PNoy approves P5B to secure Palawan oil and gas fields

(Updated 11:37 p.m.) President Benigno Aquino III has approved the release of P4.9 billion from the Malampaya fund to fortify the defenses of natural gas exploration in northern Palawan, National Treasurer Roberto Tan said Wednesday. The money, to be released this month, will be disbursed to the Armed Forces of the Philippines (AFP), Tan said. The AFP was tasked to acquire and deploy a support fleet of ships smaller than the Hamilton class BRP Gregorio del Pilar. As early as last March, the Philippine military sent an aircraft to the disputed Reed Bank near Palawan following reports that Chinese patrol boats were trying to harass a Filipino oil exploration team there. Lt. Gen. Juancho Sabban, chief of the AFP Western Mindanao Command, said the Chinese were claiming the exploration team from the Department of Energy was in Chinese territory. “Pero alam naman natin na pasok na pasok sa atin ‘yun so nagpadala kami ng eroplano," Saban then said, referring the hotly contested oil-rich area west of Palawan. BRP Gregorio del Pilar, the Philippine Navy’s largest and newly acquired ship, is a symbol of the Philippines’ “seriousness" in fortifying the protectors of the country’s maritime resources. The Gregorio del Pilar, however, is less than half the size of China’s first aircraft carrier that is expected to go on sea trials by the end of September. The Philippines’ largest ship is 367 feet long, compared to China’s Shi Lang that measures 1,000 feet.
click here to view larger image "Commingled" special account The National Treasurer also disclosed Wednesday at the joint congressional oversight committee hearing on the comprehensive tax reform package that the Malampaya fund, with a remaining balance of P99.45 billion, exists as a "commingled" special account in the government’s general fund. He said the Malampaya collections from 2002 to August 2011 totaled P121.97 billion, of which P21.645 billion was disbursed partly to pay for the Hamilton class ship which the Philippines bought from the United States. During the hearing, Senator Ralph Recto made an issue out of the "commingled" status of the Malampaya fund and said that the money was missing. Recto argued that the fund cannot be used for any purpose other than those for which it was created. In a July 5 statement, Budget Secretary Florencio Abad explained the Malampaya fund was “…not actual cash but an accounting of revenue inflows and expenditure items charged against the Fund since revenues were remitted to the government from the Malampaya Natural Gas Project since it started in 2002."

Philippine National Oil Co's oil and gas exploration sites in offshore Palawan. Source: PNOC

Fund 151 The Malampaya special account is known at the Department of Budget and Management as Fund 151 and is managed by the Bureau of Treasury and the Energy Department. Abad also said back in July that the Aquino administration had charged P2.87 billion to the Malampaya account for "necessary energy-related" expenditures:

• P2 billion for fuel requirements of the National Power Corporation-Small Power Utilities Group (NPC-SPUG), to avert a power shortage in off-grid areas
• P450 million for the Pantawid Pasada program as direct support to jeepney and tricycle drivers affected by the recent spate of oil price hikes and
• P423 million for the purchase of the USS Hamilton cutter marine vessel to strengthen the security perimeter of the Malampaya Natural Gas Project.

Abad claimed that during the Arroyo administration only P250 million out of the P19.64 billion drawn from the fund was spent on an energy-related project that provided electricity to 211 villages in 2006 “The rest of the 98.73 percent or P19.39 billion was released for non-energy related projects," Abad noted and broke it down as follows:

• In 2006, P1 billion for the Armed Forces Modernization Fund
• In 2008, P4 billion for the Department of Agriculture
• In 2009, a total of P14.39 billion to various agencies, including P7.07 billion for the Department of Public Works and Highways, P2.14 billion for the Philippine National Police, P1.82 billion for the Agriculture Department, P1.4 billion for the National Housing Authority, and P900 million for the Department of Agrarian Reform.

National Treasurer Tan said the P4.9 billion for the security build-up in northern Palawan will likely be raised through borrowings and then credited to Fund 151. Budget Secretary Abad in a statement September 7 described how government will disburse the money for Malampaya defenses. "The amount is divided between the capability requirements of the Philippine Navy and Philippine Air Force. Of this amount, P2.65 billion will fund base support and logistic system, coast watch requirements; and the acquisition of a high-endurance cutter sea vessel and three helicopters of the Philippine Navy." "Meanwhile, the Air Force will be using P2.30 billion to purchase three helicopters and develop a base-hangar," Abad said. — With Earl Victor Rosero/PE/VS, GMA News