Malampaya revenue proposed as buffer if gov’t forgoes fuel taxes

THE Philippine Chamber of Commerce and Industry (PCCI) said the government needs to provide more incentives and legal protections for upstream oil and gas drilling programs to make the Philippines less reliant on imported energy.

“We should offer enhanced fiscal terms for drilling programs and legislate legal protection for energy projects against LGU (local government unit) and third-party interventions that threaten national energy security,” PCCI Director for Energy and Power David O. Chua said at a House of Representatives hearing late Wednesday.

The Philippines, which sources over 96% of its crude oil imports from the Middle East, is under pressure to develop domestic energy sources.

The PCCI also proposed the creation of an Energy Sovereignty Fund from the government’s gas royalties from the Malampaya Deep Water Gas-to-Power Project.

Mr. Chua noted that royalties from the Malampaya Phase 4 drilling campaign can serve as a “unique fiscal shock absorber” against revenue foregone due to the waiving of some taxes.

“The government’s 60% share from the MAE-1 and Camago-3 discoveries represents a significant, unprogrammed windfall. We propose that these royalties be earmarked to replenish the Treasury for the ‘foregone’ revenue from fuel excise and VAT suspensions,” he said.

The Malampaya project, located 50 kilometers northwest of Palawan, has generated over $14 billion in royalties since it began operations in 2002.

The group also proposed to increase the number of exploration wells across all pre-determined areas (PDAs) to maximize the country’s untapped energy potential.

It also asked senators to enhance fiscal incentives for companies that commit to multi-well drilling programs in areas like the West Philippine Sea, the Palawan blocks and Liguasan Marsh.

The group also pressed for the grant of “Project of National Significance” status to all approved petroleum and gas developments to discourage third-party interventions.

The PCCI also noted that all Department of Energy-approved service contracts should be automatically granted “green lane” status to ensure expedited permit processing.

“By utilizing the Malampaya Dividend to fund tax relief and aggressively pursuing new discoveries, we can transform this energy emergency into an era of unprecedented energy independence,” Mr. Chua said. — Beatriz Marie D. Cruz