Solon to COA-DOE: Resolve Malampaya tax issues immediately

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A congressman has asked the Department of Energy and Commission on Audit to resolve the conflict over the Malampaya gas project that could result to a negative impact on the country’s electricity supply and price.

Camarines Sur representative LRay Villafuerte said that if the two sectors fail to resolve the issue on the Malampaya tax, it could affect electricity prices and spook investors, and also threaten the country’s energy supply.

“As correctly pointed out by the DoE, the CoA ruling could lead to an ‘exodus’ of investors in the country’s power sector at a time when investments in this industry are badly needed in the face of critical power supply vis-a-vis our fast-growing energy requirements. We appeal to the CoA and the DoE to resolve this issue immediately,” Villafuerte said.

The lawmaker was referring to the different interpretations of the COA and the DOE on Presidential Decree 87 and Service Contract 38 that deals with the Malampaya gas project.

The COA ruled that the income tax of the Malampaya consortium was deductible from the government’s 60 percent share of the gas field royalties.

This means that Shell Philippines Explorations BV, Chevron Malampaya LIC., and the Philippine National Co. – Exploration Corp. are expected to pay P151 billion in back taxes covering 2002 to 2016.

However, the DOE said that COA should honor the Malampaya contracts through the Oil Exploration and Development Act of 1972 and PD 1459, which authorizes the DOE secretary to enter into petroleum service contracts.

Villafuerte said that the issue doesn’t help President Rodrigo Duterte’s 10 – point socioeconomic agenda, which aims to increase the country’s competitiveness and attract more foreign investors.

“As pointed out by industry players, dunning power generation companies for supposed back taxes could jack up electricity prices, a scenario that would hurt consumers and all the more investors long complaining about the Philippines having among the highest power rates in Asia,” Villafuerte said.

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