Press Release
July 4, 2011

It's time to 'escort' the P77.2-B Malampaya funds
to the annual national budget

Sen. Ralph G. Recto yesterday said Malacanang could still make last minute changes to its proposed P1.816 trillion budget for 2012 by including government's annual proceeds from the Malampaya natural gas project as part of the funding sources of the budget or Budget of Expenditures and Sources of Financing (BESF).

Recto said the inclusion of the Malampaya funds in the BESF of the General Appropriations Act (GAA) would guarantee transparency in its disbursement and democratize the allocation or utilization of said funds for priority programs and projects.

The BESF identifies the funding-financing sources of proposed expenditures of the national government, which include among others taxes, borrowings, dividends/earnings of state agencies, fees and charges and proceeds from privatization.

Currently, government share from the Malampaya funds is treated as an off-budget item that could only be disbursed through the discretion of the President.

"The Commission on Audit has spoken, the Malampaya funds should have appropriations cover from Congress. The Heidi Mendozas of COA want the treatment of the funds as a special presidential kitty be stopped," Recto, Senate ways and means chair and Senate finance committee vice-chair, said.

"From being a budget orphan before, the Malampaya funds could now be part of the official national budget family," he added.

He said as the newest funding source of the national budget, the Malampaya funds could be used to bankroll energy-related programs of the Department of Energy (DOE) or pay off national obligations as proposed by COA.

"The Malampaya funds have long been floating up in the budget clouds, the time has come to escort it down to the fold of the GAA or the annual budget," Recto stressed.

It was estimated that government receives from P9 billion to P11 billion yearly as share from the Malampaya gas project.

The senator nevertheless stressed that there should a faithful accounting first of the Malampaya funds that were previously collected and are said to be "lying idle" in the last eight years.

The COA reported that a special account maintained by the DOE for the Malampaya proceeds showed a balance of P77.187 billion as of December 31, 2010.

Recto said the DOE must disclose to the Senate where the account is and what bank is playing "babysitter" to the Malampaya special account.

He also said the Department of Finance (DOF), Bureau of the Treasury (BTr), Department of Budget and Management (DBM) and the DOE should now "make an accurate identification of the Malampaya funds from the 'special accounts' line-up."

"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," Recto said.

The COA reported that of the total amount, P19.4 billion went mostly to projects unrelated to energy development while only 1.27 percent went to the DOE for the electrification of 211 villages. Recto said the entire P77.187 is by far the biggest amount of funds that could be "missing" from the government coffers after being co-mingled with other regular state funds.

"We want the DOF, BTR, DBM and DOE to say where the money is," he said.

The Malampaya natural gas project, which began in 2002, involves the extraction of natural gas from the waters off Palawan.

The government receives net proceeds from service contractors Shell Philippines Exploration BV and Chevron-Texaco which operate the project. The government has a 10-percent stake in the project through the Philippine National Oil Company-Exploration Corp.

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