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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
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Oli' THE PHILIPPINES 
) 
First Regular Session 
) 
'13 
JUl -4 A10:28 
SENATE 
___________ 
S_'_N_o. __ 
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Introduced by Senator Ralph G. Recto 
Explanatory Note 
The Malampaya Deep Water Gas-to-Power Project is one of the largest and most 
significant industrial endeavors in Philippine history as it paved the way for the discovery of an 
alternative and indigenous source of energy. It reduced the country's dependence on imported 
fuel for the bulk of its domestic and industrial power requirement. The Malampaya Project is a 
joint undertaking of the national government and the private sector represented by Shell 
Philippines Exploration B.V. (SPEX) on behalf of joint venture partners Chevron Malampaya 
LLC and thi PNOC Exploration Corporation. 
The said project was expected to provide 2,700 megawatts of power or substantial long-
term revenue of some US$IO billion to the Philippine government for a period of 20 years 
starting June 2002. [1] [2] 
The 2013 ~evenue estimate from the Malampaya Project is P28.74 Billion [31, P3.28 
Billion or eleven percent (11 %) higher than the 2012 revenue estimate ofP25.46 Billion. [4] 
Presidential Decree No. 910 mandates that the government share from service contracts 
and agreements such as the Malampaya Fund shall be used to finance energy resource 
development and exploration programs and projects as may be directed by the President. 
However, over the years, the annual revenue inflow from Malampaya was used to fund non-
energy related programs such as rice sufficiency programs, relief operations and AFP 
Modernization Fund. 
The utilization of the Malampaya Fund is currently not under scrutiny in the budget 
process, Due to the lack of transparency in the utilization of the Fund, there are conflicting 
reports on the project beneficiaries and actual Fund balance. 
To make the disbursement of the Malampaya Fund transparent and free from abuse, this 
bill seeks to allocate the net national government share from the Malampaya Project to, pay the 
National Power Corporation's (NPC) Stranded Contract Costs (SCC) and Stranded Debts portion 
of the Universal Charge (DC). Under the Electric Power Industry Reform Act (EPlRA), a UC 
will be imposed on all electricity end-users to cover payment of NPC's stranded debt and 
stranded contract costs. 
1 Expected life ofthe Malampaya Gas Project htto:llwww.doe.gov.phlDNG/malampaya history,pdf(Accessed 2 Apri12013) 
2 The se 38 consortium applies for a IS-year extension of its service contract http://www.doe.gov.phlNews/201l-10-03-
Malampaya%20expansion,htm (Accessed 2 April 2013) 
3 Department of Budget and Management, "Budget of Expenditures and Sources of Financing (Tables): Fiscal Year 2013" 
(Projected Revenues from the Malampaya PrQject for FY 2013) 
4 Department of Budget and Management, "Budget of Expenditures and Sources of Financing (Tables): Fiscal Year 2012" 
(Projected Revenues from the Malampaya Project for FY 2012) 


This bill would provide timely and substantial relief to power consumers in the light of 
the Decision promulgated on February 19, 2013 by the Energy Regulatory Commission (ERC) to 
set the Universal Charge 
(UC) for the recovery of 
National Power 
Corporation's 
(NPC) Stranded Contract 
Costs 
(SCC) 
at 
PhR0.1938lkWh. 
[5] 
The 
UC-SCC 
of 
PhP0.1938MWh became effective last March 2013. 
Instead of using Malampaya Fund to finance non-energy related programs and projects of 
national government agencies, the said Fund would now directly benefit power consumers. 
Furthermore, to ensure transparency in the Fund's utilization, the bill also mandates that the 
allocation of the said Fund to lower power costs should be clearly provided for in the General 
Appropriations Act. 
In view of the foregoing, the approval of the bill is earnestly sought. 
mjma 
5 Energy Regulatory Commission. Press Release. "ERe Sets the Universal Charge for NPC's Stranded Contract Costs, 
02/19/2013" 
http://www.erc.gov.phIPressReleaseIViewPressRelease/ERC-Sets-the-Universal-Charge-for-NPCs-Stranded-
Contract-Costs (Accessed on 20 March 2013) 


'stmlh· 
SIXTEENTH CONGRESS OF THE 
) 
{~Hl;r tlf tqC' ~N'tpbtl! 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
'13 
JUl -4 AiD :28 
SENATE 
465 
S.No. __ 
_ 
Introduced by Senator Ralph G. Recto;!i\ii\ii 
AN ACT 
REDUCING ELECTRICITY RATES BY ALLOCATING THE NET NATIONAL 
GOVERNMENT SHARE FROM THE MALAMPAYA NATURAL GAS PROJECT FOR 
THE PAYMENT OF THE STRANDED CONTRACT COSTS AND STRANDED DEBTS 
OF THE NATIONAL POWER CORPORATION 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
1 
SECTION 1. All proceeds of the net national government share from collections of the 
2 
Malampaya Natural Gas Project, otherwise known as the Malampaya Fund shall be allocated 
3 
solely for the payment of the National Power Corporation's Stranded Contract Costs and 
4 
Stranded Debts which shall be remitted to a Special Trust Fund to be administered by the Power 
5 
Sector Assets and Liabilities Management (PSALM) Corporation: Provided, That the amounts 
-
6 
herein allocated shall be included in the General Appropriations Act: Provided, further, That 
7 
when the stranded contract costs and stranded debts are fully paid, the aforementioned collection 
8 
shall accrue to the National Treasury. 
9 
SEC. 2. 
Implementing Rules and Regulations. - Within sixty (60) days from the 
10 
effectivity of this Act, the Department of Energy, Department of Finance and the Department of 
11 
Budget and Management shall provide the necessary rules and regulations for the proper 
12 
disposition of the said funds and the effective implementation of this Act. 
13 
SEC. ·3. 
Repealing Clause. - All laws, decrees, issuances, rules, and regulations or 
14 
parts thereof inconsistent with the provisions of this Act are hereby repealed, amended or 
15 
modified accordingly. 
16 
SEC. 4. 
Effectivity. This Act shall take effect fifteen (15) days from the date of 
17 
publication in the Official Gazette or in at least two (2) newspapers of general circulation. 
Approved,