Government takes control of Malampaya a “silly idea” that will cost taxpayers $ 1 billion – Solon

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The integrated Malampaya platform (archive photo from Philippine Daily Inquirer)

MANILA, Philippines – Surigao del Sur representative Johnny Pimentel criticized the government’s proposal to buy Shell Petroleum NV’s 45% operational stake in the Malampaya offshore gas field, calling it a “silly idea that would easily force taxpayers to suffer another $ 1 billion (P50 billion) of government debt obligations. “

Pimentel released the statement Sunday in response to several groups urging lawmakers “to fully explore whether the government could easily obtain funding” to take over Shell’s operational stake in the gas project.

“Right now, the government is already in a favorable position, simply collecting 60 percent of the net proceeds from the Malampaya oil business. The government is spending nothing and taking no responsibility,” Pimentel.

According to Pimentel, the money that will be used to pay the stake would only serve to support the country’s already swollen foreign debts.

He explained that the cost of the acquisition would cost $ 1 billion “because in addition to paying Shell $ 460 million, the government would have to borrow and spend another $ 500 million to $ 600 million to explore and develop additional production wells.”

“And the government simply cannot afford to incur further debt obligations now, considering the worsening budget deficit,” Pimentel said.

The government recorded an unprecedented budget deficit of $ 1.37 trillion in 2020 due to its aggressive spending to fight the COVID-19 pandemic and stimulate the economy.

Pimentel warned that government deficit spending, while necessary, was “doomed to haunt businesses and the economy in the months ahead if left unchecked.”

“Once the economy starts to recover, bank lending rates will rise rapidly as the government will compete with the private sector in borrowing more money to pay off public debt,” Pimentel said.

Pimentel also pointed out that both the state-owned Philippine National Oil Co. (PNOC) and its subsidiary, PNOC Exploration Corp. (PNOC-EC), lacked the $ 1 billion needed to buy Shell’s Malampaya stake and manage the gas project.

“The reality is that all government-owned or controlled companies, including PNOC and PNOC EC, have paid up to 75 percent of their annual net income as cash dividends to the national treasury,” Pimentel said.

These developments came after Shell recently agreed to sell its stake in Malampaya Energy XP Pte Ltd., a subsidiary of Udenna Corp., owned by Dennis Uy, a major contributor to President Rodrigo Duterte’s campaign.

This means that Udenna is set to own 90% of the project, having also previously bought the shares of Chevron Malampaya LLC which was under Chevron Philippines Ltd.

The remaining 10% is currently held by PNOC-EC.

in October On the 19th, some concerned citizens filed a corruption complaint against the Energy Secretary Alfonso Cusi and the CEO of Udenna Uy at the Guarantor’s Office.

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