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Republic of the Philippines
DEPARTMENT OF ENERGY

JUL 1 2 2009

DEPARTMENT CIRCULAR No, 0€2009-07-0011

“i

GUIDELINES GOVERNING A TRANSPARENT AND COMPETITIVE SYSTEM
OF AWARDING RENEWABLE ENERGY SERVICE /OPERATING CONTRACTS
AND PROVIDING FOR THE REGISTRATION PROCESS OF
RENEWABLE ENERGY DEVELOPERS

WHEREAS, pursuant to Article XII, Section 2, of the 1987 Philippine
Constitution, all forces of potential energy and other natural resources within the
Philippine territory belong to the State and their exploration, development and
utilization shall be under the full control of the State;

WHEREAS, Republic Act (R.A.) No. 9513, otherwise known as the “Renewable
Energy Act of 2008,” provides that it is the policy of the State to encourage and
accelerate the exploration, development and increase the utilization of
renewable energy resources such as, but not limited to, biomass, solar, wind,
hydropower, geothermal, and ocean energy sources, and including hybrid
systems;

WHEREAS, the Implementing Rules and Regulations (IRR) of R.A. No. 9513
mandates the Department of Energy (DOE) to issue a regulatory framework
containing the guidelines governing a transparent and competitive system of
awarding Renewable Energy Service/Operating Contracts from pre-development
to development/commercial stage, among others;

WHEREAS, biofuels, which are defined as fuels made from biomass, are
considered renewable energy resource under the scope of biomass energy;

WHEREAS, Joint Administrative Order (JAO) No. 2008-1, Series of 2008,
otherwise known as the “Guidelines Governing the Biofuel Feedstocks
Production, and Biofuels and Biofuel Blends Production, Distribution and Sale,”
was issued for the accreditation of biofuel producers, among others, under R.A.
No. 9367 otherwise known as the “Biofuels Act of 2006;”

WHEREAS, R.A. No. 7638, as amended, otherwise known as the “Department
of Energy Act of 1992,” mandates the DOE to prepare, integrate, coordinate,
supervise and control all plans, programs, projects and activities of the
Government relative to energy exploration, development, utilization, distribution
and conservation, among others;

NOW, THEREFORE, in consideration of the foregoing premises, the DOE hereby
issues the following guidelines:

Energy Center, Merrit Ra, Fort Bonifacio, Taguig City, Metro Manila, Philippines
Fax # 812-61-94 Tel.# 840-20-08 Fax # 840-21-38 Tal # 840-22-36 Fax # 9840-17-31 Tel # 817-86-03 Trunkline 479-29-00
Website: www.doe.gov ph, E-mail: info@due gav.ph
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CHAPTER I. GENERAL PROVISIONS

SECTION 1. Title. - This Circular shall be known as the “Guidelines Governing
a Transparent and Competitive System of Awarding Renewable Energy
Service/Operating Contracts and Providing for the Registration Process of
Renewable Energy Developers.”

SEC. 2. Scope. - This Circular shall provide the guidelines on the award of
Renewable Energy Service/Operating Contracts (RE Contracts) covering both the
pre-development and development stages either for power or non-power
applications, including the transition of the existing service. contracts and
agreements on the exploration, development or utilization of Renewable Energy
(RE) resources with the DOE/Government to RE Contracts, subject to Rule 13,
Section 39 of the IRR of the Act, and the issuance of DOE Certificate of
Registration for RE Developers.

SEC. 3. Definition of Terms. — As used in this Circular, the following terms
shall be understood to mean, as follows:

(a) “Act” shall refer to R.A. No. 9513, otherwise known as the “Renewable
Energy Act of 2008;”

(b) "Blocking System” shall, for purposes of this Circular, refer to the
subdivision of the Philippine territory by the DOE, into meridional blocks of
half (1/2) minute of fatitude and half (1/2) minute of longitude with
Geographic Projection and Datum of the Philippine Reference System
(PRS) of 1992. One (1) meridional block shall have an area of eighty one
(81) hectares. Each block shall be designated a block number which shall
be used exclusively in identifying the coverage of a contract area;

(c) "Commercial Operation” shal! refer to the phase of RE development
when the RE Developer has completed its commissioning and test
operations and is ready to sell or apply its produced energy, as duly
confirmed by the DOE;

(d) “Declaration of Commerciality” shall refer to a written declaration by
the RE Developer, duly confirmed by the DOE Secretary, stating that the
project is commercially feasible;

(e) "Financial Closing” shall refer to the stage when the RE Developer has
established, based on the DOE’s criteria and procedures, its financial
capability to implement its RE project;

(f) “Frontier Areas” shall refer to areas with RE resource potentials but
without sufficient available technical data as determined by the DOE and
are not ready for immediate development and utilization;

(g) “RE Applicant” shall refer to any entity, whether individual or juridical,
local or foreign, including joint venture or consortium of local, foreign, or
local and foreign firms, subject to the timitations provided in Section 6
hereof, which applies for the assessment, exploration, extraction,

i)
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harnessing, development, — utilization or commercialization of RE
resources;

(h)"“RE Application” shall refer to the legal, technical, financial and other
pertinent documents submitted by the RE Applicant in accordance with the
requirements for direct negotiation of RE Contracts under Section 10 of
this Circular;

(i) “RE Developer” shall refer to individual/s or juridical entity created,
registered and/or authorized to operate in the Philippines in accordance
with existing Philippine laws and engaged in the exploration, development
or utilization of RE resources and actual operation of RE systems/facilities,
It shall include existing entities engaged in the exploration, development
and/or utilization of RE resources, or the generation of electricity from RE
resources, or both;

(j) “RE Proposal” shali refer to the legal, technical, financial and other
pertinent documents submitted by the RE applicant in accordance with
Section 9 on the open and competitive selection process of this Circular;

(k)"Work Program” shall refer to plans, programs, and activities, including
the corresponding budgetary requirements, for the performance of
obligations under the RE Contract, including, but not limited to, plans for
exploration, development, production or utilization; and

(|) “Working Capital” shall refer to the RE Applicant’s net liquid assets
(quick assets less current fiabilities) consisting primarily of cash,
temporary investments, short term current receivables and deposits.

CHAPTER II. RE SERVICE /OPERATING CONTRACTS

SEC. 4. Nature of RE Contract. - An RE Contract is a service agreement
between the Government, through the President or the DOE, and an RE
Developer over an appropriate period as determined by the DOE in which the RE
Developer shall have the exclusive right to explore, develop or utilize a particular
RE area: Provided, That an agreement between the Government and the RE
Developer for the exploration, development or utilization of biomass resources
shall be covered by an RE Operating Contract only, subject to the provisions of
Section 25 of this Circular: Provided, further, That JAO No. 2008-1, Series of
2008 under R.A. No. 9367 shall govern the registration and accreditation of
biofuel producers, in lieu of an RE Contract.

a. Stages of RE Contract - The RE Contract shall be divided into two (2)
stages, namely:

i. Pre-Development Stage - involves the preliminary assessment and
feasibility study up to financial closing of the RE project; and
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ii, Development/Commercial Stage - involves the development,
production or utilization of RE resources, including the construction and
installation of relevant facilities up to the operation phase of the RE
facilities.

b. Conversion of RE Contract:

i. From Pre-Development Stage to Development /Commercial Stage -
Upon Declaration of Commerciality by an RE Developer and after due
confirmation by the DOE, the RE Developer shall apply for the
conversion of the RE Contract, prior to its expiration, from Pre-
Development Stage to Development/Commercial Stage. The
Declaration of Commerciality shall be based on the feasibility studies
and/or exploration activities conducted by the RE Developer.

The RE Developer of an RE Contract shall secure permits, clearances
or certificates such as, but not limited to, Environmental Compliance
Certificate (ECC), Certificate of Non-Coverage (CNC), Water Rights
Permit, Free and Prior Informed Consent (FPIC), Certificate of Non-
Overlap, Local Government Unit (LGU) endorsement and all other
regulatory requirements from other government agencies which are
applicable to the RE activities/operations.

ii. From Existing Service Contract/Agreement on RE Resources to RE
Contracts under the Act and this Circular - For an existing RE
project, the contract holder may elect to convert its Service
Contract/Agreement under applicable laws by applying for an RE
Contract under the Act and this Circular. The approvat of such
application shall be carried out on the basis of its prior rights over the
contract area.

Any individua! or juridical entity with a valid and existing service or
development contracts and agreements with the DOE/Government for
the exploration, development or utilization of RE resource shall be
deemed provisionally registered as an RE Developer under the Act,
which registration shal! subsist until the issuance of DOE Certificate of
Registration provided for under Section 18 of the IRR. For this
purpose, the DOE shall issue the corresponding provisional certificate
of registration, pursuant to Section 39 of the IRR, upon receipt of the
RE Developer’s letter of intent for conversion to RE Contract.

SEC. 5. RE Contract Area. - The RE Contract area shall be defined through a
Blocking System: Provided, That the Blocking System shall apply only to RE
Contracts on ocean, solar, wind and geothermal resources.

Part 1. Application Requirements

SEC. 6. Application Requirements. - All applicants for the issuance of an RE
Contract shall comply with the following requirements:
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a. Who may apply - Any person, natural or juridical, local or foreign, may,
subject to the jimits herein set, apply for RE contracts.

i. For RE Contract both during Pre-Development and Development/
Commercia! Stages covering all RE resources and including hybrid
systems, the RE Applicant must be a Filipino or, if a corporation, must
be a Filipino corporation at least sixty percent (60%) of its
capitalization must be owned by Filipinos and duly registered with the
Securities and Exchange Commission (SEC), except in situations as
provided for in sub-paragraphs ii and iii of this Section.

ii. In the case of the exploration, development or utilization of geothermal
resources, the applicant may either be a Filipino, natural or juridical,
or a foreign corporation.

iii. Consistent with Article XII, Section 2, of the 1987 Philippine Constitution
and applicable existing laws, any foreign-owned corporation duly
authorized to operate in the Philippines may apply for an RE Contract
in the nature of a financial or technical assistance agreement for
jarge-scale exploration, development or utilization of geothermal
resources.

iv.In case the RE applicant is a joint venture or consortium, the partners of
the joint venture or the members of the consortium shall organize
themselves as a corporation registered under the Corporation Code of
the Philippines.

To signify its intention to enter into RE contractual arrangements with the
DOE, the RE Applicant shal} submit a letter of intent, together with the duly
accomplished RE Contract Application Form (Annex “A”).

b. Legal Requirements — For an individual or single proprietorship, the RE
Applicant shall submit a National Statistics Office (NSO)-certified true copy of
birth certificate, business permit and other applicable documents. For juridical
entity, the RE Applicant shall submit an original copy of certification from its
Board of Directors or officers authorizing its representative to negotiate and
enter into an RE Contract with the DOE, duly certified Articles of Incorporation
or other equivalent legal document creating the same and latest General
Information Sheet or equivalent legal documents showing the names of its
officiats, ownership, control and affiliates. In the case of foreign corporations,
the documents to be submitted shall be duly authenticated by the Philippine
Consulate having consular jurisdiction over the entity.

c. Technical Requirements - The RE Applicant must possess the necessary
technical capability to undertake the obligations under the RE Contract in
terms of the following:

i. Track Record or Experience - By himself, the corporation itself, through
the member-firms, in case of a joint venture/consortium, or through
employment of service providers, the RE Applicant shall inciude in its
technical submission proof of its on-going or completed
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contracts/agreements similar to or congruent with the nature of
project/work being proposed to be covered by an RE Contract
involving a specific RE resource. The individual firms may individually ~
specialize on any or several stages of the RE Contract. A joint
venture/consortium applicant shall be evaluated based on the
individual or collective experience of the member-firms of the joint
venture/consortium.

it. Work Program — This shall be evaluated based on its viability, minimum
expenditure commitments, detailed program of activities inclusive of
environmental protection/conservation and social acceptability plans,
among others.

lit.Key Personnel Experience - The key personnel of the RE Applicant must
have sufficient and relevant work experience in connection with the
project being applied for. For this purpose, the Curriculum Vitae of the
management and technical personnel must be submitted.

iv.List of Existing Company-owned Equipment (if any) for RE Operations and
Any Lease Agreement of RE Equipment - This shall be evaluated
based on the technical and environmental soundness, sufficiency, and
appropriateness of company-owned and leased equipment that will be
used for the project.

d. Financial Requirements — The RE Applicant must have adequate capability
to provide the financial requirements to sustain the proposed Work Program
for the exploration activities or conduct of feasibility studies during the Pre-
Development Stage, and detailed engineering/geological/ industrial design for
the development and operation of facilities during Development/Commercial
Stage, as the case may be. This financial capability shall be measured in
terms of:

i. Audited Financial Statements for the last two (2) years and unaudited
Financial Statement if the filing date is three (3) months beyond the
date of the submitted audited Financial Statement;

ii. Bank certification to substantiate the cash balance in the audited Financial
Statement or updated Financial Statement;

iii. Projected cash flow statement for two (2) years;

iv.List of company-owned equipment/facilities available for the proposed RE
projects;

v. If the RE applicant, on account of its infancy, is unable to produce the
requirements in sub-paragraphs (i) to (iii) above, it shall submit an
audited Financial Statement and duly certified and/or notarized
guarantee or Letter of Undertaking/Support from its parent company
or partners to fund the proposed Work Program. In the case of foreign
parent-company, the audited Financial Statement and the guarantee
or Letter of Undertaking/Support shall be duly authenticated by the

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Philippine Consulate Office that has consular jurisdiction over the said
parent company; and

vi.Proof of the ability of the RE Applicant to provide the required minimum
amount of Working Capital which shall be equivaient to 100% of the
cost of its work commitment for the first year of the proposed Work
Program.

The legal, technical and financial requirements shall be as enumerated in the
Checklist of Requirements (Annex “B”).

SEC. 7. Payment of Application and Processing Fees. ~ The RE Applicant
shall pay the prescribed application and processing fees for each RE Proposal or
RE Apptication. No RE proposal/application shall be accepted without due
payment of application and processing fees. Provided, That the payment shall be
made only upon submission of complete documentary requirements and receipt
of order of payment from REMB.

Part 2. Procedure for Awarding of RE Contracts

SEC. 8. Modes of Awarding RE Contract. — RE Contracts shall be awarded
through an open and competitive process of selection or by direct negotiation.

SEC. 9. Open and Competitive Selection Process. - Unless as otherwise
provided in Section 10 below, the DOE shall observe the following process:

a. Invitation for RE Project Proposals - Alt areas for open and competitive
selection shall be posted by the DOE in its website. In the event that new
areas have been identified, the DOE shall update its website and may
include them in the areas to be published in preparation for the conduct of
open and competitive selection of awarding RE Contracts. The publication of
areas shall be made as often as practicable depending on the number of
identified areas and type of RE resources, among others. Thereafter,
invitations for open and competitive selection shall be published once every
week for three (3) consecutive weeks in at least two (2) newspapers of
general circulation. The DOE shall, likewise, post said invitation and the
attachments in its website.

The invitation shall include information such as, but not limited to:

i. Map of the area being declared open for RE project proposals;

ii. Instructions to RE Applicants on the requirements for RE Contract
proposal;

iii. Schedules, including the deadline to submit, the date of opening,
and period of evaluation of RE project proposals; and

iv. Criteria for evaluation and the corresponding percentage/weight.
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b. Creation of a Review Committee - A Review Committee shall be created to
evaluate the RE Proposals and Applications of RE Applicants and provide
recommendations to the DOE Secretary for the award of RE Contracts.

The said Committee shall be composed of the folowing: the Assistant
secretary in charge of the REMB as Chairperson, the representative from
the Office of the Renewable Energy Management Bureau (REMB) Director as
the Vice-Chairperson, and one (1) representative each from the concerned
division of the REMB, Compliance Division of the Financial Services, and
Contracts Division of the Legal Services, as members. The Review
Committee shall be assisted by a Secretariat from the REMB.

In the event that a foreign corporation shall be the winning or qualified RE
Applicant, the RE Contract shall be awarded in accordance with the
provisions under Sections 11 and 23 hereof.

c. Criteria for Evaluation - The Review Committee shalt! set the rules for the
evaluation of RE Proposals and Applications which shall be based mainly on
legal, technical and financial criteria, taking into account the type of RE
resource, RE Contract Stage being offered, and the size and !ocation of the
RE area, among others.

Evaluation of the RE Proposal on technical and financial criteria shall
proceed only after the Review Committee has found that all the legal
requirements are complied with.

d. Period of Evaluation - Only complete submissions will be evaluated by the
Review Committee. The review of the RE Proposal shall be conducted within
a reasonable period, as indicated in the Instruction to RE Applicants, from
the date of opening of the RE proposal. The RE Applicant shall be notified
by the DOE of the results of its evaiuation.

SEC. 10. Direct Negotiation. — Direct negotiation shall be allowed only in the
following instances subject to confirmation by the REMB:

a. In case of Frontier Areas — The negotiation shall be subject to the following
conditions:

i. In instances where there is only one applicant for an RE area and
the submission is deemed to be incomplete, the said RE applicant
Shall be given thirty (30) days within which to complete its
submission.

it. In the event that there are two (2) or more interested applicants
over the same RE area, the REMB shall prioritize and endorse to the
Review Committee for evaluation the application of the RE Applicant
whose submission was first received by the REMB. If the submission
is deemed insufficient, the same shall be given thirty (30) days
within which to complete its submission.
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iti. Should the RE Applicant fail to complete its submission within the
prescribed period as stated above, it shall be automatically
disqualified and, in the case of two or more applications, it shalt
lose its right as first proponent and the immediately succeeding
application shall be considered. ,

iv. ‘The RE Application over a specific Frontier Area shall, in the interest
of transparency, be posted in the DOE website within five (5)
working days from receipt of payment of. application/processing
fees until the award of the RE Contract.

Vv. Upon submission of the complete documentary requirements, the
DOE and the RE Applicant shall negotiate the terms and conditions
of the RE Contract within a maximum period of one hundred twenty
(120) days.

b. When, during the conduct of open and competitive selection process, any of
the following circumstances exist:

i. No RE Proposal was received by the REMB;

ii. No one among the applicants was able to meet the legal
requirements, as determined by the Review Committee; or

iti. When one or more applicants met the legal requirements but after
the evaluation of technical and financial proposals, no applicant was
able to comply, as certified by the Review Committee.

the DOE may apply the mode of direct negotiation following the provisions
under paragraph (a) above on Frontier Area.

Part 3. Award of RE Contracts and Registration Procedure for
RE Developers

SEC. 11. Award of RE Contract. - The Review Committee shall, within one
(1) week after the final evaluation of the RE project proposal and, in the case of
RE Application, the negotiation of the terms and conditions of the RE Contract,
recommend to the DOE Secretary the approval of the RE Contract. The DOE
shall notify the winning or qualified RE Applicant of the award and the schedule
of signing of the RE Contract.

Provided, That the RE Contract in the nature of a financial or technical assistance
agreement shall be approved and executed by the President of the Philippines,
upon the recommendation by the DOE Secretary.

SEC. 12. Effectivity of the RE Contract. — The RE Contract shall take effect on
the effectivity date as stipulated in the signed RE Contract.

SEC. 13. Posting of Performance Bond. — Within sixty (60) days after the

effectivity date of the contract and at the start of every contract year thereafter,
the RE Developer shall post a bond or any other guarantee of sufficient amount,

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but not Jess than the minimum expenditures commitment for the corresponding
year.

SEC. 14. Registration as an RE Developer. -— The DOE shall issue the
Certificate of Registration to the RE Developer immediately upon the effectivity
of the RE Contract whether during Pre-Development or Development/
Commercial Stage.

Holders of valid and existing contracts or agreements on renewable energy
resources awarded prior to the effectivity of the Act shall be issued a DOE
Certificate of Registration as RE Developers only upon conversion of these
contracts or agreements to RE Contracts pursuant to Section 4 (b) hereof.

CHAPTER ITI. SALIENT PROVISIONS OF THE RE CONTRACT

Part i: Standard Provisions

SEC, 15. Term of RE Contract. - The RE Contract per RE resource type shall
have a term of not exceeding twenty-five (25) years and renewable for not more
than twenty-five (25) years: Provided, That the total period of the RE Contract
from the Pre-Development to the Development/Commercial Stages shall not
exceed fifty (50) years.

During Pre-Development Stage, the RE Contract shall have a term of two (2)
years and may be extended for one (1) year subject to terms and conditions
under the RE Contract: Provided, however, That in the case of a Geothermal RE
Contract, the term may be extended for two (2) years and further extendible for
one (1) year upon compliance by the RE Developer of the conditions stipulated
in the RE Contract.

SEC. 16. Obligations of the RE Developer. —- The RE Contract shall stipulate
all the obligations of the RE Developer which shall include, among others, the
following:

a. Comply with all its work and financial commitment in carrying out its RE
operations and provide all necessary services, technology, and financing in
connection therewith;

b. Observe applicable laws relating to labor, health, safety, environment,
ecology and indigenous peoples rights, among others;

c. Pay the government share and taxes, as may be applicable;

d. Give priority in employment to qualified personnel] in the area where the RE
project is located and give preference to Filipinos in all types of employment
for which they are qualified;

e. Give preference to local companies/ agencies in entering into subcontracts
on RE activities or services which the RE Developer may not carry out, upon

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approval by the DOE, provided that these companies/agencies are
competitive and the services required are locally available;

Post a performance bond, if applicable, within the prescribed period;

mn

g. Maintain complete and accurate technical data and reports, and accounting
records of all the costs and expenditures for the RE operations;

h. Submit technical and financial reports in accordance with the format as |
prescribed by the DOE and in a timely manner;

i. Be responsible in the proper handling of data, samples, information, reports
and other documents; and

j. Allow DOE personnel, at ail reasonable times, full access to RE Contract
area and to accounts, books, and other records relating to RE operations.

SEC. 17. Rights of the RE Developer. - Immediately upon effectivity of the
RE Contract, the RE Developer shall be issued a DOE Certificate of Registration
which shall qualify it to avail of the incentives and privileges under the Act.

SEC. 18. Benefits to Host Communities. - The RE Contract shall specifically
include provisions on the benefits to host communities or local government units
(LGUs) which comprise the allocation of such host Communities or LGUs from
the Government Share in the exploration, development and utilization of the RE
resources pursuant to Sections 20 and 21 of the IRR of the Act, among others.
This may be stipulated as part of RE Developer’s obligation to include in its
Information, Education and Communication (IEC) Campaign information on
benefits to host communities and LGUs where the RE project is located.

SEC. 19. Disputes and Arbitration. - In case of dispute between the DOE and
the RE Developer relating to the RE Contract or the interpretation and
performance of any of the clauses of the RE Contract, both parties shall seek to
resolve such dispute or difference amicably or failing such amicable settiement,
through referral to an expert, for technical disputes only.

All disputes which cannot be settled amicably within sixty (60) days, after the
receipt by one party of a notice from the other party, of the existence of the
dispute, shall be settled exclusively and finally by arbitration, upon written
demand of either party.

SEC. 20. Suspension and Termination of the RE Contract. — The DOE shall
have the power to suspend and terminate the RE Contract, after due notice to
the RE Developer. The grounds for suspension and termination shall include, but
not be limited to, the following:

a. Grounds for the Suspension/Termination of an RE Contract for the Pre-
Development Stage:

i. Non-compliance with the approved Work Program and any of the
obligations;

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if.

Vi.

Non-compliance with RE technical design standards adopted by the
DOE;

Non-observance of environmental regulations imposed by the
Department of Environment and Natural Resources (DENR) during
the conduct of feasibility study;

Tampering or plagiarizing of technical design and feasibility study
reports;

Non-posting of performance bond or any other guarantee within the
period provided for in the RE Contract; and

Non-payment of the financial obligations agreed upon under the
contract.

b. Grounds for Suspension/Termination of an RE Contract for the
Development/Commercial Stage:

Vi

Vil.

viit.

Non-compliance with the terms and conditions of the RE Contract;
Violation of the RPS rules, as may be applicable;

Non-compliance with the approved Work Program and any of the
obligations;

Non-compliance with RE technical design standards adopted by the
DOE;

Non-observance of environmental regulations imposed by the DENR
during construction and operation;

Tampering or plagiarizing of technical design, feasibility study,
generation and operation reports;

Non-remittance of government share;

Non-payment of the financial obligations agreed upon under the
contract; and

Non-posting of performance bond or any other guarantee within the
period provided for in the contract.

The termination shall not be effective if the failure of the RE Developer giving
ground to the termination has been cured on or before the effective date of
termination specified in the notice.

Provided, however, That RE Contract in the nature of a financial or technical
assistance agreement shall be suspended or terminated by the President, upon
recommendation by the DOE Secretary.

SEC. 21. Confidentiality. - All documents, information, data and reports
generated by the RE Developer during its RE operations under the RE Contract

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shall be kept confidential, and shall not be disclosed to any third party or to any
affiliate not directly involved in the implementation of the RE Contract.
Moreover, neither the DOE nor the RE Developer shall! transfer, present, sell or
publish confidential information in any manner without the consent of the other
party: Provided, however, That the DOE shall have the right to use and make
public data and information generated by the RE Developer with respect to the
contract area after the expiration of the RE Contract.

SEC. 22. Assignability/Transfer. - All assignments of RE Contract shall be
subject to prequalification and prior written approval of the DOE.

a. The RE Developer may assign part or all of its rights and/or obligations
under the RE Contract to its affiliate or any third party with prior notice to
and approval by the DOE and in accordance with the following provisions:

i, The RE Developer shall submit to the DOE copies of a written
agreement on the corresponding part of its rights and/or obligations
to be assigned; and

ii. The RE Developer shall guarantee in writing to the DOE the
performance of the assigned obligations.

b. The RE Developer may authorize its subsidiaries, branches or regional
corporations to implement the RE Contract, but the RE Developer shall
remain responsible for the performance of this RE Contract.

Provided, however, That in the case of an RE Contract in the nature of a financial
or technical assistance agreement, it shail be assigned or transferred, in whole
or in part, to a qualified person subject to the prior approval by the President:
Provided, further, That the President shail notify Congress of every financial or
technical assistance agreement assigned within thirty (30) days from the
approval thereof.

Part 2. Special Provisions
A. Geothermal Energy

SEC, 23. RE Contract in the Nature of an FTAA. — The RE Contract that shall
govern the large-scale exploration, development or utilization of geothermal
energy resources by foreign-owned entities shall be in the nature of a Financial
or Technical Assistance Agreement (FTAA).

Geothermal RE projects shall be classified as large-scale based on capitalization
and other similar criteria as may be determined by the DOE.

The mode of awarding RE Contract to a foreign company shall be in accordance
with the procedures set forth under Sections 9 and 10 hereof.

In the event that a foreign corporation qualifies for an RE project, the following
requirements and/or terms and conditions shall be present in the RE
proposal/application, for evaluation, and in the award and implementation of the
RE Contract, in addition to the requirements provided under Section 6 hereof:

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a. A firm commitment in the form of a sworn statement, of an amount
corresponding to the expenditure obligation that will be invested in the
contract area as part of the RE Proposal/Application documents: Provided,
That such amount shail be subject to changes as may be necessary to cover
the cost of inflation and foreign exchange fluctuations;

b. Representations and warranties that, except for payments for dispositions
for its equity, foreign investments in local enterprises which are qualified for
repatriation, and local supplier's credits and such other generally accepted
and permissible financial schemes for raising funds for valid business
purposes, the RE Developer shal! not raise any form of financing from
domestic sources of funds, whether in Philippine or foreign currency, for
conducting its geothermal operations for and in the contract area;

c. A stipulation in the RE Contract that the foreign RE Developers are obliged
to give preference to Filipinos. in all types of employment for which they are
qualified and that technology shall be transferred to the same;

d. If the RE Application/Proposal is found to be sufficient and meritorious in
form and substance after evaluation, the DOE shall give the foreign RE
Applicant the prior right to the area covered by such proposal. Thereafter,
the DOE shall recommend its approval to the President.

e. The President shall notify Congress of the RE Contract in the nature of
financial or technical assistance agreements within thirty (30) days from
approval and execution thereof; and

f. Such other terms and conditions consistent with the Constitution, applicable
laws and with the Act as the President, upon recommendation by the DOE
Secretary, may deem to be in the best interest of the State and the welfare
of the Filipino people.

The RE Developer shall manifest, in writing, to the President through the DOE
Secretary, its intention to withdraw from the RE Contract, if in its judgment the
project is no longer economically feasible, even after it has exerted reasonable
diligence to remedy the cause or the situation. The Secretary shall, after due
evaluation, recommend to the President the acceptance of the withdrawal:
Provided, That the RE Developer has complied with or satisfied all its financial,
technical and legal obligations. Provided, further, That upon withdrawal, the
performance bond paid for under the RE Contract shall be forfeited in favor of
the Government.

B. Hydropower Energy

SEC. 24. Impounding and Pumped-Storage. - Applicants for the registration
as Hydropower RE Developer, utilizing impounding and pumped-storage, shall be
required to show proof of compliance with the internationally accepted norms
and standards on hydropower development such as those of the World
Commission on Dams, the International Energy Agency, among others.

14
=== dc2009-07-0011-pages-15.ppm ===
The Hydropower RE Contract area shafl not be defined using the Blocking
System.

Cc. Biomass Sector

SEC. 25. Biomass Operating Contract. - The RE Developers of biomass,
biogas and methane-capture from organic wastes need not enter into a Pre-
Development Service Contract due to the peculiar conditions and realities
attendant to developing or utilizing such non-naturally occurring resources:
Provided, however, That except in instances where the power to be generated is
for own use, the Biomass RE Developers shall be required to obtain an
Operating Contract to cover the project’s Development/Commercial Stage
wherein the developer shall commit to develop, construct, install, commission
and operate an RE generating facility subject to the following:

a. All Biomass RE Contracts shall be exempt from the payment of government
share.

b. In the event that there is excess capacity to be sold to any end-user, such
biomass systems shall be covered by an RE Operating Contract with the
DOE.

c. The Biomass RE Operating Contract shall not include exclusivity of areas for
feedstock sources and thus not covered by the Blocking System.

CHAPTER IV. RE PROJECTS FOR OWN-USE AND MICRO-SCALE RE
PROJECTS FOR NON-COMMERCIAL OPERATIONS

SEC. 26. RE Projects for Own-use. - RE Developers generating power for
own-use shall! register with the DOE to avail of any incentives under the Act. The
DOE Certificate of Registration shall be issued upon complete submission of
requirements which shail include, but not be limited to, the following:

a. Letter of Intent;
b. Project Description; and
c. Proof of ownership of the RE facilities

SEC. 27. RE Operating Contract for Micro-Scale Projects for Non-
Commercial Operations. - The issuance of RE Contracts for Non-Commercial
Micro-Scale RE Project shall be governed by a simplified process of application
and evaluation using the Checklist System. All interested applicants shall submit
requirements to the REMB which shall include, among others, the following:

15
=== dc2009-07-0011-pages-16.ppm ===
a. Letter of Intent;
b. Project Description;
c. Work Plan;

d. LGU endorsement/certification and any of the documents listed in the legal
requirements provided in Section 6 (b) hereof, as rnay be applicable; and

e. Other proof of sustained operations of the project as may be defined by the
DOE.

SEC. 28. Procedure and Requirements for Application. — The DOE shall
follow a set of simplified procedure and requirements prescribed in Section 6 for
granting RE Contracts covering both RE Projects for Own-Use and Micro-Scale RE
Projects for Non-Commercial Operations.

SEC. 29. Registration as an RE Developer. ~ RE Developers of RE Contracts
for Non-Commercial Micro-Scale Projects shall register with the DOE to avail of
any incentives and priviteges under the Act. All such RE Developers shall be
exempt from payment of the Government Share.

CHAPTER V. FINAL PROVISIONS

SEC. 30. Separability Ciause. - If for any reason, any provision of this Circular
is declared unconstitutional or invalid, the other parts or provisions not affected
thereby shall remain in full force and effect.

SEC, 31. Repealing Clause. ~ The provisions of other department circulars
which are inconsistent with the provisions of this Circular are hereby repealed,
amended or modified accordingly.

SEC. 32. Effectivity. - This Circular shall take into effect fifteen (15) days
following its publication in at feast two (2) newspapers of general circulation.

Issued this 12" day of July 2009 in Fort Bonifacio, Taguig City, Metro Manila.

ee

\

ANGELO T. REYES
Secretary
§ Republic of the Philippines
DEPARTMENT OF ENERGY
® IN REPLYING, PLS CITE:

SE09-014390
iB

SOA

16
=== dc2009-07-0011-pages-17.ppm ===
IL.

ANNEX “A”

Application No.
O.R. No.

Date

Amount

RE SERVICE/OPERATING CONTRACT APPLICATION FORM

(Republic Act No. 9513)

GENERAL INFORMATION

A. Name of Applicant: ce

B. Authorized Representative:

C. Business ee _

Address/ Tel. / Fax
Nos./ Email Address:

D. RE Sector of interest; 4.9 ———-—~—~— eee

E. Area or Block/s No. and

Location applied for:
F. Approximate area covered
(in has or sq. m):

G. Brief description of —-- _
primary and secondary
purpose as authorized by
its Articles of Incorporation
(for juridical person only):

COMPANY/BUSINESS BACKGROUND

A. Controlling Stockholders (for corporation only)

(List names of majority stockholders and the percentage of their

holdings)

a) - %
b) _. _ %
c) - _ %
d) _. a %
e) - a %

B. Company Directors and Officers
(List of Board Members and Company Officers)

NAME / POSITION

=== dc2009-07-0011-pages-18.ppm ===
ITT.

IV.

b)
c) — _
d)

e)

C. Parent/Subsidiary / Affiliates
(List Names, Addresses and Nature of Business)

a) = _.
b)

D. No. of Years in Operation:

E. Description/ History of the Company / Business:
1. Organizational structure
2. Ownership structure
3. Field of specialization

TECHNICAL AND FINANCIAL CAPABILITIES

A. Key Personnel in the Organization
1. Corporate officers/ hierarchy / expertise
2. Staff members/experience

B. List of On-going or Completed RE or Energy-Related
Contracts/ Agreements

Brief description

Type of energy resource

Location

Contract term/implementation period

. Client

C. Latest Financial Statements
1. Income Statement
2. Balance Sheet

Wom ON

CERTIFICATION:

It is certified that the foregoing information are true and correct. It is
understood that any omission or misinterpretations of the required
information shall be sufficient cause for the rejection of this application.

Date ‘Dul y Authorized Representa tive

Name of Applicant
=== dc2009-07-0011-pages-19.ppm ===
ANNEX “B”

CHECKLIST OF REQUIREMENTS
(Renewable Energy Service/Operating Contract under R.A. No. 9513)

RE Contract Application/Proposal
A. Legal Requirements

1. Individual or Single Proprietorship:
a. Birth Certificate - duly authenticated by National Statistics
Office (NSO);
b. Business Permit - certified true copy; and
c. Department of Trade and Industry (DTI) Registration
(if applicable).

2. Corporation/ Joint Venture/Consortium
a. Securities and Exchange Commission (SEC) Registration -
SEC-certified;
b. By-Laws and Articles of Incorporation - SEC-certified;
c. Certification authorizing its representative to negotiate and
enter into RE Contract with the DOE;
Business Permit;
Controlling Stockholders and Percentage of their Holdings;
Organizational Chart of the Company;
Parent/Subsidiary/ Affiliates (if applicable); and
Company Profile.

a

Bog mo

B. Technical Requirements

Track Record or Experience;

Work Program with financial commitment per activities;

Curriculum Vitae of Management and Technical Personnel;

List of Technical Consultants with corresponding Contract between the
Developer and Consultants showing their respective qualifications;
and

5. List of existing company-owned and leased equipment appropriate for
the RE project with corresponding description.

PwN
=== dc2009-07-0011-pages-20.ppm ===
C. Financial Requirements

D. Other Requirements

1.

N

Audited Financial Statement for the last two (2) years and unaudited.
Financial Statement if the filing date is three (3) months beyond the
date of the submitted Audited Financial Statement;

Bank certification to substantiate the cash balance (exact amount in
words and numbers);

Projected cash flow statement for (2) years; and

For newly-organized or subsidiary corporation with insufficient funds
to finance the proposed work program, it shall submit an Audited
Financial Statement and duly certified and/or notarized guarantee or
Letter of Undertaking /Support from its parent company or partners to

_ fund the proposed Work Program. In the case of foreign parent-

company, the Audited Financial Statement and the guarantee or Letter
of Undertaking/Support shall be duly authenticated by the Philippine
Consulate Office that has consular jurisdiction over the said parent
company.

Letter of Intent/ Application;

Duly accomplished RE Contract Application Form;

Map showing the applied area (RE area of application: in case of ocean,
solar, wind, and geothermal, must conform with the DOE Blocking
System);

Application/ Processing fees; and

Draft Pre-Development or Development/Commercial Service
Contracts,

Il. Requirements for Conversion from Pre-Development Stage to
Development/Commercial Stage

1.

Letter of Declaration of Commerciality declaring the RE project is _
commercially feasible and viable; and

Feasibility study and/or detailed engineering design of the RE project
with the following corresponding documents:

a. Resolution of Support from host communities and host
municipality /ies;

b. Proof of Public Consultation;

c. Any form of legal documents showing the consent of the
landowner if the project falls under a private land;
=== dc2009-07-0011-pages-21.ppm ===
Il.

d. Department of Environment and Natural Resources (DENR)
Permits:
i, Environmental Impact Study
ii, Environmental Compliance Certificate (ECC) or Certificate of
Non-Coverage (CNC)
iii. Forest Land Use Agreement (FLAg)/Special Land Use
Agreement (SLUP) for area applied in public domain
e. National Commission on Indigenous Peoples (NCIP): Free and
Prior Informed Consent (FPIC)/Certificate of Pre-Condition or
Certificate of Non-Overlap;
f. National Transmission Corporation (TRANSCO):
i. Grid System Impact Study
ui. Interconnection Agreement, if applicable
g. Energy (Electricity) Sales Agreement;
h. Other clearances from other concerned agencies (i.e., Maritime
Industry Authority (MARINA), Bureau of Fisheries and Aquatic
Resources (BFAR), Philippine Navy, Philippine Coast Guard, etc.);
Proof of Financial Closing;
Final area for development (geographical coordinates /PRS92);
Payment of corresponding Application/ Processing Fee; and
Draft Development/ Commercial RE Contract.

~ _ bas

Requirements for Conversion from Existing Contracts to RE Contracts

1. Letter of Intent from the Developer requesting for the conversion of the
existing Contract/ Agreement to RE Contract;

Accomplishment report vis-a-vis work and financial program;
Updated Work Program; and

Such other documents that may be required by the DOE.

ew Nh
=== dc2009-07-0011-pages-22.ppm ===
‘REGISTRATION PROCESS OF RENEWABLE ENERGY
DEVELOPER (R.A. No.9513

DIRECT NEGOTIATION

RE APPLICANT

* RE Applicant
submits RE

Application to
REMB

Jt

RE Applicant
prepares the
necessary legal,
financial and
technical documents
and fills out RE
Application Fonn.

REMB checks the
completeness of RE
Application against the

prescribed checklist

REMB
notifies RE
Applicant to
complete
snbmission E
within 30 days
from receipt
of notice

Is RE Application
te Complete? —_ agate

REMB issues order of
payment to RE Applicant to &
pay Application Fee E

If there ate two (2) or
more RE
Applications, REMB
shall endorse to
Review Committee
the application it has
received first. The
Review Comunittee
shall determine the
completeness of
submission. Order of
payment shall be
issned only when the
submission is
complete.

Is RE
Application
completed
within 30
days?

Has the
= Application &
me Fee been paid?

DOE posts RE
Application in
its website
within 5 days
from receipt of
payment

REMB disqualifies
the RE Applicant

and sends notice of
disqu

=== dc2009-07-0011-pages-23.ppm ===
JL

DOE evaluates the RE Application and
negotiates the terms and conditions of
the RE contract within [20 days

REMB disqualifies
the RE Applicant

Is the RE
Application

. compliant with alli

“=, the requirements?

and sends notice of
disqualification

The Review
Committee shall
determine first if
the RE Applicant
is legally
qualified before
evaluating the
technical and
financial criteria
of the application.

Review Committee
Recommends to the
DOE Secretary the
Award RE Contract

DOE Certificate of
Registration

If the RE Contract
is in the nature of
FTAA, the
President shail
award and
execute the RE
Contract upon DOE issues the Certificate
recommendation DOE Awards and = j-— of Registration to RE
bythe DOE Parties sign the RE Developer upon Effectivity
Secretary Contract of the RE Contract

DOE advises the RE E
Applicant of the Schedule of f
Signing of RE Contract &

Note: Submission of a Letter of Intent and/or an RE Contract Application Form only
without attaching legal, technical and financial documentary requirements shall not be
considered as a submission of an RE Application.

=== dc2009-07-0011-pages-24.ppm ===
REGISTRATION PROCESS OF RENEWABLE ENERGY

DEVELOPER (R.A. No.9513

OPEN AND COMPETITIVE SELECTION

RE APPLICANT

RE Applicant
prepares the
necessary legal,
financial and

technical documents :
and fills out RE &
Application Form.

DOE Posts/Publishes the Notice &
of {Invitation for RE Project
Proposal

RE Applicant submits
RE Proposal to REMB

REMB checks the
completeness of RE Proposal
against the prescribed checklist F

REMB
returns the
documents

Is RE Proposal unopened to :

The Review
Committee shall
determine first if
the RE applicant
is qualified or has
passed the legal
requirements
before evaluating
the technical and
financial criteria
of the proposal.
The period of
evaluation shall
be set on the
specific selection
process based on
the number of
areas offered,
type of RE
resources, among
others.

the RE
Applicant

= Complete?

REMB issues order of
payment to RE Applicant to
pay Application Fee :

REMB disqualifies
the RE Applicant

and sends notice of
disqualification

YES

Review Committee
determines if the RE e
Applicant is legally qualified &

=== dc2009-07-0011-pages-25.ppm ===
Has RE Applicant
passed the legal
requirements?

Review Committee S
evaluates the technical and 6
financial criteria

Is the RE
Proposal
accepted?

REMB disqualifies
the RE Applicant
and sends notice of
disqualification .
ee REMB notifies RE
Applicant and
advises to pay Z
processing fee

If the RE Contract
is in the nature of

REMB disqualifies
the RE Applicant
and sends notice of

disqualification

NO

If there are two (2) or
more RE Proposals
which have passed the
legal requirements, they
shall be evaluated
simultaneously based on
their technical and
financial criteria. The
Review Committee shall
recommend the award of
the RE Contract to the
one with the best offer.

DOE Certificate of
Registration

DOE issues the
Certificate of
Registration to RE

Developer upon

Effectivity of the RE

Contract :

DOE Awards and
Parties sign the RE
Contract

FTAA, the

President shall _jves|_
award and

execute the RE

Contract upon Review Committee
recommendation Recommends to the

by the DOE
Secretary

DOE Secretary the
Award of RE Contract

DOE advises the winning RE
Applicant of the Schedule of
Signing of RE Contract

=== dc2009-07-0011-pages-26.ppm ===
CONVERSION FROM PRE-DEVELOPMENT STAGE TO
DEVELOPMENT/COMMERCIAL STAGE OF AN RE
CONTRACT (R.A. No.9513

RE DEVELOPER

RE Developer submits
Application for

Conversion and
Job Declaration of

Commerciality

RE Developer
prepares the

necessary permits,
financial and :
technical documents —
and fills out RE :
Application Form.

REMB checks the
completeness of requirements

REMB
notifies RE
Developer to
complete
submission.

Is the application
Complete?

REMB and Financial Services
evaluate financial and technical §
aspects of the RE project E

REMB notifies RE
NO Developer to

Is the RE
men, Project viable?

address concems

=== dc2009-07-0011-pages-27.ppm ===
tt

DOE issue Confirmation of
Commerciality and negotiate the terms
and conditions of the RE Development

Service Contract

REMB, with the
assistance of Legal
and Financial

Are the terms
and conditions
accepted?

Services, renegotiates
the contract with RE
Developer

REMB recommends to
the DOE Secretary the
conversion of RE
Contract

If the RE Contract
is in the nature of
FTAA, the
President shall]
award and

DOE advises the RE Developer
on the Signing of Development/
Commercial RE Contract

execute the RE

Contract upon
recommendation
by the DOE
Secretary

Parties sign the
Development/Commercial
RE Contract

RE Project under Development/ \,
Commercial RE Contract 3

Note: The DOE Certificate of Registration issued to RE Developer during the effectivity of the
Pre-Development RE Contract shall remain valid upon approval of conversion. Said certificate
shall continue to serve as a proof of entitlement of incentives under R.A. No. 9513 unless otherwise
automatically revoked or cancelled due to termination of the RE Contract.

=== dc2009-07-0011-pages-28.ppm ===
. CONVERSION OF EXISTING SERVICE
CONTRACT/AGREEMENT ON RE RESOURCES TO RE
CONTRACT UNDER R.A. No. 9513

APPLICANT

Applicant prepares the .
necessary documentary
requirements as prescribed by B
the DOE including its
accomplishment report vis-a-
_vis work and financial
commitments and updated
work program, and taking
into account such factors as
type of RE resource, and
remaining term of
contract/agreement, among
others.

Applicant submits application for
conversion or letter of intent with
all necessary documents to REMB

REMB acknowledges receipt
of application and advises the
applicant of the schedule of
negotiation

REMB, with the assistance of
Financial and Legal Services, —
negotiates with the applicant the
terms and conditions of RE
Contract. The negotiation period
shall not exceed 120 days.

REMB shall reject
the application and
advises the applicant
on the grounds for
rejection.

Is negotiation
“a, successful?

Holder of existing contract/
agreement shall continue to operate
its RE project within the remaining
term under the old regime.

REMB recommends approval for
conversion of contract/agreement to
RE Contract to the DOE Secretary

=== dc2009-07-0011-pages-29.ppm ===
If the RE Contract

is in the nature of

FTAA, the |
President shall

award and

h Upon approval by the Secretary, &
nannurion of REMB notifies the applicant of
een eo the approval and the schedule of

existing service -
- signing of RE Contract
contract to RE = NINE

Contract upon :
recommendation JL
by the DOE

Secretary DOE Secretary awards the

conversion and the parties
sign the RE Contract

Once the holder of the | :

existing service ;

contract/agreement was

issued a DOE

Certificate of DOE issues the Certificate

Registration as an RE of Registration to RE

Developer, the RE Developer upon Effectivity §

project shall be
governed by R. A. No.
9513 (Act). RE
Developer shall
continue to avail of the
incentives except those
which have been

modified or withdrawn ‘
by the Act. Registration

of the RE Contract

DOE Certificate of