Department of Energy (DOE) facade. Images from DOE / INQUIRER FILES
MANILA, Philippines — The Department of Energy (DOE) is in discussions with the state-run Land Bank of the Philippines to manage a mechanism to mitigate risks taken by investors in the early stages of geothermal energy development.
“We are still in discussion with Landbank as a possible facility manager,” Mylene Capongcol, director of the Renewable Energy Management Bureau of the DOE, said in a message to Inquirer.
However, she said that the agency remained open to exploring partnerships with other groups.
In September, Capongcol noted that the DOE had also approached other known institutions as potential partners, namely the International Monetary Fund, Development Bank of the Philippines, Department of Finance, and Philippine Guarantee Corp.
The DOE official did not provide any specific timeline for the talks to materialize.
However, she said it’s possible that the geothermal resource de-risking facility (GRDF) could be launched by next year.
GRDF is envisioned to share the cost of exploration drilling with qualified developers, thus reducing risk when investing in geothermal resources at the pre-development stage.
Capongcol previously said the government may need an initial $250 million to jump-start the facility.
She noted earlier that the program could shoulder up to 50 percent of the initial costs of the exploration and drilling stage — considered the riskiest part of pursuing projects as it requires hefty investments.
According to Marvin Bailon, Energy Development Corp. vice president-head of Business Development Group, firms usually earmark P1.5 billion to P2 billion for the first two wells. This is on top of the surface study and 3D seismic assessment they need to conduct to check for potential sources.
According to a briefer from the DOE, the facility may recover the costs by imposing interest on loans; levying a royalty once the project becomes operational; and securing a share of project equity.