Gov’t urged to invest in offshore wind projects

The Government needs to consider coming in as an investor in offshore wind energy projects, an industry official said.

“Offshore wind is a big undertaking. Maybe the government wants to also have a stake there because… it’s huge in scale,” Jose M. Layug, Jr., president of the Developers of Renewable Energy for Advancement, Inc., said on the sidelines of a launch event last week.

Mr. Layug noted that PNOC Exploration Corp., a subsidiary of the state-owned Philippine National Oil Co., holds a 10% interest in Service Contract 38, or the Malampaya gas field development project.

“Maybe, government might want to be part of that first offshore wind project. I raised that earlier so the government could consider it,” he said.

Asked to comment, Energy Secretary Raphael P.M. Lotilla said any government venture into offshore wind would depend on the availability of funds.

“It depends on the availability of financing, but there are other ways where government can assist,” he said at the same event.

Mr. Lotilla said that the government can assist in terms of rights acquisition for users of submarine resources, the sea floor, and offshore areas.

“Where government can facilitate, we should be open to consider facilitating,” he said.

The Department of Energy (DoE) has awarded 82 offshore wind energy service contracts, with a potential capacity of 63.359 gigawatts (GW).

These projects are located in the north of Luzon, west of Metro Manila, north and south of Mindoro, Panay, and the Guimaras Strait. All these projects are currently in the pre-development stage, with proponents conducting assessments on resource volumes, site suitability, and project viability.

The DoE and the Asian Development Bank initially identified at least nine ports which can be upgraded or repurposed to service offshore wind operators.

Under the Philippine Offshore Wind Roadmap, the Philippines has an estimated potential capacity of 178 GW from offshore wind resources.

This is expected to help the Philippines achieve its aim of increasing the share of renewables to 35% by 2030 and 50% by 2040.

Universal water access to depend on governance, incentive policies

The Philippines must address concerns about institutions, incentives, and investments — the so-called “three I’s” — in order to expand universal access to safe water and sanitation, according to a specialist from the World Bank.

“We need to strengthen policies and governance within institutions. And these are policies and governance not just in water supply but also equally importance on water resource management,” Fiorella Delos Reyes Fabella, senior water supply and sanitation specialist from the World Bank, said during a forum in Quezon City on Thursday.

With over 30 agencies responsible for water resources, Ms. Fabella said that there is a need to strengthen institutional governance, “not just in water supply but also equally important on water resource management,” she said.

Regarding incentives, she said that the lack of clear regulation has caused “overlaps” in regulatory authority.

“Different delivery standards and a different rate setting principles across many water service providers in the Philippines are subjected to different regulatory standards and this has led to water pricing that does not recover the costs. And then it has also led to an unsustainable trajectory,” she said.

She said that service providers will need tariffs that “accurately reflect the cost of services,” which includes capital, operating and maintenance costs.

“Regulation will push water service providers to meet certain targets and standards as well as to get the correct tariffs,” she said.

According to the World Bank, only 48% of the population are currently receiving piped water services, and approximately 63% have access to safely managed sanitation services or proper collection, treatment, and disposal of human waste.

“These figures are significantly lower than the regional East Asia Pacific (EAP) average, which stands at around 74% for safe water access and 69% for access to sanitation,” the World Bank said.

On the investment side, it said that municipalities and cities need strong support from the National Government to achieve universal access to safe water and sanitation.

“We have a decentralized setup in the country. It is the LGUs (local government units) that are ultimately responsible but when you look at the LGUs and their capacity. If they could actually, with their funding that they will get from the Mandanas Ruling, they can actually do the expansion to meet universal access to safe water and sanitation in their areas,” Ms. Fabella said.

Source: Business World

FDI inflows drop to 3-year low in Sept.

Net inflows of foreign direct investments (FDI) slumped to the lowest level in over three years in September, as the uncertain global economic environment dampened investor sentiment.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed FDI net inflows plunged by 42.2% to $422 million in September from $731 million in the same month in 2022.

This was also 46.5% lower than the $790-million FDI net inflows in August.

The September figure was the lowest monthly net inflow of FDI in over three years, or since the $314 million in April 2020 at the height of the coronavirus disease 2019 (COVID-19) pandemic lockdowns.

Security Bank Corp. Chief Economist Robert Dan J. Roces attributed the FDI slump in September to global economic uncertainties such as possible recessions and trade disputes.

“Domestic policy shifts, and currency fluctuations have further dampened confidence. Challenges in key sectors and the attractiveness of other regions also play a role,” he said.

BSP data showed all major FDI components posted a decline in net inflows in September.

Nonresidents’ net investments in debt instruments of local affiliates fell by 47.8% to $238 million in September from $456 million in the same month in 2022.

Meanwhile, investments in equity and investment fund shares slid by 33.1% to $184 million in September from $275 million a year ago.

Reinvestment of earnings also slipped by 9.9% year on year to $79 million in September.

Nonresidents’ net investments in equity capital (other than reinvestment of earnings) also declined by 43.9% to $105 million in September from $187 million in the same month last year.

Broken down, equity capital placements slumped by 25.2% to $172 million, while withdrawals climbed by 57% to $67 million.

The equity placements were mainly from Japan, Singapore, and the United States, and invested mostly in financial and insurance, construction, manufacturing, and other industries.

“Net FDI inflow in September was the lowest since April 2020, indicating the continued impact of a challenging global economic environment on investor sentiment,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

9-MONTH SLUMPFor the first nine months of the year, FDI net inflows dropped by 15.9% to $5.9 billion from $7 billion in the comparable year-ago period.    

“FDI declined on the back of persistent global economic uncertainties, which continued to affect investor decisions,” the central bank said.

BSP data showed foreign investments in debt instruments declined by 17.2% year on year to $4.06 billion in the January-to-September period.

Investments in equity and investment fund shares also dropped by 12.9% to $1.8 billion in the nine-month period.

Net foreign investments in equity capital went down by 18.5% to $945 million. Equity capital placements inched up by 2.7% to $1.39 billion, while withdrawals surged by 126.5% to $448 million.

Most of these placements were from Japan, Singapore, the United States, and Germany.

Reinvestment of earnings dipped by 6.1% to $869 million in the January-to-September period.

Ms. Velasquez said that if economic conditions improve in 2024, net FDI inflows may improve.

“The country’s favorable growth prospects and the government’s efforts to attract investors such as trade liberalization reforms and overseas roadshows, could also contribute to boosting investor sentiment,” she said.

Ms. Velasquez said the government can still improve infrastructure and the ease of doing business in the Philippines in order to make the country more competitive in attracting investments.

“Moving forward, the Philippines’ FDI outlook hinges on global economic recovery, consistent domestic policies, strong economic performance, and a more competitive regional stance,” Mr. Roces said.

The BSP expects FDI net inflows to end the year at $8 billion.

Source: Business World