The government has contributed around Php124 billion to the Malampaya fund, according to the Department of Energy (DOE).
At the congressional hearing for the department’s 2022 budget last week, DOE-Energy Utilization Management Bureau Director Patrick Aquino said that total collections from the Malampaya gas-to-power project from January 2002 to June 30 this year stood at Php332 billion.
Of the Php332 billion, around 63% or Php208 billion is being used to pay the Universal Charge-stranded debts (UCSD) and UC-Stranded Contract Costs (UC-SCC), which are transferred to and assumed by the Power Sector Assets and Liabilities Management Corporation (PSALM).
This is in accordance with the provisions of Republic Act (RA) 9136 or the Electric Power Industry Reform Act (EPIRA) and RA 11371 or the Murang Kuryente Act (MKA). EPIRA specifically established PSALM to assume the debts of the National Power Corporation (NAPOCOR), while the MKA mandates that the Malampaya fund would be used to pay NAPOCOR’s debts being charged to consumers in their monthly electric bills.
UCSDs are NAPOCOR’s unpaid financial obligations that have yet to be liquidated by the proceeds from the sales and privatization of its assets. The UC-SCC, meanwhile, is the surplus of the contracted cost of electricity under eligible independent power producer contracts over the actual selling price of the contracted energy output.
Congressmen then urged the DOE to be transparent in giving details as to how the Malampaya fund is being spent.
In response, Energy Asec. Gerardo Erguiza, Jr. said that the DOE turns over to the Bureau of the Treasury whatever it collects from Malampaya. Energy officials added that the department would formally submit a report on the use of the Malampaya fund.
Under Malampaya’s Service Contract 38, 70% of the revenue coming from the sale of natural gas would go to the contractor to recover its investment. The remaining 30% is split between the government and the Malampaya consortium on a 60-40 basis in favor of the state.
The Malampaya consortium is currently composed of Udenna Corporation’s UC38 LLC and Shell Philippines Exploration B.V. (SPEX), which hold 45% each, while PNOC-Exploration Corporation owns the remaining ten percent on behalf of the government. Udenna acquired its first 45% from Chevron in March 2020.
Another Udenna unit Malampaya Energy XP signed a deal to purchase SPEX in May. The Dennis Uy-led firm would have 90% control of Malampaya once the DOE approves the Shell-Udenna deal, which together with the Chevron transaction is being scrutinized by the Senate.