2008 deficit seen below program

Finance Secretary Margarito Teves said the 2008 budget deficit is likely to fall below the P75-billion program, because of higher-than-expected royalty payments from the Malampaya natural gas project.

“It is probably going to be lower than P75 billion. We benefitted from the P13 billion from Malampaya,” Teves noted.

The consortium behind the Malampaya natural gas project has remitted to the Bureau of the Treasury (BTr) roughly P13 billion in royalty payments for 2008.

Officials said the amount from the Malampaya consortium was unexpected and had not been included in the programmed revenues.

The Malampaya consortium, which operates the 2,700 MW deep water-to-gas project, consists of Shell Philippines Exploration B.V. (Spex) and Chevron Texaco, each holding a 45-percent stake in the project.

The Philippine National Oil Company-Exploration Corp., the government’s exploration arm, holds a 10- percent stake.

The government is strongly in favor of maintaining the royalty tax imposed on Malampaya even as the Manila Electric Co. (Meralco) has in the past, cited the royalty tax on the Malampaya project as one of the reasons for the high cost of power in the country.

Net government revenues from the Malampaya project amounted to P12.2 billion in 2007, up from P8.5 billion in 2006, data from the Department of Energy showed.

Lopez-owned First Gas Corp., which operates the Sta.Rita and San Lorenzo natural gas plants in Batangas, utilizes the natural gas produced by the Malampaya project.

Meralco sources some of its power requirements from First Gas Corp. It earlier said that if royalties to the government would be taken out, its generation costs would drop by at least P1.79 per kilowatt hour.

This, First Gen has said, would result in a lowering of the costs to consumers by P1 per kilowatt hour in the franchise area of Meralco.

Furthermore, the DOF said that the collection of royalty or government share from natural gas and geothermal projects is provided for in the Constitution.

The government’s January to November budget deficit reached P66.7 billion, reversing the P12.6-billion surplus recorded in the same period last year.

In November alone, the government incurred a budget deficit of P4.3 billion, a marked turnaround from the P54.1- billion surplus recorded in the same period last year.–Iris C. Gonzales, Philippine Star