Press Release
October 27, 2010

Full accounting of Malampaya funds pressed

Sen. Ralph G. Recto today asked the government, particularly the Department of Energy (DOE) and the Department of Budget and Management (DBM), for a full accounting of the proceeds of the Malampaya Deep Water Gas-to-Power Project.

"The real status of the Malampaya Fund - including its whereabouts, the disbursements in its name and the sharing mechanism between the government and its private sector operator - remain a mystery despite an earlier call for a full disclosure of all its transactions," Recto, chair of the Senate ways and means committee, said.

"There is also a need to clarify on who is really liable to pay the taxes assessed against the income of the gas project. The government should justify why the income taxes amounting to over P50 billion were deducted from its share in the proceeds of the project and not on the cut of the service contractor."

In a recent budget hearing of the DOE at the Senate, it was bared that the national government share in the joint undertaking amounted to some P90 billion, some P20 billion of which has already been disbursed while the rest has been said to have already been forwarded to the National Treasury.

In the same hearing, the Commission on Audit questioned the deduction of corporate income taxes of the service contractors from the 60% government share in the project, which amounted to P53,140,304,739.86.

The service contractors in the project are Shell Exploration B.V., Shell Philippines LLC, Chevron Malampaya LLC and PNOC-Exploration Corporation.

Recto, who is also vice chair of the Senate finance committee, had earlier asked the DOE and DBM to explain the P20-billion disbursement from the Fund.

But Recto stressed that there might be a need to organize a "search team" for the balance of P70 billion, whose 'whereabouts" have yet to be ascertained.

"As the propriety of these releases remain unclear, I am now inquiring into the whereabouts of the remaining P70 billion of the Malampaya Fund. Has this been used up? Is this deposited in a special account?" he asked.

He also asked the DBM on the process by which these kinds of funds are kept and what the government does with its interest income.

"P70 billion is a lot of money and I can imagine how much interest income is earned from such an amount. The people have the right to know where and how these funds are used," Recto said.

"It is also within the people's right to know if the P20 billion disbursements from the Malampaya Fund are legal," he added.

According to documents submitted by the DOE during its budget hearing at the Senate, a total of P1 billion had been released to the Armed Forces of the Philippines Modernization Fund, while P2.14 billion had been disbursed to the Department of Interior and Local Government - Philippine National Police.

Other disbursements are as follows: P5.82 billion to the Department of Agriculture, P3.55 billion to the Department of Public Works and Highways; P1.39 billion to the Department of Finance; P198 million to the Department of National Defense; P50 million to the Philippine Coast Guard; P745 million to the Department of Health; P900 million to the Department of Agrarian Reform; and P400,000 to PAGASA.

A total of P3.9 billion has been released to the local government of Palawan.

"With the national government desperately looking for cash to fund the rehabilitation and reconstruction of destroyed farmlands and government infrastructure in affected areas of the recent supertyphoon, inquiry into the status of the public funds such as that of the Malampaya project now becomes imperative," Recto explained.

"As I have said before on these kinds of funds, use it or lose it. If there is such a sum of money lying around somewhere, then the government should be able to make use of it for the benefit of the people," he said.

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