Malampaya contractor seeks DOE guidance over COA ruling

MANILA, Philippines – Shell Philippines Exploration B.V. (SPEX) said it is seeking guidance from the Department of Energy (DOE) on how the Malampaya consortium can address a recent ruling of the Commission on Audit (COA).

COA ordered the Malampaya consortium to pay the government P53.14 billion ($1.19 billion) in income tax.  (READ: COA orders Malampaya contractors to pay gov’t P53B taxes)

SPEX has a 45% interest in the consortium. Other members include Chevron Malampaya LLC, 45% and the Philippine National Oil Company-Exploration Corporation (PNOC-EC) with 10% share.

The state auditors overruled the petition of the consortium, together with DOE, that the income tax was already included in the government’s 60% share in the Malampaya royalties.

“We’re studying it with the DOE. The DOE has to guide us. We’re one party with the DOE so we need to consult them,” said SPEX Managing Director Sebastian Quiniones.

Quiniones added: “That’s what we signed up for. We have to get together with (DOE) to talk. We will wait. COA is government and DOE is also government.”

The SPEX official will also consult with Chevron on the matter, he added.

The Malampaya consortium remitted $900 million in royalties to the government in 2014.

This brings to $8.5 billion the total payment turned over to the government since the commissioning of the project in 2001.

“It was based on the pricing of oil and gas which had an impact on pricing,” Quiniones explained when asked why last year’s payment was lower than previous years, which reached over $1 billion.

So far, Malampaya royalties had been used for the fuel requirements of the National Power Corporation-Small Power Utilities Group (NPC-SPUG) amounting to P2 billion ($44.33 million); and the Pantawid Pasada program, P450 million ($10.09 million).

The royalties were also used to purchase a USS Hamilton class cutter worth P423 million ($9.48 million), to strengthen security of the perimeter of the Malampaya project. – Rappler.com

$1 = P44.61