LGUs allowed to use 20% development funds for energy projects

MANILA, Philippines — Local government units (LGUs) may use 20 percent of their development funds for energy projects during the national energy emergency but cannot cover regular fuel or operating expenses.

Under a joint memorandum circular issued by the Department of Budget and Management (DBM), Department of Finance (DOF) and Department of the Interior and Local Government (DILG), LGUs may use their 20 percent Development Fund for projects that directly mitigate the impact of the energy emergency.

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The move follows Executive Order No. 110, signed in late March, which declared a State of National Energy Emergency and authorized the Unified Package for Livelihoods, Industry, Food, and Transport, or UPLIFT.

The Local Government Code requires local government units (LGUs) to allocate a portion of their annual National Tax Allotment for development projects, and we refer to this allocation as the fund.

Eligible projects include local oil storage facilities, renewable energy expansion, smart and green grid systems, and solar photovoltaic systems.

LGUs may also use the fund to procure electric vehicles for health services, uniformed services and disaster preparedness and response operations, along with the necessary charging infrastructure.

READ: DBM sets how P11.3-B aid can be used by poor LGUs

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However, the funds cannot cover regular and recurring operating expenses, such as fuel, petroleum products, electricity, water, and other administrative costs.

Such expenses must continue to be charged against the appropriate regular fund sources.

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“LGUs shall ensure that energy and conservation initiatives funded under the 20% DF are integrated into the LGU’s planning, investment programming, budgeting, and reportorial mechanisms to promote accountability, sustainability, and institutional continuity, such as the Local Energy Efficiency and Conservation Plan,” the memorandum read. /pai