THE Asian Development Bank (ADB) is backing efforts to tap new geothermal resources in the Philippines as the country seeks to strengthen energy security and reduce its reliance on imported fuels.
ADB Philippines Country Director Andrew Jeffries said the $170 million-worth Philippine Geothermal Resource Derisking Facility (PGRDF) is among the lender’s projects in the pipeline for the country, with implementation possible by the end of the year or early next year.
‘It’s working with the [Department of Energy] and [Land Bank of the Philippines] to provide funding to de-risk the drilling and exploration phase of geothermal energy. That has been approved by the [Investment Coordination Committee],’ Jeffries told reporters in a recent interview.
The PGRDF is designed to reduce the financial risk of exploring new geothermal sites, where developers have to spend heavily on drilling before knowing whether an area contains a commercially viable resource.
Under the facility, up to 50 percent of eligible exploration drilling costs can be financed through sub-loans. These will only have to be repaid if exploration confirms a commercially viable geothermal resource. If exploration fails, ADB said the financing will be written off and effectively converted into a grant. Such risk-sharing is expected to encourage more private investment and help bring new geothermal sites to commercial development.
The DOE said the facility would help move geothermal projects from the exploration stage toward commercial development, expanding the pool of investible projects, while also strengthening the power system and reducing exposure to volatile imported fuel prices.
Financing projects
BEYOND geothermal development, the ADB is also working with the Philippine government on financing programs aimed at strengthening public financial management and deepening the country’s financial markets.
One of these is the Public Financial Management Reform Program, Subprogram 2, which will support efforts to improve fiscal discipline, modernize government financial-management systems, and strengthen the delivery of public services.
The lender said the program will also support fiscal decentralization and the devolution of public services, while encouraging local investments in climate resilience. It will include measures to strengthen public financial management in the Bangsamoro Autonomous Region in Muslim Mindanao (Barmm) and help build its capacity for greater fiscal autonomy.
The subprogram will also help the government develop a medium-term reform roadmap and corresponding action plans for public financial management, the ADB said.
Another program in the pipeline is the Promoting Financial Market Deepening and Innovation Program, Subprogram 1, which seeks to expand the Philippines’ capital markets and reduce the economy’s heavy reliance on bank financing.
The ADB said the program will seek to expand access to long-term financing for government infrastructure and private-sector investments by making it easier to issue capital-market instruments, broadening available financial products, and strengthening capital market supervision.
It will also support reforms on sustainable finance, consumer protection, cybersecurity, and financial integrity as the government seeks to address regulatory gaps arising from digital and innovative financial services.