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Use Malampaya Funds to subsidize power rates

March 23, 2018
Laban Konsyumer Inc. (LKI) supports Bills in Congress to use Malampaya Funds to subsidize electricity rates
PRO-CONSUMER advocacy group, Laban Konsyumer Inc. (LKI) recently expressed support for the current initiatives and separate filings of bills Nos. 898, 924, 1110 and Senate Resolution 39 and 130 , by Senators Ejercito, Recto, Pimentel and Gatchalian on using the Malampaya Funds and other revenues derived by the government from the commercial production of other indigenous energy resources like coal, geothermal energy and crude oil , to subsidize power rates.
In Congress, Bayan Muna Representative Carlos Zarate pushed for the passage of House Bill No. 3877, which he authored, and seeks to amend Presidential Decree 910 and mandate the transfer of the Malampaya funds to the general fund ?so we can truly appreciate its true value in national development. Rep. Batocabe has also recently filed a separate bill for this purpose.
LKI recently made an urgent call to the government, asking for the Malampaya funds to be utilized immediately as a subsidy for electricity rates, to cushion the impact of the recent price increases in power, mainly brought about by upward movements in generation charge.
The group went on record to say ?the Filipino consumer has been forced to deal these past few months with constant price increases in various goods and services, especially with the questionable implementation of the TRAIN law. Given this, we feel that it is the government?s duty and obligation to exhaust every possible way to soften the blow of these price increases that the everyday Filipino has been made to suffer.?
One low-hanging fruit LKI believes to be a possible alleviation from rate increases is the use of the Malampaya funds as subsidy to help lower power rates in the Philippines. The Malampaya Fund is composed of royalties that the government has collected from the Malampaya gas project in Palawan. This began in 2002, and the $4.5-billion project?s primary operation is the extraction of natural gas from the waters off Palawan. The Malampaya gas facility is operated by Shell Philippines Exploration B.V. and Chevron Malampaya LLC, who possess majority shares. The government holds a minority share, and based on the service contract, a production-sharing scheme is implemented, wherein the government gets 60 percent of earnings from the project.
LKI wishes to remind the current Administration that originally, based on the Presidential Decree No. 910 (1972), the funds accruing from royalties paid by the Shell-Chevron group, operators of the Malampaya gas fields in Palawan, should have been used for energy resource development and energy?related projects authorized by the President. The group stated that PD 910 has to be amended to authorize the current bills pending in Congress.
But LKI President and former Department of Trade and Industry (DTI) undersecretary Atty. Vic Dimagiba said ?the time to act on this is now, as these funds should be used instead to pay for part of our electricity bills.?
Dimagiba said ?LKI supports the initiative of the Senate and the House to lower the cost of electricity, especially the universal charges consisting of missionary electrification charge, environmental charge, and stranded contract cost of NPC. We supported the congressmen and senators who had filed separate bills for this purpose of lowering costs on consumers. The Malampaya funds remain the biggest funds for this purpose. Moreover , the Bill of Sen. Ejercito includes all revenue shares of the government in all local indigenous energy resources like coal, geothermal energy, and crude oil. Except for Malampaya where amounts are available, there are no available report of shares from the other indigenous energy resources.?
LKI reiterated that Malampaya funds have been identified as public funds, which would demand public accounting from the government. The group wishes to remind consumers of previous plans by the previous Administration in 2013 to explore the P137-billion Malampaya Special Funds to subsidize the expenses on the importation of crude oil to cushion electricity price increases on consumers.
Dimagiba continued his call for government action, stressing that ?using the Malampaya funds to subsidize charges to the consumer is not a new idea. The government has had every opportunity to use these funds for the benefit and welfare of the everyday Filipino for a long time, so it is puzzling to me why they cannot seem to act on this now, considering the upward trend of costs everywhere.?
Dimagiba, in a recent teelevison interview , reminded the public of the delicate power situation of the country today, saying that ?every year, we experience power plants shutting down, especially during summer. This leads to a spike in prices in WESM, and eventually higher electricity rates for customers. Thus, it is all the more important for options like the Malampaya funds to be used to cushion the impact of rate increases on consumers. DOE should strictly monitor the accurate information on power shutdown by the plants as well as the supplier of natural gas and other indigenous energy sources.?
Dimagiba concluded his plea for government action, stating ?at the end of the day, we appeal to our leaders? wisdom and good conscience to grab this perfect chance that we have to uplift the lives of our countrymen, through the proper use of the Malampaya funds, making the cost of living for each and every Filipino cheaper in whatever way possible.?
For any inquiries or concerns, you may reach LKI President Vic Dimagiba at 0917-812-5546 and email at; and