Developing pro-poor markets for environmental services in the ...

Location/ type of fund
Allocation in highly
urbanised city
Allocation in non-highly
urbanised city
Electrification Fund (EF) 75% 50%
Development and Livelihood Fund
(DLF)
12.5% 25%
Reforestation, Watershed
Management, Health and/or
Environment Enhancement Fund
(RWMHEEF)
12.5% 25%
A hierarchy of geographical areas for application of each type of fund is listed in the IRR.
In general, the three types of fund are meant to supplement the provision of basic needs in
communities hosting energy projects. In reviewing what would constitute basic needs, the
DOE came up with electrification, livelihood, health, and environmental enhancement (which
pertains more to waste disposal) as the main types of development projects that would be
allowed under ER 1-94. With regard to reforestation and watershed protection, it is not clear
whether these were considered as basic needs, or whether these were objectives that would
primarily serve the interests of the energy projects. Interestingly, the NPC has its own list of
obligations for energy-generating companies to invest in environment-related projects in their
area of operations, which would answer for the sustainability of the energy project. The
environment-related projects under the RWMHEEF are over and above the NPC list. Hence,
the intended beneficiaries of the fund extend beyond the private energy companies.
The EF is solely meant for electrification projects in host communities. The main objective is
to provide electricity to host rural areas with growing populations. The DLF is mainly for
livelihood projects, including infrastructure projects that are meant to increase productivity.
Finally, the RWMHEEF is meant to serve a mix of objectives, which includes environmental
and health-related goals alike. It is more of a catch-all fund that was created to supplement
the provision of basic needs of communities (other than electrification and livelihood), as
well as improve environmental conditions where deemed necessary.
4.2.2 Institutional set-up
DOE is the sole agency that administers all types of funds. The actual money is held in
special accounts for each type of fund which does not have to be deposited into the national
treasury, thus making disbursements more efficient.
The IRR further states that annual work plans should be prepared jointly by the generation
company and the LGU concerned, to be submitted to DOE not later than March 15 every
year. For watershed-management and reforestation projects, such work programs should be
coordinated and endorsed by the concerned DENR Regional Office or watershed
management administrator in the area. However, the LGU is solely responsible for
implementation, supervision, and administration of all projects approved. Local participation
in project selection is not explicitly required, and it will depend on the LGU officials on
whether or not they get local residents involved in selecting the project/s. All DLF and
RWMHEEF projects should be implemented within one year of receiving their funds.
Upon completion of the documents, a MOA is entered into by the DOE, the generating
company, and the concerned LGU. Release of project funds is made directly to the LGU
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