Amendments to Executive Order No. 462 (Sections 1, 2, 14, 16)
Section 1: Exploration, Development, and Utilization
- The government, through the Department of Energy (DOE), engages in OSW resource assessment and development.
- Participation of the private sector is through production sharing contracts (PSCs), awarded either by public bidding or negotiation.
- Host communities and local government units must be consulted before awarding contracts.
- PSC contractors must meet technical and financial standards set by DOE.
Section 2: Scope of Production-sharing Contracts
- PSCs apply only to projects that harness OSW resources on public domain lands or offshore waters within the Philippine territory, contiguous zone, and exclusive economic zone.
- Contracts are subject to public easements as recognized by law.
- Projects must have a net electric output exceeding a defined megawatt threshold for sale to electric utilities.
- Projects not meeting criteria are categorized as Private OSW Projects and governed under Section 3.
Section 14: Government Share
- Government share (GS) in profits is determined by bidding or negotiation.
- GS includes a signature bonus payable upon signing a Pre-Negotiated Commercial Contract and confirmation of commercial feasibility.
- Signature bonus waived for the first project to reduce initial cost burden.
- Production bonus is payable annually after full recovery of pre-operating costs.
- GS is capped to prevent electricity prices from exceeding contracted selling rates to local electric utilities.
- Production bonus shall not exceed 15% of net proceeds, defined as gross sales less operating and maintenance costs.
Section 16: Assistance to OSW Developers
- DOE assists developers to avail fiscal and non-fiscal incentives including Board of Investments registration as pioneer industry.
- Developers may charge costs of site assessment and feasibility studies against current commercial project costs to incentivize further development.
- DOE helps secure access to lands and offshore areas for resource harnessing.
- DOE conducts regular studies for proper valuation of intermittent OSW electrical generation reflecting technological advances and scale differences.
Implementation and Effectivity
- DOE, with relevant government agencies, must amend existing rules and regulations within 60 days of the Executive Order's effectivity.
- The Order takes effect 15 days after publication in at least two newspapers of general circulation.