Delay in tariff mechanism seen to dampen interest in renewable energy sector

MANILA, Philippines - The International Finance Corp. (IFC), the private sector lending arm of the World Bank group, has warned of a possible exodus of investors in the renewable energy (RE) industry if the government will fail to come up with the feed-in tariff (FIT) mechanism at the soonest possible time.

In an interview, IFC representative to the Philippines Jesse Ang said, “everybody is waiting for the FIT. The government (National Renewable Energy Board) should study and move on and decide otherwise investors will leave.”

Ang said however that investors remain optimistic on the approval of the FIT anytime soon.

He said the FIT has been pending and has undergone a lot of studies and scrutiny. “It should be in place June of last year. The government must really act on it soon,” he added.

The IFC official, however, said while the rules on RE’s FIT have yet to be finalized, they are eyeing on a number of projects under the Public-Private Partnership (PPP) program of the government.

According to Ang, IFC has been allotting some $200 million to $300 million each year for energy-related projects.

But he said some of this amount may be for PPP program. “We will come up with some announcement very soon on a PPP project,” he added.

For the past three years, the institution had already poured in about $900 million to the Philippine power industry.

Recently, the multilateral institution signed a risk-sharing facility with Banco de Oro Unibank Inc.

IFC said this facility aims to encourage private enterprises in the Philippines to invest in sustainable-energy projects and become more profitable, while addressing climate change.

The government is seeking for P1.83 trillion ($40.6 billion) in new investments for the local energy sector to develop not only the country’s fossil fuel and renewable energy sources, but to also boost the growth of other critical sectors as well.