Opinion: Anomaly in the Use of the Malampaya Fund (Part I)
AN IRREGULARITY OF HUGE PROPORTIONS. Partylist Congressman Neri Colmenares recently exposed in Congress the disposition of the billions of pesos which areproceeds from the Malampaya oilfields/natural gas, have been exploited off Palawan province by two giant oil companies, Shell and Chevron. The travesty of injustice cannot be glossed over or belittled, because this is supposed to be owned by the Filipino people, by the Philippine government but the sharing of the billions of pesos, said Colmenares is unequal, because to the oil companies 90 percent is given while the Philippine government through the PNOC gets only 10 per cent.
And under the Philippine Constitution, Congress has the power to approve the expenditures of public funds through its budget powers and no public funds can be spent without the approval of Congress. All funds collected must accrue to the Philippine government and the funds be spent for public purposes and disrespected by Congress.
MISUSE OF THE MALAMPAYA FUND. But on the contrary, the Malampaya Fund has been grossly misused, said the Bacolod-based Congressman, who has exhibited an exemplary performance while in Congress. For all intents and purposes, of eighty partylist groups belonging to the national democratic coalition and which has organized a political party, the Makabayan, all have exhibited sincerity and given exemplary performance, indeed.
Again, on the Malampaya Fund, the Filipino people, said Colmenares have been sold out by corrupt government officials which through them have signed with Shell and Chevron an onerous contract which have allowed it to garner most of the funds.
This, although under the contract, 60 per cent of the proceeds should accrue to the Philippine government, only 40 per cent to the oil companies.
But there is a sleight-of-hand component in the contract because the so-called "recovery cost" is immediately deducted from the proceeds. Worse, the income tax that should have been charged against the proceeds of Shell and Chevron is paid from the government’s share and not from the income of both oil companies. Immediately, half of government’s share of 60 per cent is deducted as payment for taxes. This was inserted in the provisions of Section 6.3 Special Contract 38.
So, of the total gross proceeds of $8.9 million of the Malampaya oilfields, covering the period 2002-2009, the Philippine government share was a mere US$1.989 billion because the rest of the funds went to Shell and Chevron to pay for their corporate income tax of $1.153 billion, Branch Profit Remittance Tax $326.8 million, Direct Contractors Share $2.279 billion and Cost Recovery $3.22 billion. Adding, Colmenares said, "One of the worst anomalies of the contract is the provision that whatever expense Shell and Chevron incurs should be repaid as "recovery costs," a sovereign guarantee that whatever funds are spent on items both oil companies claim as "recovery cost" must be paid back to them. This includes operators expenses classified as "recovery cost" by both companies. These are, indeed, amorphous and questionable items claimed by both.*