SPEx arbitration case seen as bridge to unify gov’t tax policy

The Department of Energy (DOE) on Monday said the arbitration case filed by Shell Philippines Exploration B.V (SPEx) is an opportunity for the national government to “come up with definitive and clear-cut policies in dealing with partners.”

SPEx took its case against the government at the International Center for the Settlement of Investment Dispute (ICSID) over the P53.14 billion tax dispute regarding the Malampaya deep water gas-to-power project on July 20.

Energy secretary Alfonso Cusi said in a statement that the arbitration by the Royal Dutch Shell Plc’s Philippine unit calls for a nationalistic approach “to make a unified stand.”

“This is in line with the Duterte administration’s vision of unity in our country,” he said.

Cusi said that he would recommend the present administration “the necessity of aligning government institutions to work together and act consistently.”

“The Philippine government must have a unified stand in all its decisions and actions just as we have shown in the West Philippine Sea issue,” he said.

Cusi added that the DOE will “exhaust all possibilities and avenues to study options and bring before the President recommendations that will have one objective: to protect and serve the best interests of our Country and the Filipino people.”

SPEx previously challenged the interpretation of the Commission on Audit (CoA) on their computation of the 60 – 40 sharing of the Malampaya project proceeds. A 2009 report of the COA found P53 billion worth of underpayments involving income taxes due from the Malampaya consortium.

Previous administrations said that the tax liabilities have been covered by the 60% share remitted from 2002 – 2009. However, the state auditor retained that the consortium members underpaid their taxes resulting to SPEx previously seeking arbitration in Singapore.

The Malampaya gas project is currently handled by SPEX and partners Chevron Malampaya LLC and Philippine National Oil Co. – Exploration Corp. (PNOC – EC). The three power companies currently operate Service Contact 38 which supplies to power plants in Batangas and Shell Petroleum Corp for its refinery and compressed natural gas refilling station.