Gwen questions delay of town'sshare on oil project

CEBU, Philippines — Cebu Governor Gwendolyn Garcia has questioned the Department of Energy (DOE) on the late remittance of the share of Alegria from the oil project in the town.

Garcia said Alegria has received only about P100,000 of the total  proceeds amounting to at least P500,000 and up to P600,000 in fiscal year 2018-2019 generated from the oil project in one of its barangays.

“Under the Local Government Code, when we talk about share of the national wealth, that should be remitted directly on the first five days of every quarter,” Garcia said.

Section 293 of the Code states, “in the case of any government agency or government-owned or controlled corporation engaged in the utilization and development of the national wealth, such share shall be directly remitted to the provincial, city, municipal or barangay treasurer concerned within five (5) days after the end of each quarter.”

It was in 2018 when it was found that Alegria hosts commercial quantities of natural gas and oil resources. DOE and China International Mining Petroleum Company Limited (CIMP), now the project’s contractor, discovered an estimated 27.93 million barrels of oil.

Of the total amount, a conservative estimate of about 3.35 million barrels or 12 percent may be recovered for production. (1 barrel = 42 gallons).

For natural gas, about 9.42 billion cubic feet in reserves were found, with a recoverable resource estimated at 6.6 billion cubic feet or about 70 percent of the total natural gas in place.

Garcia explained that 70 percent of the total gross proceeds of the oil project go back to CIMP as reimbursement for operating expenses.

The 30 percent of proceeds left will then be divided among the national and local government units in a 60-40 scheme. Of the 40 percent allocated to the local government, eight percent go to the Province of Cebu, 14 percent go to Barangay Montpeller, and 18 percent go to the town.

This 18 percent translates to P500,000-600,000 as far as proceeds from fiscal year 2018 and 2019 is concerned.

“These funds could very well have been used already for services that could have been extended to the people of Alegria,” Garcia said.

To expedite the remittance of Alegria’s shares, Garcia suggested that DoE channel the proceeds directly to the municipality through a trust fund. This scheme is reportedly being followed by power generators for the province’s shares of revenue per kilowatt hour.

“Perhaps it is also best nga mao sad na ang buhaton nga pwede mo-open ug trust account. Ang shares sa LGU, adto na diretso aron magamit dayon,” she said.

Aside from this, the governor pointed out that income tax from the project is being deducted from the share of the local government. She reportedly pointed this out in her meeting with DOE early last week.

“I said, why will you charge the income tax on the share of government? I-tax diay ang government? Isn’t income tax chargeable to the contractor?” she said.

Garcia said she is looking into the possibility of broadening the local government’s shares.

Section 291 of the Local Government Code reads: “Forty percent (40%) of the mining taxes, royalties, forestry and fishery charges and such other taxes, fees or charges, including related surcharges, interests, or fines the government agency or government owned or controlled corporation would have paid if it were not otherwise exempt.”

The governor pointed out that the law did not mention oil and gas, opening the possibility for even larger shares for the LGU.

“Nowhere is it stated,” Garcia said.

Garcia is set to meet again with DoE sometime this week during which she expects the agency’s representatives to present the operating expenses from CIMP and the total gross proceeds.

Located in southern Cebu province, about 120 kilometers from Cebu City, Alegria is a fourth-income class town with about 25,000 people. JMO (FREEMAN)