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Budget Secretary Benjamin Diokno. (ALFRED FRIAS/PRESIDENTIAL PHOTO)

DBM to help in probe on Malampaya mess

By Luis Leoncio

All documents needed for an impending probe on the misuse of the Malampaya Fund will be released as the government will fully cooperate with efforts to identify those responsible as a result of recent Commission on Audit (COA) findings on the irregular use of the multibillion peso fund, Budget Secretary Benjamin Diokno said.

Diokno said a special (COA) report on the state of the fund transmitted to the DBM last August 31 covered the releases that the DBM made to various implementing agencies (IAs) during the period January 2004 to May 2012, involving 184 Special Allotment Release Orders (SAROs) amounting P38.8 billion.

“The DBM is not a prosecutorial body. We have other agencies for that, but we are willing to participate,” Diokno told reporters during a regular briefing.
The COA report stated that releases of funds during the previous administration, spanning way back to the term of former President Gloria Arroyo, to different government agencies “may not be considered proper in view of non-compliance with existing laws, rules and regulations.”

It noted that SAROs and NCAs (notice of cash allocations) were released even without complying with complete documentary requirements under existing laws, rules and regulation.

There were either no request for fund from the implementing agencies (IAs), or Department of Energy (DoE) endorsement or special budget, or proof of Department of Budget and Management (DBM) evaluation, or approval by the President which are required under DBM-DOE-Department of Finance (DOF) Joint Circular 3 and Executive Order (EO) 683 and 848.

In some cases, funds were released even in the absence of project proposals or for purposes other than the purpose for which the fund was approved for release by the President, the COA report noted.

Likewise, the DBM released the SAROs without first establishing the propriety of the projects to be funded and reasonableness of the amount being requested as shown in the collatilla to the SAROs requiring submission of documents prior to the disbursement of funds, it added.
The absence of such requirements contributed to the irregular disbursement of  funds, the COA noted.

“We are willing to provide necessary evidence, SARO releases, etc. We will cooperate fully on whatever the direction of the government on this matter,” Diokno said.

The COA report focused on “compliance by the DBM with existing laws, rules and regulations on the release of SAROs and Notice of Cash Allocation (NCAs) to the different IAs out of the Malampaya Fund.”

When asked if the DBM would craft additional guidelines for the use of the fund, Diokno said there would be ‘no need’.

“Our people know what to do. It has always been the policy of the DBM to only release funds on the basis of a request,” Diokno said.

But the nature of the fund has made it “difficult to access and reuse”, Diokno said.

The Malampaya Fund was created as a special fund Presidential Decree (PD) 910, issued by then President Ferdinand E. Marcos on March 22, 1976.

The Malampaya Fund was initially set up to help intensify, strengthen, and consolidate government efforts relating to the exploration, exploitation, and development of indigenous energy resources vital to economic growth.

Under Section 8 of PD 910, the Malampaya Fund “shall form part of a Special Fund to be used to finance energy resource development and exploitation programs and projects of the government and for such other purposes as may be hereafter directed by the President.”

However, “use of the funds for ‘other purposes as directed by the President’ has been rendered unconstitutional with the Supreme Court decision on the Priority Development Assistance Fund (Belgica vs Ochoa, Jr., GR No. 208566, November 19, 2013, 710 SCRA 1).”

“The government is no longer involved in [the] activity [for which the fund was created for], it’s a private sector or joint venture activity,” Diokno added.
“In other words, we have a fund that is lying idle there. We cannot use it,” he said

As of June 30, 2017, the Malampaya Fund has a standing balance of close to 200 billion pesos, and it continues to grow, with monthly inflow from the Malampaya natural gas project, Diokno said.

Diokno added the broadening the use of the fund or changing the nature of the fund would require Congressional action.

“Looking forward, this is a clear message to all people in the bureaucracy that we should be careful in the use of public funds,” he said.

The Department of Energy (DOE) earlier indicated that it will ask President Duterte’s endorsement for a bill expanding the coverage of the Malampaya funds.

Energy Undersecretary and spokesperson Wimpy Fuentebella said legislation was needed to allow the use of Malampaya funds to finance several interconnectivity and rural electrification projects.

Fuentebella said the total collection from the Malampaya gas facility was at P241.37 billion, while only P47.74 billion had been utilized.

The Supreme Court ruled in November 2013 that the fund should be reserved for energy resource development and exploitation activities.

Fuentebella said, if a law is passed by Congress, the fund could be used to finance the construction of the following projects: Visayas-Mindanao Interconnection Project, Bohol-Cebu Interconnection Project, and Antique-Mindoro Interconnection Project.

The $4.5-billion Malampaya gas-to-power project is a joint undertaking of the Philippine national government and the private sector.

It was spearheaded by the Department of Energy (DOE) and developed and operated by Shell Philippines Exploration B.V. on behalf of joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation.

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