Government officials yesterday said adhering to the Malampaya project in Palawan will benefit the upstream oil and gas industry as it will maintain the “predictability, certainty and consistency of investment rules in the country.”
Speaking during the EU-Philippines Business Summit, Department of Energy (DOE) secretary Alfonso Cusi maintained its position that the 60 percent corporate income tax of the Malampaya project will form part of the government share.
“The DoE has strongly affirmed its position… before the Commission of Audit that the income tax of the Malampaya contractor shall form part of the 60 percent of government share,” Cusi said.
He said it is important for the industry to “observe the sanctity of contract in our commercial transactions.”
“The foremost consideration in the mind of foreign investors in deciding where to invest is the predictability, certainty and consistency of investment rules and regulatory regime of a country, he added.
Committee on Energy chairman Senator Sherwin Gatchalian agreed with the DOE’s position on the contract.
“Definitely, that is a more prudent position considering that since time immemorial, this type of arrangement is embedded on most of our service contracts… It just so happen that Malampaya is the most profitable,” he said in the same event.
Gatchalian said changing the rules will turn off foreign investors the country needs as the Philippines does not have the required technology yet.
“If we change the rules, a lot of investors will not come and invest in the country especially in exploration which has a gestation of 10 years,” he said.
Last month, the DOE filed a motion for reconsideration to the Commission on Audit (COA) and maintained the previous DOE administration’s decision that the income from the Malampaya project is deductible from the government’s 60 percent share.