Local government units (LGUs) may now use their 20 percent Development Fund (DF) for projects aimed at cushioning the impact of the country’s energy crisis under new guidelines issued by the Department of the Interior and Local Government (DILG), Department of Budget and Management (DBM) and Department of Finance (DOF).

The policy allows LGUs to use the fund for the construction or establishment of local oil storage facilities, expansion of renewable energy projects and smart and green grid systems, and procurement of electric vehicles for health services, uniformed services and disaster risk reduction and response operations.

Projects may also include the construction and installation of solar photovoltaic systems and other energy-efficiency initiatives recommended by the Inter-Agency Energy Efficiency and Conservation Committee.

Under DBM-DOF-DILG Joint Memorandum Circular No. 1 dated 4 August 2026, LGUs may finance development-oriented and capital-intensive projects supporting the government’s Unified Package for Livelihoods, Industry, Food and Transport (UPLIFT) Framework.

The UPLIFT Framework was adopted under Executive Order No. 110, s. 2026, following President Ferdinand Marcos Jr.’s declaration of a State of National Energy Emergency. It serves as the government’s unified response to protect energy stability, economic continuity and public welfare.

The circular supplements an earlier directive governing the use of the 20 percent DF and gives LGUs greater flexibility to align local resources with the UPLIFT Framework.

LGUs are also encouraged to coordinate with national government agencies to ensure that local interventions complement existing programs and provide additional support to sectors and areas not sufficiently covered by national or local initiatives.

The DILG said energy-efficiency and conservation projects funded under the 20 percent DF must be incorporated into local planning, investment programming, budgeting and reporting mechanisms, including the Local Energy Efficiency and Conservation Plan.

The fund, however, cannot be used for recurring expenses such as fuel purchases, electricity and water bills, and other day-to-day administrative costs.

The guidelines are intended to help LGUs invest in cleaner, more resilient and energy-efficient communities while mitigating the impact of global energy uncertainties on local economies and essential public services.