DOE also lauded an earlier action of the Board of Investments extending income tax holiday on renewable energy projects for own use and on energy efficiency projects as well as duty exemption on capital equipment, raw materials, spare parts and accessories imports.
“This would certainly aid energy efficient projects which will ultimately redound to the benefit of consumers. The tax incentives will result in increased economic activity and the potential to generate more jobs,” Lotilla said.
