The Philippines and Indonesia have committed to help each other during periods of supply constraints in energy commodities such as coal and liquefied natural gas.
The agreement, an offshoot of the official visit to the Philippines by Indonesian President Joko Widodo, came in the form of a memorandum of agreement binding the Department of Energy to its counterpart agency in Indonesia to a pledge of cooperation so that both benefit from enhanced energy security.
“The signing of the MOU reinforces and updates the long-term energy cooperation between the two countries. On the part of the Philippines, it is an offshoot of our President’s efforts to achieve higher energy security through energy diplomacy,” said Energy Secretary Raphael Lotilla, in a statement.
DOE said previous bilateral agreements reflected the dominance of state-owned companies in the power sector in the Philippines and in the upstream sector, including coal mining in Indonesia.
However, the agency said an updated cooperation agreement and adjustment is necessary since the role of the private sector in the energy sector has significantly grown in both countries.
Lotilla noted the two countries share common energy concerns and can benefit from heightened levels of cooperation.
He particularly said Indonesia and the Philippines are second and third globally in terms of installed geothermal generation plants and both countries are highly dependent on coal-fired power plants but seek an orderly transition to cleaner technologies without imposing additional burden on consumers.
The DOE said transitioning to clean energy to achieve the country’s energy security goals would require a transition fuel like LNG capable of providing baseload generation to fill in the gap when existing coal-fired power plants start to retire.
DOE also said the Philippines and Indonesia are major sources of minerals needed for the energy transition and have vast potential for solar, wind and ocean energy production.
Lotilla also said the Philippines has proven a reliable market for Indonesian coal accounting for 98 percent of total Philippine coal imports in 2022 or an increase from an 88 percent share in 2017.
Lotilla said there were earlier discussions with the government of Indonesia ensuring the Philippines will continue to have access to regular supply from the country’s primary source of imported coal.
In 2022 Indonesia, the world’s largest coal exporter, suspended coal exports to prioritize the stockpiling of inventory for local use and prevent widespread power outages.
Most power plant turbines in the Philippines run on fuel grades higher than are domestically available.
The DOE said similar assurances can be had through the Brunei Darussalam–Indonesia–Malaysia–Philippines East Asean Growth Area cooperation initiative.
