World Bank approves $1.02-B loan for the Philippine energy transition, water security

THE WORLD BANK has approved a $1.02-billion loan to support Philippine reforms aimed at accelerating clean energy deployment, strengthening electricity markets, and improving water management.

In a statement on Monday, the World Bank said it approved the Second Energy Transition and Climate Resilience Development Policy Loan (DPL) last week to help address the high and volatile cost of electricity in the country.

The DPL is comprised of a $1-billion loan from the International Bank for Reconstruction and Development (IBRD) and a $20-million performance-based grant from the Livable Planet Fund.

“(This) is among the largest IBRD operations the World Bank Group has approved in support of the Philippines’ development agenda,” the multilateral bank said, adding that this was shaped by consultations with relevant government agencies, the private sector, utilities, consumer groups, civil society organizations, and local government units.

“By reducing reliance on imported fossil fuels and accelerating the deployment of homegrown energy solutions, the DPL will help shield the Philippines from global price shocks and put the country on a more secure and affordable energy path,” the bank added.

The Philippines imports most of its energy needs, making it extremely vulnerable to global crude price swings.

Rising fuel costs stemming from the Middle East conflict has pushed the government to place the country under national energy emergency until March 2027.

World Bank Division Director for the Philippines, Malaysia and Brunei Zafer Mustafaoğlu said the reforms would allow the country to capitalize on its abundant renewable energy resources.

“This operation helps turn those natural advantages into reliable, affordable electricity for Filipino families and businesses,” he said.

“At a time when global energy markets are deeply volatile, this DPL helps the Philippines take control of its own energy future, support growth, and create jobs,” he added.

Finance Secretary Frederick D. Go said the World Bank’s approval of the DPL will help in making electricity and reliable water services in the country more affordable. 

“The initiatives we pursue are designed to reduce the country’s dependence on imported fuel, strengthen energy security, and expand access to sustainable water systems,” he told BusinessWorld.

“These will ultimately translate into lower electricity costs, improved essential services, more quality jobs, and more climate-resilient communities,” he added.

The DPL will support reforms including the full operationalization of the renewable energy market and the integration of electric vehicle charging into utility planning.

The financing will also support the country’s first offshore wind auction, targeting 3.3 gigawatts of contracted capacity by 2030 and expected to mobilize about $7 billion in private investment.

The Philippines remains heavily dependent on fossil fuels, with renewables accounting for only 25% of the power generation mix as of end 2025. Under the Philippine Energy Plan, the government is targeting to increase this share to 35% by 2030.

Through the loan, the World Bank said, “the share of installed renewable energy capacity is targeted to rise from 30% to 42%, helping diversify the country’s energy mix and reduce its exposure to imported fossil fuel price shocks.”

The financing facility, which is designed to mobilize private capital at scale, is anchored on the Philippine Development Plan 2023-2028 and AmBisyon Natin 2040.

“Beyond energy, it also tackles long-standing challenges in the water sector, where more than 1,600 local government units are responsible for providing services but often lack the financing and institutional capacity to do so reliably,” it said.

The DPL will also support cost-recovery tariff frameworks, a unified financing structure that prioritizes poor and climate-vulnerable communities, and bulk water pricing regulations which is expected to scale local water providers with sustainable business plans from 10 to 100 by 2027. — Justine Irish D. Tabile