A CONGRESSMAN on Thursday asked the Commission on Audit and the Department of Energy to get their act together and resolve the controversy over the Malampaya gas project, which could have an negative impact on the supply and price of electricity in the country.
Besides threatening the stability of the country’s energy supply, Camarines Sur Rep. LRay Villafuerte also said the failure of the DoE and CoA to resolve swiftly the Malampaya tax issue could jack up electricity prices and further spook investors.
Villafuerte was referring to the conflicting interpretation of the CoA and DoE of Presidential Decree 87 and the deal covering the Malampaya gas project known as Service Contract 38 (SC 38).
“As correctly pointed out by the DoE, the CoA ruling could lead to an ‘exodus’ of investors in the country’s power sector at a time when investments in this industry are badly needed in the face of critical power supply vis-a-vis our fast-growing energy requirements. We appeal to the CoA and the DoE to resolve this issue immediately,” Villafuerte said.
The CoA has ruled that the income tax of the consortium handling the Malampaya project was deductible from the government’s 60 percent share of the gas field’s royalties.
As a result, COA said the consortium members, which include Shell Philippines Exploration BV, Chevron Malampaya Llc., and Philippine National Oil Co.-Exploration Corp., should pay the government P151 billion in back taxes covering the years 2002 to 2016.
But DOE said the COA should honor the contracts of the Malampaya gas project in Palawan, citing PD 87 or the Oil Exploration and Development Act of 1972 and PD 1459, which authorizes the energy secretary to enter into petroleum service contracts.
Villafuerte warned that failing to resolve the issue does not bode well for President Duterte’s 10-point socioeconomic agenda, in which one of the key goals is to increase the country’s competitiveness and the ease of doing business in order to attract foreign direct investments here.
“As pointed out by industry players, dunning power generation companies for supposed back taxes could jack up electricity prices, a scenario that would hurt consumers and all the more investors long complaining about the Philippines having among the highest power rates in Asia.
Moreover, the COA’s recent ruling that.the income tax payments are supposed to be over and above the government’s annual share from the Malampaya venture is the kind of business policy flip-flop that the investor community has also complained about in doing business in the Philippines, Villafuerte said.