DC2009-07-0011: Guidelines Governing a Transparent and Competitive System of Awarding Renewable Energy Service/Operating Contracts and Providing for the Registration Process of Renewable Energy Developers

Department Circular No. DC2009-07-0011, signed 12 July 2009 by DOE Secretary Angelo T. Reyes. The first DOE circular to operationalize the RE Contract system created by RA 9513 (RE Act of 2008) — issued pursuant to the Act’s Implementing Rules and Regulations, which mandated DOE to issue a regulatory framework governing a transparent and competitive system of awarding RE Service/Operating Contracts from pre-development through development/commercial stage [DC2009-07-0011, Whereas recitals, 2009-07].

Background and legal basis

Grounded in Article XII, Section 2 of the 1987 Constitution (State ownership and control of exploration, development, and utilization of natural resources) and RA 9513’s policy of accelerating renewable energy development [DC2009-07-0011, Whereas recitals, 2009-07]. Notes that biofuels are a biomass-energy resource, but that biofuel producer accreditation runs through Joint Administrative Order (JAO) No. 2008-1, Series of 2008 (under RA 9367, the Biofuels Act of 2006) rather than through an RE Contract [DC2009-07-0011, Whereas recitals and §4, 2009-07]. Also cites RA 7638 (DOE Act of 1992) as general authority for DOE’s planning and supervisory role over energy activities [DC2009-07-0011, Whereas recitals, 2009-07].

Scope and RE Contract concept

Covers award of RE Service/Operating Contracts (RE Contracts) for both the pre-development and development stages, power or non-power applications, the transition of pre-existing service contracts/agreements to RE Contracts, and issuance of DOE Certificates of Registration for RE Developers [DC2009-07-0011, §2, 2009-07].

An RE Contract is a service agreement between the Government (through the President or DOE) and an RE Developer, granting the exclusive right to explore, develop, or utilize a particular RE area for a DOE-determined period [DC2009-07-0011, §4, 2009-07]. It has two stages [DC2009-07-0011, §4(a), 2009-07]:

Biomass resources are an exception: agreements to explore, develop, or utilize biomass are covered by an RE Operating Contract only, with no separate Pre-Development Service Contract [DC2009-07-0011, §4 and §25, 2009-07].

Conversion paths [DC2009-07-0011, §4(b), 2009-07]: (1) Pre-Development → Development/Commercial, triggered by the developer’s Declaration of Commerciality and DOE confirmation, requiring permits such as ECC/CNC, Water Rights Permit, FPIC, LGU endorsement; and (2) existing service contracts/agreements on RE resources (pre-dating the Act) → RE Contract, with the holder deemed provisionally registered as an RE Developer pending issuance of a DOE Certificate of Registration.

Definitions of note

Key defined terms carried through later omnibus guidelines [DC2009-07-0011, §3, 2009-07]: Blocking System (subdivision of Philippine territory into half-minute-latitude × half-minute-longitude meridional blocks, ~81 hectares each, PRS92 datum, used exclusively to identify contract-area coverage); Frontier Areas (RE-potential areas without sufficient technical data, not yet ready for development — the basis for Direct Negotiation eligibility); RE Developer (individual/juridical entity registered/authorized in the Philippines, engaged in RE exploration, development, utilization, or RE-based generation); Financial Closing (developer has established, per DOE criteria, its financial capability to implement the project).

Award modes

RE Contracts are awarded by open and competitive selection or by direct negotiation [DC2009-07-0011, §8, 2009-07].

Open and Competitive Selection Process [DC2009-07-0011, §9, 2009-07]: DOE posts open areas on its website and publishes invitations weekly for three consecutive weeks in at least two newspapers of general circulation. A Review Committee — chaired by the REMB Assistant Secretary, vice-chaired by the REMB Director’s representative, with members from REMB, the Financial Services Compliance Division, and the Legal Services Contracts Division — evaluates proposals on legal, technical, and financial criteria (technical/financial evaluated only after legal compliance is confirmed).

Direct Negotiation [DC2009-07-0011, §10, 2009-07]: allowed for Frontier Areas, or where the competitive process yields no proposals, no legally-qualified applicant, or no applicant that passes technical/financial evaluation. A sole or first-in-time applicant with an incomplete Frontier Area submission gets 30 days to complete it (loses priority if it fails to do so); the completed application is posted on the DOE website within 5 working days of the processing-fee payment; DOE and the applicant then negotiate contract terms within a maximum of 120 days.

Award, registration, and contract terms

The Review Committee recommends award to the DOE Secretary within one week of final evaluation or negotiation; FTAA-type contracts (see Geothermal, below) require Presidential approval and execution [DC2009-07-0011, §11, 2009-07]. The RE Contract’s effectivity date is as stipulated in the signed contract [DC2009-07-0011, §12, 2009-07]. A performance bond (at least equal to the minimum expenditure commitment for the year) is due within 60 days of contract effectivity and at the start of every contract year thereafter [DC2009-07-0011, §13, 2009-07]. The DOE Certificate of Registration issues immediately upon contract effectivity, for either stage [DC2009-07-0011, §14, 2009-07].

Term [DC2009-07-0011, §15, 2009-07]: not exceeding 25 years, renewable for not more than 25 more years, with the combined Pre-Development-to-Development/Commercial period capped at 50 years. Pre-Development Stage: 2 years, extendible 1 year; for Geothermal RE Contracts, extendible 2 years and further extendible 1 year.

Developer obligations, rights, and host-community benefits

Obligations include complying with work/financial commitments; observing labor, health, safety, environmental, ecological, and indigenous-peoples-rights laws; paying government share and taxes (biomass excepted, see below); Filipino employment and local-subcontractor preference; posting the performance bond; maintaining accurate technical/accounting records; timely reporting; and allowing DOE full access to contract-area records [DC2009-07-0011, §16, 2009-07]. In exchange, the RE Developer receives a DOE Certificate of Registration qualifying it for RA 9513 incentives immediately upon contract effectivity [DC2009-07-0011, §17, 2009-07]. RE Contracts must provide for host-community/LGU benefits drawn from the Government Share, per IRR Sections 20–21 [DC2009-07-0011, §18, 2009-07].

Disputes, suspension/termination, confidentiality, assignment

Disputes are first pursued amicably (technical disputes may go to an expert referral); unresolved disputes after 60 days go to binding arbitration [DC2009-07-0011, §19, 2009-07]. DOE may suspend/terminate an RE Contract for cause, with distinct grounds enumerated for the Pre-Development Stage (e.g., non-compliance with Work Program, DENR environmental non-observance during feasibility study) and the Development/Commercial Stage (adds RPS-rule violations, non-remittance of government share, DENR non-observance during construction/operation) [DC2009-07-0011, §20, 2009-07]. Cure before the stated termination date defeats termination; FTAA-type contracts are suspended/terminated by the President on DOE recommendation. Developer-generated data/reports are confidential during the contract term, except DOE may use/publish them after contract expiration [DC2009-07-0011, §21, 2009-07]. Assignment requires DOE prequalification and prior written approval; FTAA assignments require Presidential approval and a 30-day Congressional notification [DC2009-07-0011, §22, 2009-07].

Resource-specific special provisions

Geothermal (FTAA route) [DC2009-07-0011, §23, 2009-07]: large-scale geothermal exploration/development/utilization by foreign-owned entities proceeds via a Financial or Technical Assistance Agreement (FTAA), with DOE-determined “large-scale” thresholds based on capitalization. FTAA applicants face additional requirements (sworn expenditure commitment, restrictions on domestic financing sources, Filipino-employment/technology-transfer stipulations) and require Presidential approval/execution with 30-day Congressional notification. A developer withdrawing from an FTAA forfeits its performance bond to the Government.

Hydropower [DC2009-07-0011, §24, 2009-07]: impounding and pumped-storage developers must show compliance with international norms (World Commission on Dams, International Energy Agency). Hydropower contract areas are not defined via the Blocking System.

Biomass [DC2009-07-0011, §25, 2009-07]: biomass, biogas, and organic-waste methane-capture developers skip the Pre-Development Service Contract and go directly to an Operating Contract for the Development/Commercial Stage (except for own-use projects). All Biomass RE Contracts are exempt from government share payment; excess capacity sold to end-users still requires an RE Operating Contract; feedstock-source areas are not exclusive and not covered by the Blocking System.

Own-use and non-commercial micro-scale projects

RE Developers generating power for own-use register with DOE (Letter of Intent, Project Description, proof of facility ownership) to access RA 9513 incentives [DC2009-07-0011, §26, 2009-07]. Non-Commercial Micro-Scale RE Projects use a simplified Checklist System (Letter of Intent, Project Description, Work Plan, LGU endorsement) [DC2009-07-0011, §27, 2009-07], follow the same simplified Section 6 procedure [DC2009-07-0011, §28, 2009-07], and are exempt from Government Share payment [DC2009-07-0011, §29, 2009-07].

Final provisions

Standard separability and repealing clauses (§30–31); effectivity is 15 days after publication in at least two newspapers of general circulation (§32) [DC2009-07-0011, §§30–32, 2009-07]. Annex A is the RE Contract Application Form; Annex B is the Checklist of Requirements for applications, Pre-Development-to-Development conversions, and existing-contract conversions; four registration-process flowcharts (Direct Negotiation, Open and Competitive Selection, Pre-Development-to-Development conversion, Existing-Contract conversion) close out the document.

Later status

DC2009-07-0011 was one of the 13 prior RE-contract issuances consolidated into the 2019 omnibus circular — the cleaned source copy of Digest: DC2019-10-0013: Omnibus Guidelines Governing the Award and Administration of RE Contracts (2019) itself records: “Consolidates 13 prior issuances from DC2009-07-0011 through DO2019-07-0018” [source/regulations/dc2019-10-0013.md, header note, 2019-10]. DC2019-10-0013 was in turn superseded in full by DC2024-06-0018 (2024-07-04) Digest: DC2019-10-0013: Omnibus Guidelines Governing the Award and Administration of RE Contracts (2019) . lapsed-date is left blank above rather than set to DC2019-10-0013’s 2019-11-08 effective date: DC2019-10-0013’s own repealing clause (§47) is a generic “inconsistent provisions” clause, not a named repeal of this specific 2009 circular, so an exact lapse date for DC2009-07-0011 is not independently confirmed by either document’s text. See RE Contract Framework for the current operative RE Contract framework.

Full text: Cleaned copy