DOE plans new bidding for geothermal field exploration

The Department of Energy (DOE) plans to conduct the first geothermal bid round in the second quarter to promote the development of geothermal power development in the country, a ranking DOE official said.

This geothermal bidding scheme was conceptualized after the successful launch of a similar bidding process, the first public contracting round (PCR-I) which would allow the Philippines to bid out 46 exploration blocks in Palawan and Sulu Sea basins on March 5.

At least 15 big foreign exploration companies have expressed interest in participating in the PCR-I.

Energy Undersecretary Eduardo Mañalac said the bidding for geothermal field exploration will be scheduled after the PCR-I, or by mid-March.

"We have identified at least 10 possible geothermal development areas in Luzon, Visayas and Mindanao. We also preparing a package for prospective investors," Manalac said.

Mañalac said a number of Japanese firms have already signified interest in this bidding procedure.

According to Mañalac, they are still studying the actual procedure and terms for the bidding of the geothermal fields. But he said they may use the PCR-I as a basis in developing such scheme.

Under the fiscal terms for PCR-1, a contractor recovers its exploration and development costs from 70 percent of gross proceeds and gets a maximum of 40-percent net proceeds while the government share is equivalent to 60 percent. Likewise, the contractor shall be exempted from paying national taxes except income tax, which shall be paid out of the government share.

The contractor can also get a Filipino participation incentive allowance (FPIA) of up to a maximum of 7.5 percent with a minimum of 15-percent Filipino participation.

The DOE launched the PCR-1, a new bidding scheme that gives a package of contractual and fiscal incentives, in August 2003.

The DOE official said they expect to generate greater response to the new bidding round since the Philippines is considered the second largest producer of geothermal energy and could be the world’s largest in the next 10 years.