Philippines’ First Energy Transition DPL

On March 31, 2025, the World Bank approved the First Energy Transition and Climate Resilience Development Policy Loan (DPL) in the Philippines. According to the Bank, this is the first package in a series of two loans that seek to enable more private investment and savings in renewable energy, increase flexibility and competition in the electricity sector, and strengthen institutions for water resources management, sanitation, and the resilience of agriculture and water systems.

This DPL is also the continuation of the First Sustainable Recovery DPL(FSR), which was implemented from 2023 through 2024. Local CSOs criticized FSR for its lack of meaningful consultation and for promoting natural gas expansion, undermining the Bank’s climate commitments. Local organizations also opposed FSR’s Prior Actions – policy and institutional measures that the Philippines had to implement before the Bank approved the loan – which sought to remove a foreign equity cap on energy investments. Local organizations denounced that it would contravene the Philippines’ 1987 Constitution, which requires Filipinos to hold a minimum of 60% ownership and management of public utilities.

Project documents fail to disclose details on strategy, actions, and risks involved. The current project documents published on the World Bank’s website do not provide enough detail on the activities that will be adopted in connection with the DPL. They only mention three pillars (acceleration of private investments, reforms to increase the flexibility of the grid, and reforms on water management) without describing how they would be translated into actions. This raises concerns about the possible activities that will be supported by the loan. Risk assessments are mentioned in the Appraisal Program Information Document, but they are not publicly disclosed. This is especially relevant as the documents mention that out of “the eight risk categories assessed, six are rated moderate and two are rated substantial.” They further add that “the institutional capacity for implementation and sustainability risk is substantial on account of the need for inter-agency coordination.” Although the Bank does pledge to assist the country in mitigating those risks, there is no information on how this will be done.

Objectives and Prior Actions have not been meaningfully discussed with communities and local organizations. The project documents provide no evidence of any meaningful consultations conducted by the Philippines government during the formulation of this DPL, nor has any information been disclosed about potential consultation processes in the future. In previous DPLs approved by the Bank in the Philippines, consultation processes faced significant challenges, including a lack of information, insufficient time for reflection, and inadequate spaces for discussion. In the case of FSR, CSOs criticized the Prior Actions agreed upon between the Bank and the Government of the Philippines, which included provisions that favored foreign commercial interests over local companies by sidestepping constitutional provisions setting caps on foreign investments.

Concerns related to Paris alignment of prior actions. The DPL documents provide no evidence that prior actions were Paris-aligned. This concern draws from previous experience in the country related to the First Sustainable Recovery Package, which promoted an energy market expansion through Public-Private Partnerships that were used for gas infrastructure. The generation of gas-stranded assets could undermine the Philippines’s Paris Agreement commitments by locking in carbon-intensive technologies for decades.

The Philippines Movement for Climate Justice and Bank Information Center discussed the issues related to FSR and the new First Energy Transition and Climate Resilience DPL with the World Bank’s country team in the Philippines during two meetings in July and September of 2024. Concerns regarding DPL implementation were also relayed during a CSPF panel at the World Bank Annual Meetings but haven’t yet led to any improvements.

Last Updated

April 7, 2025

Location

Philippines

Institution

World Bank Group

Campaigns

Climate, Stakeholder Engagement

Total Cost

$800 million

Funding

World Bank

MDB Financing Status

Active

Monitored by

Marco
Vermaasen