WHEREAS, it
is necessary for the economic and industrial development of the country
to reduce our dependence on imported energy supplies and accelerate the
development of geothermal resources which have been identified as a
viable and untapped economical source of energy;chanroblesvirtualawlibrary
WHEREAS, it is in the national interest to allow service contracts for
financial, technical, management or other forms of assistance with
qualified domestic and foreign entities, for the exploration,
development, exploitation, or utilization of the country's geothermal
resources;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution of the
Philippines, do hereby order and decree as follows:cralaw:red
Section 1. Exploration of and Development of
Geothermal Resources by the Government. — Subject to existing private
rights, the Government may directly explore for, exploit and develop
geothermal resources. It may also indirectly undertake the same under
service contracts awarded through public bidding or concluded through
negotiation, with a domestic or foreign contractor who must be
technically and financially capable of undertaking the operations
required in the service contract; Provided, that if the service
contractor shall furnish the necessary services, technology and
financing, the service contractor may be paid a fee not exceeding forty
per centum (40%) of the balance of the gross value of the geothermal
operations after deducting the necessary expenses incurred in the
operations; Provided, further, that the execution of the activities and
operations subject of the service contract, including the
implementation of the work program and accounting procedures agreed
upon, shall at all times be subject to direct supervision of the
Government, through the Bureau of Energy Development.
Service contracts as above authorized shall be subject to the approval
of the Secretary of Energy.
Geothermal resources mean (a) all products of geothermal processes,
embracing indigenous steam, hot water and hot brines; (b) steam and
other gases, hot water and hot brines resulting from water, gas, or
other fluids artificially introduced into geothermal formations; (c)
heat or other associated energy found in geothermal formations; and (d)
any by-product derived from them.
Section 2. Geothermal Contract Areas. — Service
contracts, as herein authorized, may cover public lands, government
geothermal reservations, including those presently administered or
unappropriated areas, as well as areas covered by exploration permits
or leases granted under Republic Act No. 5092.
Service contracts for exploration and development of geothermal
resources may also cover private lands, or other lands subject of
agricultural, mining, petroleum or other rights or devoted to purposes
other than the exploration or use of geothermal energy; Provided, that
the right to enter private lands, and to established easements over
such lands shall, in the absence of a voluntary agreement with the
private landowner, upon application of the contractor to the Court of
First Instance of the province or the municipal court of the
municipality where the land is situated, and upon posting of the
necessary bond as may be fixed by the same court, be allowed by the
court subject to payment of reasonable compensation.
Section 3. Conversion of Geothermal Exploration
Permits and Leases to Service Contract. — Holders of valid and
subsisting geothermal exploration permits and geothermal leases granted
by the Government prior to January 17, 1973, pursuant to Republic Act
No. 5092, shall enter into service contracts as herein provided
relative to the areas covered by their respective permits or leases
within six months from the effective date of this Decree; and, in
default thereof, the geothermal exploration permits and geothermal
leases shall be deemed automatically cancelled and the area covered
thereby shall revert back to the State.
All geothermal exploration permit application filed under Republic Act
No. 5092 shall be deemed withdrawn and no effect as of the effective
date of this Decree.
Section 4. Privileges of Service Contractors. — The
provisions of any law to the contrary notwithstanding, a service
contract executed under this Act may provide that the contractor shall
have the following privileges:cralaw:red
(a) Exemption from payment of tariff duties and
compensating tax on the importation of machinery and equipment, and
spare parts and all materials required for geothermal operations
subject to such conditions as may be imposed by the Director of Energy
Development; Provided, that should the contractor or its sub-contractor
sell, transfer or dispose of the machinery, equipment, spare parts or
materials without the prior consent of the Bureau of Energy
Development, it shall pay twice the amount of the taxes and duties not
paid because of the exemption granted;chanroblesvirtualawlibrary
(b) Entry, upon the sole approval of the Bureau of
Energy Development which shall not be unreasonably withheld, and
subject to such conditions as it may impose, of alien technical and
specialized personnel (including the immediate members of their
families), who may exercise their professions solely for the operations
of the contractor as prescribed in its contract with the Government
under this Act;chanroblesvirtualawlibrary
(c) Subject to the regulations of the Central Bank,
repatriation of capital investment and remittance of earnings derived
from its service contract operations, as well as such sums as may be
necessary to cover principal and interest of foreign obligations
incurred for the geothermal operations.
(d) Other privileges provided in Section 12 of
Presidential Decree no. 87 as may be applied to the geothermal
operation.
Section 5. Exploitation Permits. — In cases where
discovered geothermal resources are deemed inappropriate for service
contracts arrangements in view of economic and/or technical reasons,
the Bureau of Energy Development may issue development and exploitation
permits for such resources and formulate the applicable rules and
regulations to govern the same.
Section 6. Rules and Regulations. — The Director of
Energy Development shall be vested with the authority to promulgate
such rules and regulations as may be necessary to implement the
provisions of this Act, subject to approval by the Secretary of Energy.
Section 7. Repealing Clause. — The provisions of
Republic Act No. 5092 and other laws, rules and regulations
inconsistent with this Decree are hereby repealed.
Section 8. Effectivity. — This Decree shall take
effect immediately upon approval.
Done in the City of Manila,
this 11th day of June, in the year of Our Lord, nineteen hundred and
seventy-eight.
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