Friday, 21 January 2011 13:25
The Department of Energy (DOE) is proposing the passage of a new oil and gas exploration bill to replace Presidential Decree 87, an official said. Energy Undersecretary Jay Layug said the proposed bill, which will be submitted to the Senate and Congress next month, would give more incentives to prospective investors.
"This year, what we plan to do is to pass an exploration bill to be a law, which will serve to address all the issues and provide more incentives to exploration companies," Layug said.
Layug said that PD 87, an Act to promote the discovery and production of indigenous petroleum products, is already "antiquated."
"It is (proposed bill) targeted to come up with new incentives and validating what we have now. It should be better. in the sense that it will be a win-win situation for both the investors and government," Layug said.
He said the DOE is determining if there is a need to enhance the current revenue sharing between the government and the project contractors. Layug said the 60-40 percent government-contractor revenue sharing after cost-recovery "could be enhanced or modified, but certainly without impairing the existing service contracts."
"There are several models for production sharing. And we are looking at the best models for that," Layug said. He assured that DOE will respect the Constitution and the interest of the investors in the issuance of the new bill.
DOE is eyeing Senators Sergio Osmena and Juan Ponce Enrile to sponsor the bill in the Senate and Rep. Henidina Abad and Rep. Arnulfo Fuentebella be the sponsors in Congress.
"It's very important for the prospective foreign investor that the state respects the contracted entered into with. We cannot adjust it, there is non-impairing clause in the Constitution," Layug said.
He said the department can still proceed with the petroleum exploration contracting round this year while the bill is pending.
The DOE postponed the bidding for oil and gas contracts slated for December pending the resolution of the issues raised by the Commission on Audit (COA).
"We decided to postpone it because of the COA situation. So we will still going to try to address that problem," Energy Secretary Jose Rene Almendras said earlier.
The COA has found that contractors of the Malampaya gas-to-power project were not paying corporate income tax because it was already deducted from the government's 60 percent share in the sale of natural gas and condensates from the Malampaya gas field in northwest Palawan. The deduction allegedly resulted to billions of pesos worth of losses for the government. (PNA/PIA-BST)
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