Legal Basis for Financial Benefits to Host Communities
- Republic Act No. 7638 mandates the Department of Energy (DOE) to provide equitable benefits to communities hosting energy resources or generating facilities.
- Energy Regulations No. 1-94 operationalizes Section 5(i) of RA 7638.
- Section 66 of RA 9136 (Electric Power Industry Reform Act of 2001) and Rule 29(A) of its IRR require energy companies to provide financial benefits of P0.01/kWh of total electricity sales to host regions, provinces, cities, municipalities, and barangays.
- Trust accounts to be established and administered by DOE for these financial benefits.
Recognition of Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs)
- Republic Act No. 8371 recognizes the rights of ICCs/IPs to their ancestral lands and domains.
- ICCs/IPs entitled to equitable benefits from energy generating facilities and resources located within their ancestral domains.
- Need to strengthen cooperation among energy developers, local government units (LGUs), and ICCs/IPs for benefit distribution.
Scope and Coverage
- Applies to all legitimate ICCs/IPs accredited by the National Commission on Indigenous Peoples (NCIP) with issued Certificate of Ancestral Domain Title (CADT) hosting a generating facility or energy resource.
- Financial benefits cover Development and Livelihood, Reforestation, Watershed Management, Health, and Environmental Enhancement programs.
Key Definitions
- Ancestral Domains: Territorial areas including lands, inland waters, coastal zones, and natural resources held communally or individually by ICCs/IPs from time immemorial.
- Ancestral Lands: Lands occupied and used by ICCs/IP families or clans individually or traditionally since time immemorial.
- Free and Prior Informed Consent (FPIC): Consensus of all ICC/IP members according to their customary laws, free from coercion, with full disclosure.
- ICCs/IPs: Indigenous groups characterized by self-identification, cultural traits, traditional territories, and historical differentiation from majority Filipinos.
- Watershed: Land area draining into a stream or body of water, vital for environmental management.
Coverage of Beneficiaries
- Host communities defined as LGUs (barangays, municipalities/cities, provinces, regions) and ICCs/IP ancestral domains hosting energy facilities.
Allocation of Financial Benefits
- Financial benefits of P0.01/kWh divided into Development and Livelihood Fund (DLF) and Reforestation, Watershed Management, Health and Environment Enhancement Fund (RWMHEEF).
- Distribution for non-highly urbanized cities:
- Designated resettlement areas: 5%
- Host barangays: 20%
- Host municipalities: 35%
- Host provinces: 30%
- Host regions: 5%
- Organized ICCs/IPs: 5%
- In absence of resettlement area or organized ICCs/IPs, shares reallocated to barangay or region, respectively.
- Distribution for highly urbanized cities:
- Designated resettlement areas: 10%
- Host barangays: 30%
- Host cities: 55%
- Organized ICCs/IPs: 5%
- Similar reallocations apply if resettlement areas or ICCs/IPs absent.
Project Implementation and Approval
- Generation companies or energy developers, via Community Relations Officers (COMREL), assist host communities in preparing annual work programs (AWP) and project proposals.
- ICCs/IP proposals require NCIP endorsement before submission to DOE.
- DOE evaluates proposals using prior year financial benefits as basis.
- Implementation requires a Memorandum of Agreement (MOA) among DOE, developers, host communities, and NCIP if needed.
- DOE releases funds within 15 days upon complete documentation submission.
Audit of Financial Benefits and Project Monitoring
- DOE audits sources of funds, ensuring correctness of electricity sales data.
- If funds are unjustifiably disbursed or projects delayed, DOE may withhold further releases until satisfactory justification or audit by DOE or COA deputized auditor.
Settlement of Disputes
- DOE holds jurisdiction over conflicts arising from implementation.
- Boundary or location disputes are resolved amicably among stakeholders or referred to NCIP, Department of Interior and Local Government (DILG), and Energy Regulatory Commission (ERC) as applicable.
- DOE suspends processing of proposals affected by disputes until resolved.
Administrative Guidelines
- DOE to issue Administrative Operating Guidelines within 180 working days from effectivity to facilitate ICCs/IPs' availing and utilization of benefits.
Repealing, Separability, and Effectivity Clauses
- Existing mechanisms and responsibilities not inconsistent with this Circular remain effective.
- Invalid provisions do not affect others.
- Rules become effective 15 days after publication in two newspapers of general circulation.