FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
1 
7 JU/_ -;i ;' .; ', ., 
OF THE PHILIPPINES 
First Regular Session 
1 
S E N A T E  
il f:CF i'Kfi rr:y : 
Senate Bill No. 4 8 5 
INTRODUCED BY SEN. 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 seeks to develop alternative sources of energy is earnestly 
sought. 
&?j 
GGO EJERCITO ESTRAD 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
1 
7 
tllil- -? 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
PROVIDING INCENTIVES FOR DEVELOPERS, MANUFACTURERS AND 
PURPOSES 
ESTABLISHING A NATIONAL NON-CONVENTIONAL ENERGY PROGRAM, 
USERS OF NON-CONVENTIONAL ENERGY SYSTEM, AND FOR OTHER 
Be it enacted by fhe Senafe and House of Representafives of fhe Philippines in 
Congress assembled: 
SECTION 1. 
Short Title. This Act shall be known as the Non- 
Conventional Energy Program Act of 2007”. 
SECTION 2. Declaration of Policies. It is hereby created 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; 
“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 
(b) 


(9 
period of time. Examples are biomass, solar, wind, geothermal, 
hydro and ocean energy; 
“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 physio-chemical 
processes to produce heat, steam and mechanical power or 
electricity; 
“Solar Energy Systems” shall refer to energy systems which 
direcfly convert solar radiation, either through solar collectors 
into heat for various applications or through photovoltaic 
panels, into electricity; 
“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; 
“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; 
“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 
“Conventional Energy Systems” shall refer to energy systems 
using commercially-traded modern fuels such as petroleum 
products, coal and electricity produced from fuels, including 
large-scale hydro and geothermal power plants. 
SEC 4. Implementing AgencyPowers 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 and provisions of this Act; 
(b) Formulate and direct the implementation of a comprehensive national 
energy program which shall include among others, a Non- 
conventional 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 aB on-going or planned non-conventional 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 
Development Authority (NEDA); 
(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 non- 
conventional 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 non-com energy program, and 
Perform such other functions necessary to achieve the objectives of 
this Act. 
(j) 
SEC 5. Program Concept. The Non-Conventional Energy Program (NEP) 
(a) 
The 
Technology 
Program 
for 
developing 
commercial 
competitiveness of laboratory-proven noncon energy systems 
for maintaining such competitiveness by conducting technical 
research projects in cooperation with public and private 
research institutions; 
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, 
The Afiliated 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 
shall consist of the following: 
04 
(c) 


and other people’s organizations that will serve as rural 
extension area of DEA. 
SEC 6. Responsibilities of E A .  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; 
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 
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 energy 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 
(e) provide local training in basic operation and maintenance of NES in 
(f) provide expert advise t o local NES users; 
(9) monitor program implementation and user’s feedbacks and; 
(h) such other responsibilities the DEA may deem necessary; 
implementation; 
their areas; 
SEC 8. Responsibilities of fhe CRls. Cooperating Research Institutions 
(CRls) are public or private research institutions designated by DEA which 
shall jointly implement the 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; 
(c) assist DEA in developing quality standards for NES equipment and 
(d) provide services for consultancy and technical training, and; 
(e) such other responsibilities the DEA may deem necessary. 
devices; 


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 users shall have the following privileges: 
(a) 
All incentives as provided for by Section 39 of the Omnibus 
investment Code or E.O. 266; 
(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: 
(1) Depreciated to the extent of not more than twice as fast as 
normal rate of depreciation if expected life in ten (IO) years or 
less, or; 
(2) Depreciated over any number of years between five (5) years 
and expected life, if the latter is more than ten (IO) 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 11. 
Incentives to ANECs and CRIs. 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 12. Incentives to Faculty Members and Students of ANECs and CRls. Any 
faculty member or student involved in any ANEC or CRI activity shall be granted 
the following activities: 
(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 and 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 the DEA; 


SEC 13. Financial Assisfance 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 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/enterpriseslindustries 
participating in the NEP as duly recommended and endorsed by the 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 the 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 
Corporations. 
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 maybe 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 (PlOO,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. Separability Clause. If for any reason, any provision of this Act is 
declared unconstitutional or invalid, such parts not affected thereby shall 
remain 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 19. Effectivity Clause. This Act shall take effect fifteen (15) days after 
its complete publication in at least two (2) newspapers of general circulation. 
Approved,