The Malampaya story
AS A MATTER OF FACT - Sara Soliven De Guzman (The Philippine Star) - October 28, 2013 - 12:00am

Today as you cast your vote, THINK COUNTRY! Remember we need educated public officials who have the sophistication to help our society progress not regress. If you will vote for someone who you know doesn’t have the ability to get things done, has major narcissistic (in other words stuck up) tendencies and does not have the slightest idea of how to lead, then, do not waste your vote.

Our country needs us! We need to protect it from politicians who pretend to want to lead but have ulterior motives of just wanting to use this route to become rich. Why? Haven’t you notice how rich they have become with our hard earned tax-money? Sanamagan!

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Recent developments in the country’s political scene show that there are two major issues that need to be decided on by the Supreme Court by next month. One is the controversial Priority Development Assistance Fund (PDAF) and the other is the constitutionality of the discretionary manner in which the President can use the government share in the operation of the Malampaya gas and oil fields. Widespread public outburst over the channeling of PDAF into ghost projects and kickbacks have resulted in the filing of three petitions to the high tribunal to declare lump sum allocations to lawmakers found unconstitutional together with the Malampaya Fund disbursements.

There are too many inconsistent reports circulating around about the Malampaya Fund. Even people directly responsible for the accounting of these funds are giving us different impressions mostly vague. Mind you, we are not asking for an opinion, we are asking for factual accountabilities that the government particularly the Treasury and the Department of Finance must clearly answer. The Malampaya Fund is very big. I’m sure this fund helped our economy ratings go up in the previous years. Without it I don’t think we would have had that significant economic growth rating. So, where is that fund? You owe us a clear and straightforward explanation because that money belongs to the country. The citizens are now concerned about it.

What is the Malampaya project? Better still what is this Malampaya Fund all about? I gathered this information from the brief given to our students at the Malampaya Oil and Gas Exhibit and School Tour of Shell Philippines in 2010. The Malampaya Deep Water Gas-to-Power project is one of the largest and most significant industrial endeavors in Philippine history. A joint undertaking of the Philippine national government and the private sector, the project is spearheaded by the Department of Energy (DOE) developed and operated by Shell Philippines Exploration B.V. (SPEX) on behalf of joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation.

Malampaya is a story of power. It is a story of resilience, perseverance, and innovation spanning over a decade. In 1989, a small gas reservoir called Camago was discovered in the area of service contract 38 (SC 38). In 1990, upon acquisition of a 50% participating interest in SC38, SPEX joined the search for natural gas reserves. Two years later the Malampaya gas field was discovered, and was later found to be connected to the Camago structure. In 1995, after comprehensive studies, it was concluded that Malampaya presented an extraordinary opportunity for commercial gas development in the Philippines.

The development of Malampaya posed a myriad of daunting logistical, social, environmental, and financial challenges. The DOE played a key role in making Malampaya a reality.

In 1998, former President Fidel V. Ramos signed the declaration of commerciality of the venture. Three and a half years later, in October 2001, the Malampaya Deep Water Gas-to-Power Project was inaugurated in a special ceremony at the onshore gas plant in Batangas.

Since then, Malampaya has been benefiting the country in many ways, including reducing oil imports, assuring a more stable supply of energy, a cleaner source of power and meeting up to 40% of Luzon’s energy requirements. The Malampaya project has helped various communities develop sustainable social and environmental programs.

So what is the story behind the Malampaya Fund? Let us backtrack a bit to the time when Ferdinand Marcos was president. Marcos created Presidential Decree No. 910 that states: royalties and proceeds from the exploitation of energy resources should form part of a special fund to finance energy development projects of the government. However, it also authorizes the use of the fund for other projects approved by the President without seeking legislative sanction. Critics say that this undermined the constitutional mandate to the legislature of its power of the purse. I would like to think now that this is where it all began.

The Malampaya Fund represents royalties from the oil and gas field operations in the waters off Palawan. In October 2009, President Gloria Macapagal-Arroyo issued an executive order expanding the use of the fund for other purposes, apart from energy-related projects. A total of P900 million was taken from the Malampaya Fund to assist farmers directly affected by typhoons Ondoy and Pepeng. After the can of worms was opened and realizing that this was the intention, farmers in those areas (who the government claimed to have been assisted) are now crying – foul play. They claim to have never gotten any agricultural support at all.

What happened to the money? When GMA ended her term, she left a total of P136+ billion of the Malampaya Fund intact. So, do you mean P-Noy’s administration washed away all those savings? Susmariosep! Where is all that money? We are talking of billions of pesos gone or unaccounted for. Last week, National Treasurer Rosalia De Leon said that the Malampaya Fund is “intact”. Really? Then, where is it?

In briefing the Senators on the National Expenditure Program (NEP) for 2014, Finance Secretary Cesar Purisima and Treasurer Rosalia de Leon agreed that the balance was lodged in a special account in the general fund. However, they also admitted that there was “no cash” to speak of. This is truly alarming! Purisima qualified that the fund was commingled in the general fund and that cash would always be available when needed. Whaaaat? Is this a valid explanation?

To make it even more confusing Purisima continued by saying that there was an “unusual account” – Account No. 151 created by PD 1234 allowing the Malampaya Fund to straddle between a special fund and a general fund. But he also said that it’s not a special fund in the truest sense of the word. We all know that if it is a special fund, it cannot be under the general fund. If the government used the cash from the special fund to the general fund, they will encounter some liability to the special fund. Do I hear a “double accounting” happening here? Shouldn’t the special fund be separate from the general fund to avoid confusion in keeping track of expenditures and accounting for them? Anyway, if this is so, it clearly looks like gross negligence on the part of our government officials.

If I remember right, the Aquino Cabinet knew the flaws of this fund from the very start. We were very hopeful that they would be able to resolve the matter (under P-Noy’s Daang Matuwid program). It seems, however, that it only got worse. If this Administration claims that the Malampaya Fund is intact, then, be transparent. Do not give us the roundabout lest we accuse you of deceiving us. Show us the money!


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