Scope of Production Sharing Contracts
- Contracts apply to projects harnessing OSW energy in public lands or offshore waters within Philippine territory, contiguous zones, and exclusive economic zones.
- Projects must have a net electric output above a certain threshold (unspecified MW) for sale to electric utilities.
- Projects not meeting these criteria are classified as Private OSW Projects and governed separately.
- All contract-covered lands are subject to public easements under existing laws.
Government Share and Financial Provisions
- The government share (GS) from operations is determined by bidding or negotiation and includes a signature bonus and a production bonus.
- The signature bonus is paid at contract signing, following confirmation of commercial feasibility; however, the first project is exempted from paying the signature bonus.
- The production bonus is paid annually after recovery of pre-operating costs and capped at 15% of net proceeds (gross sales minus operating and maintenance costs).
- GS must not result in electricity prices higher than contracted selling rates to local electric utilities to protect consumers.
Assistance to OSW Developers
- DOE provides assistance beyond existing incentives, including:
- Help in securing fiscal and non-fiscal incentives and registration as pioneer industries.
- Allow developers to charge costs of exploring new sites to existing projects.
- Facilitate access to lands/offshore areas for OSW resource harnessing.
- Conduct studies to value intermittent electrical generation appropriate to varying scales and future developments.
Implementing Rules and Timing
- DOE shall issue amended rules and regulations within sixty (60) days from the order's effectivity.
- The Executive Order takes effect 15 days after publication in two newspapers of general circulation.