ASEAN KEY DESTINATIONS
Philippines cancels petroleum bids
Energy Secretary Jose Rene Almendras said the agency canceled bidding for petroleum contracts until it addresses the Commission on Audit's (COA) concerns on taxes.
"We were hoping that we would be able to push through with it pending the resolution, but recent meetings with COA have given us an impression that it is probably best not to for the time being," he said.
The DOE earlier lined up 12 to 15 oil and gas sites for auction this month in its bid to jumpstart the stalled bidding for petroleum contracts.
Since awarding 13 of such contracts since 2005, manpower changes at the department and, recently, COA's concerns on government's revenue sharing agreement with petroleum contractors, have put the bidding for upstream oil and gas projects on the backburner.
COA questioned why the Malampaya consortium led by Shell Philippines Exploration B.V. was allowed to deduct their corporate income tax, which amounted to roughly P53 billion from 2003 to 2009, from government's 60-percent share in the gas field's revenues.
Presidential Decree 87 of 1972 allows service contractors to deduct all operating and capital expenses up to 70 percent of their gross income. The remaining 30 percent will be divided between the contractor (40 percent) and the government (60 percent). Once the oil firms recover their cost, the revenue sharing is shifted in favor of the government.
The Malampaya is the country's largest natural gas field to date. It fuels three power plants with a combined capacity of 2,700 megawatts.
Because of the country's reliance on imported fuel, the DOE has been hoping to develop similar resources through the private sector.
But with the continued delay in the bidding of oil and gas exploration and development projects, Almendras said the DOE would instead push through with the auction of coal contracts.
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