THIRTEENTH CONGRESS OF THE REPUBLIC ) 
FIRST REGULAR SESSION 
1 
OF THE PHILIPPINES 
1 
*Q4 
>l71*! 33 PfI :2? 
S E N A T E  
S.B. NO. 
9 
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Introduced by Senator Jinggoy Ejercito Estrada 
EXPLANATORY NOTE 
The spiraling cost in the country’s acquisition of traditional sources of energy has 
placed a great strain in our local economy. This, in effect has made our country over- 
dependent with no avenue for self-sufficiency. 
It is time that we develop and harness our country’s alternative indigenous 
resources which are not only cost-efficient but environmentally friendly and safe. 
Thus, this bill seeking to develop alternative sources of energy is earnestly 
sought, 


“04 J-P 30 PI1 27 
THIRTEENTH CONGRESS OF THE REPUBLIC ) 
FIRST REGULAR SESSION 
OF THE PHILIPPINES 
1 
.e 
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I
 
II 
S E N A T E  
S.B. NO. 
1 
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Introduced by Senator Jinggoy Ejercito Estrada 
AN ACT 
PROVIDING INCEN.TIVES FOR DEVELOPERS, MANUFACTURERS AND USERS OF 
ESTABLISHING A 
NATIONAL NON-CONVENTIONAL ENERGY PROGRAM, 
NON-CONVENTIONAL ENERGY SYSTEM, AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and the House of Representatives of fhe Philippines in 
Congress assembled: 
SECTION I. 
- Short Title - this Act shall be known as the Non- Conventional 
Energy Program Act of 2004 
SECTION 2. Declaration of Policies- It is hereby declared a policy of the state 
to achieve self-reliance in the country’s every requirements through the exploitation, not 
only of indigenous conventional energy resources but also, of non-conventional energy 
resources such as, but not limited to, biomass, solar, wind, microhydro and ocean 
energy as inexhaustible energy sources which can bring economic, social and 
environmental benefits to the country. Moreover, it is also declared a policy of the state 
to set up the institutional infrastructure and provide key government inputs to develop 
local capabilities in the use of non-conventional energy systems, encourage their 
widespread commercial applications, and promote their efficient utilization. Finally, the 
state shall promote the use of non-conventional energy systems to supply energy 
required in the rural areas for basic needs of home and industry through a 
comprehensive energy program. 
SEC. 3. - Definition of Terms- When used in this Act: 
(a) “Non-conventional Energy Systems” or “NES”, shall refer to energy systems 
which use renewable energy resources applying new energy conversion or 


utilizing innovative technologies. 
These systems can be characterized as 
indigenous, small-scale, decentralized and modular; 
(b) “Renewable Energy Resources” shall refer to resources which do not have an 
upper limit on the total quantity to be used. The resources are renewed on a 
regular basis and the renewable rate is rapid enough to consider availability over 
an indefinite period of time. Examples are biomass, solar, wind, geothermal, 
hydro and ocean energy. 
(c) “Biomass energy systems” refer to energy systems which use biomass resources 
such as fuelwood from forests, agricultural and industrial wastes, animal manure, 
fast growing trees for charcoal production, and sugarcane for ethanol fuel 
production through thermochemical, biochemical or physico-chemical processes 
to produce heat, steam, mechanical power or electricity; 
(d) “Solar energy systems” shall refer to energy systems which directly convert solar 
radiation, either through solar collectors into heat for various applications or 
through photovoltaic panels, into electricity; 
(e) “Mind energy systems” shall refer to energy systems which use wind turbines to 
convert the energy in the wind to rotary motion which in turn produces 
mechanical power as in windmills or electrical power in wind turbine systems; 
(f) “Micro-hydro power systems” shall refer to small hydro-based energy systems 
which utilize water turbines with an installed capacity of not more than 50kw as 
may be determined by the Office of the Energy Affairs, to convert the energy 
from running or falling water; 
(9) “Ocean energy systems” shall refer to energy systems which convert ocean 
current to electrical energy, otherwise known as wave and tidal power systems or 
ocean thermal energy conversion (OTEC) systems which convert thermal 
gradient from the ocean surface to the bottom into electrical energy; and 
(h) “Conventional energy systems” shall refer to energy systems using commercially- 
traded modern fuels such as petroleum products, coal and electricity produced 
from such fuels, including large-scale hydro and geothermal power plants. 
SEC. 4 - hplernenting Agency/ Powers and Functions. The Department 
of Energy (DOE) shall formulate and implement the National Non-Conventional 
Energy Program (NEP). In this regard, DOE shall have the following powers and 
functions: 
(a) Promulgate rules and regulations necessary to implement the objectives 
(b) Formulate and direct the implementation of a comprehensive national 
energy program, which shall include among others, a Non-conventional 
and provisions of this Act; 


Energy Promotion, and Commercialization Program, and an affiliated 
Non-conventional Energy Centers Program; 
(c) Integrate, coordinate with, and provide the necessary guidelines to all 
government agencies and instrumentalities including government-owned 
and controlled corporations involved in non-conventional activities, 
projects and programs; 
(d) Review and approve all on-going or planned non con energy activities and 
projects supported or planned to be supported by government fund or 
funds obtained elsewhere through government intercession or assistance; 
(e) Formulate criteria for determining priority for proposed research, 
development and utilization projects on non-conventional energy and 
accordingly identify and select the schemes for execution, financing, and 
funding, including official foreign development assistance without the 
necessity of prior approval by the National Economic and Development 
Authority ; 
(f) Designate project implementers, and coordinate and monitor the progress 
of all planned and on-going projects of NEP funded by the program’s 
grants-in-aid fund; 
(9) Provide necessary and appropriate support services the national non con 
energy program such as facilitation of entry of suitable foreign expertise 
and resources in order to accelerate the pace of technology transfer and 
development to local expertise, the launching of a vigorous information 
and promotion drive, and the institution of delivery mechanisms for the 
dissemination of viably-proven applications; 
(h) Develop and implement specific policies encouraging the participation in 
the program of the private sector; 
(i) Propose and recommend in consultation with the Board of Investments, 
such incentives necessary and appropriate to institutions, enterprises, 
organizations and individuals participating in the activities and projects of 
the noncom energy program; and 
(j) Perform such other functions necessary to achieve the objectives of this 
Act. 
SEC. 5 - Program Concept- The Non-Conventional Energy Program (NEP) 
shall consist of the following: 
(a) The Technology Program for developing commercial competitiveness of 
laboratory-proven 
noncom energy systems for maintaining such 


competitiveness by conducting technical research projects in cooperation 
with public and private research institutions; 
(b) The Promotion and Commercialization Program to accelerate the 
development of a market environment conducive for commercial use of 
noncon energy and to strengthen the market by provision of incentives 
towards a more significant participation of the private sector; and 
(c) The Affiliated Noncon Energy Centers (ANECs) Program for setting up 
and/or accrediting an institution, that comprehends a mechanism for 
promoting the use of noncom energy in rural and remote areas through a 
decentralized project planning and implementation strategy of establishing 
ANECs in provincial universities and agricultural colleges or among 
cooperatives and others people’s organizations that will serve as rural 
extension area of DEA. 
SEC. 6. - Responsibilities of DEA. -The responsibilities of DEA, among 
others, are as follows: 
(a) Set the criteria which shall be the basis for accrediting ANECs until 
such time that the DEA can independently operate, supervise and 
coordinate ANECs operations, and evaluate ANECs performance with 
regards to continued participation with the program; 
(b) Council energy technology assessment studies to provide research 
directions for the Technology Program, establish joint projects with 
public or private Cooperating Research Institutions (CRIS) coordinate 
the activities of these various CRls and provide financial and technical 
support to strengthen CRI capability to do noncom energy research 
work; and 
(c) Conduct activities and projects towards a conducive market 
environment for noncom energy use and greater private sector 
participation such as market studies, information dissemination, local 
manpower development, institutional linkaging, and provision of 
financing and other incentives. 
SEC. 7. - 
Responsibilities of ANECs. 
The ANECs shall provide 
extension support to DEA in the development and implementation of provincial- 
level rural noncom enegy programs. The primary responsibilities are: 
(a) conduct rural energy surveys; 
(b) undertake area-based energy supply-demand studies; 
(c) conduct NES project feasibility studies; 


(d) carry out community organizing activities needed for project 
implementation; 
(e) provide local training in basic operation and maintenance of NES in 
their areas; 
(f) provide expert advise to local NES users; 
(9) monitor program implementation and user’s feedbacks; and 
(h) such other responsibilities the DEA may deem necessary. 
SEC. 8. - 
ResponsiMities of the CRls. 
Cooperating Research 
Institutions (CRls) are public or private research institutions designated by DEA 
who shall jointly implement with DEA activities and projects under the technology 
program. Their primary responsibilities are: 
(a) conduct pilot studies and demonstration projects; 
(b) provide technical support and consultancy services to NES users; 
(e) assist DEA in developing quality standard for NES equipment and 
devices 
(d) provide services for consultancy and technical training; and 
(e) such other responsibilities the DEA may deem necessary. 
SEC. 9. . 
Information Management Role of the DEA.- The CRls, 
ANECs and the private sector involved in the NEP shall provide the DEA with 
information required for the effective monitoring, management and development 
of the program. 
SEC. I O .  - 
Privileges of the Local Manufacturers, Dealers and 
Noncon Energy Users. Any local manufacturer or dealer of NES equipment 
and devices or noncom energy user shall the following privileges: 
(a) All incentives as provided for by Section 39 of the Omnibus Investment 
Code or E.O. 226; 
(b) At the option of the taxpayer and in accordance with the procedure 
established by the Bureau of Internal Revenue, fixed assets acquired 
by the local manufacturer and the noncom energy user for establishing 
its capability to manufacture noncom energy system equipment and 
devices may be: 
(I) 
Depreciated to the extept of not more than twice as fast as normal rate 
of depreciation if expected life in ten (1 0) years or less; or 
(2) Depreciated over any number or years between five (5) years and 
expected life, if the latter is more than ten (10) years, and depreciation 


thereon allowed as deduction from taxable income: Provided, That the 
taxpayer notifies the Bureau of Internal Revenue at the beginning of 
the depreciation period which depreciation rate allowed by this Section 
will be used by it. 
SEC. I I. 
- lncenfives to ANECS and CRls. - Any school or institution 
designated by DEA either as an ANEC or a CRI, whether a public or a private 
agency, can be a recipient of donations from DEA so as to develop and 
strengthen their capabilities to perform their responsibilities under the NEP. Such 
may include funds, technical services, NES equipment and devices, and 
laboratory facilities. 
SEC. I 2  - lncenfives to Faculfy Members and Sfudenfs of ANECs 
and CRls.- Any faculty member or student involved in any ANEC or CRI activity 
shall be granted the following incentives: 
(a) 
Tasks performed by technical staff or faculty members for 
ANEC or CRI activity in connection with the NEP shall be 
credited as additional workload and they will be provided for 
with honoraria in accordance with guidelines defined by Dea. 
(b) 
Students performing tasks for ANEC or CRI activity in 
connection with the NEP can obtain academic credits for such 
activities subject to the approval of the school authorities. The 
students will also be financially compensated for the tasks 
performed in accordance with the guidelines set by DEA. 
SEC.13 - Financial Assistance Program- Government financial 
institutions such as the Development Bank of the Philippines (DBP), the 
Philippine National Bank (PNB), the Government Service Insurance System 
(GSIS), the Land Bank of the Philippines (LBP) , and such other government 
institutions are now engaged or may hereafter engage in financing of investment 
operations shall in accordance with and to extent allowed by enabling provisions 
of their respective charters or applicable laws, accord high priority to applications 
for financial assistance by individuals/ enterprises/ industries participating in the 
NEP as duly recommended and endorsed by DEA. 
SEC.14. - Program Appropriations.- The amount necessary for the 
implementation of this Act shall be taken from the current fiscal year 
appropriations of the Office of Energy Affairs. Thereafter, such sums as may be 


needed for the operation and maintenance of the Non-Conventional Energy 
Program shall be included in the budget of the Office of Energy Affairs under the 
annual General Appropriations Act. 
SEC.15. - Assistance by Other Government Agencies, Offices and 
Corporafions. All government agencies and instrumentalities including 
government-owned and controlled corporations in addition to being implementers 
of the comprehensive national energy program when so designated, shall extend 
whatever assistance may be required by the Office of Energy Affairs including, 
but not limited to, the detail to the Office of their employees, scientists and 
technical personnel. 
SEC. 16. - Penalty Clause - Any person who willfully violates any rule or 
regulation promulgated pursuant to the authority granted in this Act shall, upon 
conviction, be punished by a fine of not less than One hundred thousand pesos 
(Php lOO,OOO.OO), or by imprisonment of not less than two (2) years or not more 
than five (5) years, or both, at the discretion of the court: Provided, That if the 
violation is committed by a juridical person, the penalty provided shall be 
imposed on the official or employee thereof responsible for the violation: 
Provided, further, that if the violation is committed by a government official or 
employee including those in government-owned or controlled corporations, he 
shall, in addition to the penalty provided, be subject to disciplinary administrative 
proceedings and penalties. 
SEC. 17. - Separabilify Clause- If for any reason ay provision of this Act 
is declared unconstitutional or invalid, such parts not affected thereby shall rein in 
full force and effect. 
SEC.18. - Repealing Clause.- All laws, orders, decrees, rules ,and 
regulations or part thereof inconsistent with the provisions of this Act are hereby 
repealed or modified accordingly. 


, 
SEC. 49 _- Effecfivify Clause- This Act shall take effect fifteen (15) days 
after its complete publication in at least two (2) newspapers of general 
circulation. 
Approved,