The Department of Energy (DOE) and the Landbank of the Philippines (LBP) recently signed a Memorandum of Understanding (MOU) for the effective and efficient utilization of funds aimed at supporting host communities, particularly those benefitting from the Energy Regulations 1-94 (ER 1-94) Program.
The DOE has identified that numerous barangays, as well as indigenous peoples (IPs) or indigenous cultural communities (ICCs) in remote areas --- particularly those located near small hydropower plants and newly established generation facilities --- have yet to establish the required trust accounts under the ER 1-94 Program. Through the ER 1-94 Program, energy generation companies contribute one centavo per kilowatt-hour of generated power to support the communities hosting their projects. This initiative not only strengthens local development but also ensures that these communities can readily access resources to drive social, economic, and environmental progress in their areas.
The MOU, signed by Undersecretary Rowena Cristina L. Guevara and LBP Senior Vice President Althon C. Ferolino, establishes a dedicated trust account to streamline access by host beneficiaries of energy projects to essential funds.
“Setting up a trust account is a crucial step for these host communities to access and utilize these funds. Without an operational trust account, these communities may miss out on valuable support for local projects that could enhance infrastructure, education, health, and livelihood opportunities,” Undersecretary Guevara said.
The DOE emphasizes the importance of establishing these trust accounts to enable communities to fully benefit from the ER 1-94 Program. “With LBP as our partner, assisting local leaders and community representatives in understanding the account setup process and requirements is essential to ensure that they can manage and use the funds effectively for sustainable development and social welfare,” Undersecretary Guevara added.
Under the MOU, LBP is committed to waive service charges for accounts falling below the maintaining balance. This special feature underscores their commitment to ensuring that financial services are equitable and accessible to all, particularly those communities who may face challenges in maintaining a minimum balance.
LBP is also committed to disseminate information about this special arrangement across their six hundred seven (607) branches and branch-lite units nationwide, ensuring that communities are well-informed and are able to experience the benefits of this partnerships.
The DOE aims to strengthen partnerships with government and private organizations, including LBP, to better serve the beneficiaries of ER 1-94, such as private distribution utilities (DUs), electric cooperatives (ECs) and host communities, most especially IPs and ICCs. A key focus is addressing the banking challenges these beneficiaries face, particularly in opening and maintaining deposit accounts required by the Program. “With LBP’s extensive reach, we are confident that this initiative will lead to a more efficient and effective use of our ER 1-94 funds,” noted Undersecretary Guevara.
DUs, ECs, and local communities hosting generation projects can benefit from three interest-bearing current accounts under ER 1-94. These accounts include the Development and Livelihood Fund (DLF) and the Reforestation, Watershed Management, Health, and Environment Enhancement Fund (RWMHEEF), from which local communities can access 25% each from the one centavo per kilowatt-hour of generated power. Additionally, the Electrification Fund (EF) allows DUs and ECs to access the remaining 50%. ###