FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S, No, 2925 
Introduced by Senator Ralph G. Recto 
EXPLANATORY NOTE 
'11 
JUL 28 P2 :24 
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 the PNOC Exploration Corporation. 
The said project was expected to provide 2,700 megawatts of power or substantial 
long-term revenue of some US$1 0 billion to the Philippine government for a period of20 
years statting January 2002. 
According to the DOE, as of May 2011, the aggregate government production 
share from the Malampaya Project has reached P200Al billion since it began producing 
natural gas commercially in January 2002. 
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 President has used the annual revenue inflow 
from Malampaya to fund non-energy related progratl1s such as rice sufficiency progratl1s, 
relief operations and AFP Modernization Fund. 
The utilization of the Malatl1paya 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 and 
Stranded Debts portion of the Universal Charge (UC). This would provide timely and 
substantial relief to power consumers in the light of impending power rate increase due to 
the new petition filed by Power Sector Assets and Liabilities Management (PSALM) 
Corporation before the Energy Regulatory Commission (ERC) seeking to pass on P 139 
billion stranded debt and stranded contract costs to power consumers through the Uc. 
PSALM has proposed to collect a UC ofPO.03 per kilowatt-hour (kWh) over 15 years for 
the stranded debt, and PO.36/kWh over four years for contract costs. Under the Electric 
Power Industry Reform Act (EPIRA), a UC will be imposed on all electricity end-users 
to cover payment ofNPC 's stranded debt and stranded contract costs. 
Instead of using MaJampaya 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. 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
SENATE 
s.No.2925 
Introduced by Senator Ralph G. Recto 
AN ACT 
'11 
JUL28 P2:Z4 
PROVIDING RELIEF TO POWER CONSUMERS BY ALLOCATING THE NET 
NATIONAL GOVERNMENT SHARE FROM THE MALAMPAYA NATURAL GAS 
PROJECT FOR THE PAYMENT OF THE STRANDED CONTRACT COSTS AND 
STRANDED DEBTS 
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 the Special Trust Fund created by the Power Sector 
5 
Assets and Liabilities Management (PSALM) Corporation: Provided, That the amounts herein 
6 
allocated shall be included in the General Appropriations Act: Provided, further, That when the 
7 
stranded contract costs and stranded debts are fully paid, the aforementioned collection shall 
8 
accrue to the General Fund. 
9 
SEC. 
2. 
Repealing Clause. - All laws, decrees, issuances, rules, and regulations 
10 
or parts thereof inconsistent with the provisions of this Act are hereby repealed, amended or 
11 
modified accordingly. 
12 
SEC. 
3. 
Implementing Rules and Regulations. - Within sixty (60) days from the 
13 
effectivity of this Act, the Department of Energy, Department of Finance and the Department of 
14 
Budget and Management shall provide the necessary rules and regulations for the proper 
15 
disposition of the said funds and the effective implementation ofthis Act. 
16 
SEC. 4. 
Effectivity. - The Act shall take effect after fifteen (15) days following 
17 
its publication in at least two (2) newspapers of general circulation. 
Approved.