Filipinos will be paying an estimated $1 billion that will be added to the country’s already swollen foreign debts if government heeds proposals to acquire Shell Petroleum N.V.’s 45 percent operating stake in the offshore Malampaya gas field.
“A foolish idea that would easily force taxpayers to suffer another $1 billion (P50 billion) in public debt obligations," said Surigao del Sur Rep. Johnny Pimentel of the proposal.
Pimentel slammed the recommendation for government to match the $460 million offered by a private firm to acquire Shell’s Malampaya gas field stake.
“Right now, the government is already in a swee spot, merely collecting 60 percent of the net proceeds from Malampaya’s petroleum business. The government is not spending anything and is not incurring any liabilities,” said Pimentel.
He stressed: “There’s no point in the government suddenly having to borrow and spend a lot of money to match any private party’s offer to buy Shell out.” The administration solon was reacting to the move by several groups to ask several lawmakers “to fully explore if the government could easily get financing” to takeover Shell’s operating stake in the gas project.
“But the takeover cost is actually around $1 billion, because on top of paying $460 million to Shell, the government would have to borrow and spend another $500 million to $600 million to explore and develop additional production wells,” warned Pimentel, vice chairman of the House Committee on Good Government and Public Accountability.
The senior lawmaker added: “And the government simply cannot afford to incur additional debt obligations now, considering its worsening budget deficit.” The government reported an unprecedented P1.37 trillion budget deficit in 2020 due to the aggressive spending to fight the COVID-19 pandemic and stimulate the economy.
According to Pimentel the government’s deficit-spending while needed ‘ is bound to haunt businesses and the economy in the months ahead if left unchecked.” “Once the economy starts to recover bank lending rates will climb fast as the government competes with the private sector in borrowing more money to repay the public debt,” the Mindanaoan solon stated.
He explained that both the state-owned Philippione National Oil Co. (PNOC) and its subsidiary, PNOC Exploration Corp., do not have the $1 billion needed to buy Shell’s Malampaya stake and run the gas project.
“The reality is, all government-owned or -controlled corporations, including PNOC and PNOC-EC, have been remitting up to 785 percent of their annual net income as cash dividends to the national treasury,” stated Pimentel.