Department of Energy

Great expectations: Can DOE chief Popo Lotilla avert an energy crisis?

Ralf Rivas
Great expectations: Can DOE chief Popo Lotilla avert an energy crisis?
In his previous stint as energy chief, Raphael 'Popo' Lotilla tackled an oil crisis and pushed for energy conservation measures, including a four-day government workweek. On his return to the DOE, he faces a looming energy crisis.

MANILA, Philippines – During the Gloria Macapagal Arroyo administration, then-energy secretary Raphael “Popo” Lotilla helped steer the Philippines through a crisis fueled by unprecedented oil price hikes.

Among the solutions of Lotilla, who first helmed the Department of Energy (DOE) from 2005 to 2007, was the implementation of energy conservation measures patterned after a Ferdinand E. Marcos-era law.

Seventeen years later, the deposed president’s son and namesake, President Ferdinand Marcos Jr., has chosen Lotilla to try and solve a similar problem.

Malacañang announced on July 11 that Marcos tapped Lotilla for the energy portfolio but clarified that his designation was still a “nomination pending clarification of his employment status.”

The law that created the energy department states that “no officer, external auditor, accountant, or legal counsel of any private company or enterprise primarily engaged in the energy industry” is eligible to head the DOE within two years of exit.

Lotilla is currently an independent director of Aboitiz Power and of oil and gas exploration company Enexor.

On July 14, Aboitiz announced in a disclosure the resignation of Lotilla, effective July 11, citing “nomination and appointment to government position” as the reason he was leaving the company. On the same day, the Department of Justice issued a statement backing the nomination of Lotilla as DOE secretary, saying the rule on energy company executives did not apply to him.

“In accordance with the subsequent laws, namely, the Revised Corporation Code, Securities and Regulations Code, and the Code of Corporate Governance, an independent director is not an officer based on the nature, duties, functions, and responsibilities vis-a-vis the corporation he serves. It is sui generis in character,” the DOJ said in a statement on July 13.

Following a review of his eligibility for the post, Press Secretary Trixie Cruz-Angeles announced Lotilla’s appointment as energy secretary on Saturday, July 23.

In his second stint as DOE chief and faced with similar challenges, will Lotilla push for strategies he had proposed in the past to resolve the country’s present day energy woes?

What happened in 2005

In 2005, the country under then-president Arroyo faced an unprecedented oil price hike coupled with brownouts.

The government’s coffers could not afford cash dole outs.

The annual oil bill then was $4.5 billion, while the Philippines’ foreign exchange reserves were at $17 billion. This meant that the government had to carefully choose how it uses its foreign exchange reserves.

Faced with this dilemma, Arroyo and her energy chief Lotilla agreed that the strategy that made the most sense was to simply cut back.

Lotilla urged lawmakers to pass a Marcos-era law issued in 1979: Batasang Pambansa (BP) 73 or an act to further promote energy conservation.

At that time, Lotilla favored energy conservation instead of new generation plants.

“There’s a lot of resistance to having another emergency power act because of the expensive power contracts that came out of it. But this [proposed bill] does not allow government to put up new generation plants. It’s just conservation,” Lotilla told the magazine, Newsbreak, then.

Arroyo went on to order a four-day workweek for government offices and instructed agencies to shut down air conditioners for three hours a day on workdays, among other measures.

Some of the measures under BP 73 regulated the use of air conditioners as well as neon lights for commercial advertising, restricted certain types of vehicles during peak hours of the day, staggered working hours, and fixed school schedules.

It also prohibited the use of government vehicles on Sundays, legal holidays, or outside regular office hours. Government officials were barred from using state-owned vehicles outside authorized routes, and a ticket trip would have to be secured and displayed on the windshield – rules included in an administrative order that Arroyo issued in August 2005, as part of the government-wide energy conservation scheme.

At the time, Newsbreak told Lotilla in an interview that many people didn’t take him seriously because they saw so many government officials, especially senators and congressmen, using gas guzzlers.

To this, Lotilla said then, “That’s why the [energy conservation] campaign is primarily targeted at government so that we will be able to lead the way.”

Lawmakers raised their eyebrows at the proposed fuel rationing program during periods of tight supply. The private sector was also quite averse to the idea then, as dealers would be forced to limit the quality and quantity of their products to customers.

To cushion the impact of oil price spikes on the domestic economy, Arroyo issued on August 13, 2005, Administrative Order No. 126 “Strengthening Measures To Address The Extraordinary Increase In World Oil Prices, Directing The Enhanced Implementation Of The Government’s Energy Conservation Program, And For Other Purposes.”

The AO, which covered all government offices in the executive and government-owned and -controlled corporations, sought to impose additional measures to limit government use of fuel products.

In November 2005, Arroyo issued Executive Order 474 creating Philippine Strategic Oil, Gas, Energy Resources and Power Infrastructure Office (PSOGERPIO) under the Office of the President but held office at the DOE. The office, headed by a presidential assistant, was tasked to “primarily promote, assist and fast-track crucial private sector-led oil, gas, energy resources, power and other energy projects to avert the fast approaching energy crisis.”

By March 2010, however, years after Lotilla left the DOE, Arroyo found herself declaring a state of calamity in Mindanao due to hours-long daily power outages, as her administration failed to avert an energy crisis in the country’s food basket.

The ‘excellent choice’

It remains to be seen whether Lotilla will revive his energy-saving proposals. As in his first stint as DOE chief, he will lead the DOE not only amid a spate of oil price hikes, but also in the face of an energy crisis.

International climate and energy policy group Institute of Climate and Sustainable Cities (ICSC) earlier warned about possible blackouts in Luzon in 2022, anticipating a deficit of 1,335 megawatts.

In 2021 and this year – in June and early July – the National Grid Corporation of the Philippines (NGCP) placed the grid on yellow and red alert levels due to thin reserves.

The NGCP earlier told then-president Rodrigo Duterte that under the “worst-case scenario,” there will be 14 weeks of red alerts over the Luzon grid. The Visayas grid may face a worse situation and raise the red alert status up to 49 weeks. (READ: What you need to know about power advisories)

Amid this scenario, stakeholders in the energy industry were unanimous in lauding Lotilla’s nomination and said they expected much from him.

Former energy secretary Vince Perez, chairman of the Alternergy Group of Companies, said Lotilla is an “excellent choice” for the post.

“He is most qualified and is very familiar with the challenges facing the energy sector,” said Perez, Lotilla’s predecessor at the DOE. “Furthermore, he is a man of integrity and a true professional. We look forward to working with him during this challenging period of energy transition.”

Like many others, the Philippine Rural Electric Cooperatives Association (Philreca) said Lotilla’s appointment “could not come in a more opportune time than now.”

“We need the Department of Energy to be [in] the hands of an able commander who can steer the sector towards becoming energy independent and resilient against negative externalities or other market inefficiencies. His experience in the energy sector – as a former secretary of energy, in fact – certainly means he is already up to speed to what is happening around us,” Philreca said in a statement.

To-do list

Tony La Viña, Manila Observatory associate director for climate policy and International relations, said that “nobody else can do this job better than Popo,” given his track record as energy chief.

In his opinion column in the Manila Standard, La Viña noted that Lotilla also “did an excellent job” as Power Sector Assets and Liabilities Management Corporation (PSALM) president.

La Viña and other stakeholders gave Lotilla to-do lists as energy chief.

“In the case of energy, we are faced with a trilemma of access and security, affordability, as well as environmental sustainability in the context of the climate and biodiversity crisis,” La Viña said.

He said that Lotilla would have to figure out how the Philippines can achieve the following:

  • Transition from fossil fuels and complete the reduction and eventual phaseout of coal in the energy mix
  • Ensure that natural gas would only be a “bridge and transition fuel” in view of its climate and biodiversity footprint
  • Craft renewable energy policies and investment packages that will help achieve its Nationally Determined Contribution (NDC) under the Paris Agreement

ICSC also said the nomination of Lotilla is a “good choice,” citing his integrity and his competence in leading the energy industry. In a statement on July 15, when Lotilla’s nomination was not yet formalized, ICSC senior policy advisor Pedro Maniego Jr. stressed the urgency of his appointment, citing the “many serious problems facing the Philippine power sector.”

He cited the country’s continued insufficient power supply because of the prolonged shutdowns and intermittent breakdowns of several coal fired power plants, and the derating of natural gas power plants due to Malampaya gas supply restrictions.

Maniego noted that the Philippines has been left behind by its Southeast Asian neighbors because of its energy problems and pointed to coal fired power plants as the “culprits in the recurring yellow and red alerts” in the country.

He urged the new DOE chief to facilitate the country’s shift to a “distributed and flexible generation system, which will complement the variable but zero marginal costs of renewable energy sources.”

“In addition, the automatic fuel cost pass-through on fossil fuel power plants, which completely transfers the fuel risks from the power producers to end users, should no longer be applied in all power supply agreements for a more affordable, reliable, and secure power system for all Filipinos,” Maniego added.

Maniego also called on Lotilla to affirm the Philippines’ commitment to clean energy – as envisioned in the country’s NDC under the Paris Agreement – by making the coal moratorium permanent.

Infrawatch PH conveyor Terry Ridon said Lotilla’s his appointment “insulates the energy sector from overt political interests, which unfortunately had not been the case in the last six years.”

Lotilla’s predecessor is Duterte’s party mate, Alfonso Cusi.

“We hope he will stand firm on imposing penalties on unplanned and forced outages undertaken by power generators, which has periodically caused price spikes in the electricity spot market,” Ridon said.

Arsenal of experience

The bulk of Lotilla’s career revolves around energy, the economy, and the academe.

He was deputy director general of the National Economic Development Authority from 1996 to 2004. According to his profile on the DOE website, as NEDA deputy director general, “he was designated as National Coordinator of the Philippine Council for Sustainable Development, where he pushed measures supportive of clean technologies and sustainable livelihoods, among other sustainable development advocacies.”

Prior to his appointment to the Arroyo Cabinet, he was PSALM president. Less than a year after he left the Arroyo administration, he served as executive director of the Partnerships in Environmental Management for the Seas of East Asia (PEMSEA).

In 2012, Lotilla declined his nomination to the post of chief justice, saying the tradition of appointing the leader of the high tribunal based on seniority should be restored in the Supreme Court.

Lotilla began his career in the academe in 1985, as assistant law professor at the University of the Philippines, where he obtained his law degree. He became a law professor in 1995.

He served as UP’s vice president for public affairs in 1991 and as director of the Institute of International Legal Studies of the UP Law Center from 1989 to 1996.

Lotilla also has degrees in psychology and history from UP, where he was editor-in-chief of the Philippine Collegian from 1983 to 1984. He obtained his Masters of Laws from the University of Michigan Law School in Ann Arbor, Michigan.

The returning energy secretary hails from Sibalom, Antique. –

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.