Resource revenues can write off energy debts

business mirror

WEDNESDAY, 25 JULY 2012 21:01 PAUL ANTHONY A. ISLA / REPORTER

REVENUES from energy resource development projects are among the many options the Department of Energy (DOE) is considering to help write off the government’s trillion-peso debts to the energy sector.

Energy Secretary Jose Rene Almendras told the Security Bank’s Economic Forum on Wednesday that the energy sector has a trillion-peso debt, which adds pressure to the government’s overall liabilities.

“I’m looking at option not to charge that [energy-sector debt] to taxpayers or consumers,” he said.

The idea to tap proceeds from energy resource development, according to Almendras, stemmed from the $1 billion in net proceeds from the Malampaya gas project, which he turned over to the government last year.

He said there is a need to reconstitute some of the laws to align income from energy resource development in paying off the energy-related debts.

Almendras added that consumers will have to pay for these debts through the universal charge if these proceeds are not used to reduce the government’s energy-related liabilities.

“We must make the right decisions today and not ‘band-aid’ decisions that are politically popular decisions. Energy is long term and its solution is economics, never political. We must not allow that to happen,” he said.

Economist Nonoy Oplas said Almendras’s proposal is innovative and could help in reducing debts and interest payments. Any refinancing or reducing of interest payments, he added,  could result in savings that could be used for social services.

Oplas said the government could enter into debt-refinancing agreements to help reduce interest payments and use proceeds from the Malampaya or other energy resource development projects as a guaranty. 

He added, though,  that local government units could oppose the proposal, as it could affect their Internal Revenue Allotments from the proceeds.

Almendras was once quoted as saying that the energy sector has a total of P932.21 billion in consolidated financial obligations as of June 2010.

He said P757.17 billion of that amount accounts for the obligations of the Power Sector Assets and Liabilities Management Corp., P6.97 billion of National Power Corp. and P980 million of National Transmission Corp.    source