The government filed a motion to dismiss the arbitration case initiated by the operator of the Malampaya natural gas project in Palawan, Energy Secretary Zenaida Monsada said Thursday.

Monsada said the Office of the Solicitor General filed a motion to dismiss the arbitration case filed by Shell Philippines Exploration B.V. with the arbitration tribunal in Singapore.

“I think we moved to dismiss the arbitration. Our lawyers at the OSG filed it. They [Shell] might agree to it, so it may not be passed on to the next administration,” Monsada said

Shell sought the intervention of the arbitration tribunal in Singapore against the government, following the Commission on Audit’s decision to collect P53.14 billion in taxes from the contractors of Malampaya-gas-to-power project.

“What I’m saying is we elevated it to the Office of the President. And we don’t know what will happen,” Monsada said.

COA ruled in May last year that the service contractors’ payment of income tax for the Malampaya project was not included in the government’s 60-percent share of the Malampaya royalties.

The department, in its filing with COA, also agreed that imposing the P53.14-billion taxes on the contractors of the Malampaya project would create havoc on the petroleum industry.

Members of the consortium running service contract 38 include Spex, Chevron Malampaya Llc and state-owned PNOC Exploration Corp.

The department said in its 30-page motion for reconsideration that the COA decision had “sent a very wrong signal to the existing and future petroleum exploration investors in the country.”

It said petroleum exploration, especially offshore, involved great risk, huge capital and high technical capability and foreign investors decided where to put their money based on “the certainty and stability of investment riles and regulatory regime of a country.”

“The trust and confidence of foreign investors in the stability and certainty of our investment laws and regulations that the government, for a long period of time, has painstakingly built and nurtured, has been greatly damaged,” the department said.

“In the face of this tight competition with other countries for foreign investors, the Philippines, if it is to achieve its aim of energy security and incidentally, overall economic progress, needs to discover other Malampaya by intensifying the exploration and production of its indigenous petroleum resources,” it said.

The department said a stable and sufficient supply of energy was one of the primary requisites to attain sustainable economic development.

“What the Philippines needs is a continued investment in petroleum exploration and development and convince those already existing investors in the country to remain and stay for the long haul notwithstanding the domestic difficulties and challenges they have to face,” it said.

 

Source: The Standard