A new Malampaya compromise

The national government is crafting a compromise agreement with Palawan to resolve the issue of jurisdiction over the Malampaya gas reserves off the waters of El Nido. According to former presidential spokesman Harry Roque, who was in the province last week, plans are in the works to resolve the issue with a new “agreement” that entails the national government committing to support the province’s “full electrification”. Mr. Roque explains that the text of the agreement is being “fast-tracked” by Malacañang for signing. He describes it with a positive spin — an advantageous deal for Palawan, which is current entangled in a legal dispute with the national government over the administrative jurisdiction of the Malampaya gas fields. Once signed, Roque explains that the agreement will preempt a ruling by the Supreme Court on the validity of Palawan’s claim to a portion of the Malampaya royalty. Mr. Roque’s own words: “Matapos tayong makibaka noon pang 2002, meron na pong katapusan ang ating laban sa 40 porsyentong share ng Palawan sa Malampaya. Sa wakas, magkakaroon na po ng full electrification ang buong Palawan at meron nang katarungan ang probinsya.” The main implication of such an agreement is Palawan’s withdrawal from the pending Supreme Court case. In exchange, the national government shall commit to an electrification program for the entire province, the cost and extent of which is not yet clear. It is hard to assess the merit of such an agreement without the complete details at hand, mainly the specifics of “full electrification” and the terms of Palawan’s surrender of its supposed legal claim. What is apparent at this point is that the idea seems to be initiated mainly by Malacañang. There has been no formal negotiation involved, as the provincial board has no record of having given the Palawan governor or his representatives a mandate to negotiate the matter. If there has been any backroom talks, no side has mentioned it. Mr. Roque made no reference to it taking place; instead he has described an incident when President Duterte had called Budget Secretary Ben Diokno to instruct him to craft the proposed agreement. If and when this proposed compromise agreement is formally presented to Palawan officials for signing, it will have to be weighed on its merits. Even as Mr. Roque had already praised it as a Palawan victory, it doesn’t mean as much unless its terms are properly and objectively assessed. Palawan’s full electrification is a goal spelled out in Palawan’s energy masterplan, a document that even non government groups have described as a decently crafted plan because of its strong bias towards renewable energy. The tag price to this plan goes somewhere around P50 billion, combining both public and private investments. The main cost center for the national government is the completion of a power distribution backbone in the entire mainland and the strengthening of island-level capacity for those areas not reached by the main grid. It also advocates for a gradual shift to renewable energy, and shuns earlier plans to put up a coal-fired power facility as the province’s main energy source. Media accounts place the current Malampaya balance at somewhere around P270 billion. A non-government group, the Kilusang Love Malampaya, estimates Palawan’s royalty share based on 40 percent beginning in 2002 when the project began should be around P108 billion. Beneath these assumptions however are unresolved questions on whether such amounts still exist or had already been spent or diverted into government projects. Corruption has also attended Malampaya, with a number of senators charged and jailed for misappropriating funds assigned to them. In Palawan, former Governor Joel Reyes is still facing graft charges for rigged projects funded by Malampaya under a previous compromise agreement amounting to around P4 billion with the Arroyo administration. The provincial government has yet to make its stand known about this compromise agreement. Because it has the markings of President Duterte’s direct involvement, as described by Mr. Roque, there is an intense political pressure on local officials to accept and embrace it. Palawan’s officials will need a crafty approach to dealing with the Palace on this one if it doesn't want to end up on the losing end. Many have suggested that they should simply wait for the Supreme Court to finally resolve the issue and define once and for all the question of a province’s territorial boundaries. Malacañang may have a compelling motive to negotiate a settlement, specially if it needs to tap into the fund which is technically covered by an escrow until its dispute with Palawan is resolved. On the other hand however, a potential Palawan victory on the case could be financially catastrophic to the national government, as it will have to figure out a way to deliver payments out of funds it can no longer properly account for.