By Victor V. Saulon, Sub-Editor

THE Department of Energy (DoE) has listed five countries that have shown “great interest” in participating in the government’s plan to build an integrated facility for liquefied natural gas (LNG), which it targets to finish during the current administration.

“These are the countries that have shown great interest in the project — Japan, China, Russia, South Korea, and Indonesia,” Energy Secretary Alfonso G. Cusi told reporters on Wednesday on the sidelines of the DoE’s launch of an information campaign called “E-Power Mo” at the Philippine International Convention Center.

“It doesn’t mean that we have shortlisted,” he said. “We are evaluating all the proposals.”

He said he would be meeting on Friday with the Philippine National Oil Co. (PNOC) board of directors “for management to present all these proposals so we can properly evaluate them.” He chairs the board of PNOC, a government agency that has become aggressive in making its assets more commercially viable.

Last month, Mr. Cusi said the DoE was planning the construction of a common receiving and distribution infrastructure for LNG, considered the “cleanest” of all fossil fuels, that is aimed at making the country a hub for the energy resource in Southeast Asia. The facility is planned for a property in Batangas owned by PNOC.

Mr. Cusi previously said the facility would cost around P100 billion and targeted for completion by 2020, which should give the country enough lead time ahead of the anticipated depletion of the Malampaya natural gas find starting in 2024. The offshore Palawan platform supplies gas to several power plants in Batangas. It powers up to 20% of the country’s electricity requirements.

He had said the facility would have an initial 200-megawatt (MW) power plant storage facilities, liqeufaction and regasification units. The plant’s output is aimed to served the country’s economic zones, he added.

Asked when the DoE and PNOC will shortlist project proponents, Mr. Cusi said yesterday that the decision might come after the discussions on Friday. He said the choice could be just one proponent or a consortium.

“This is a project that is a bit complex,” he said, citing the need to find expertise in technical, trading and management solutions.

He said that once a proponent is chosen, he expects the project to break ground in early 2018. He cited two major outcomes that the DoE is targeting to achieve with the project.

“Number one, as a substitute to the Malampaya gas when it is depleted.” he said. “Number two, is we would like for the Philippines to become the hub for LNG.”

The project will allow the country to import LNG, which is transported from other countries in liquid form, then converted back to gas ahead of its use in a proposed power plant.

With its location, the Philippines is strategically located to become an LNG hub and complement activities in Japan and Singapore, Mr. Cusi said, adding that the project could bring economic growth in the country.

“But definitely we want to complete it within the term of [President Rodrigo R.] Duterte,” he said.

The DoE’s “E-Power Mo” campaign aims to make energy issues understandable to ordinary consumers.

A NEW contracting round is in the works for petroleum and coal, the Department of Energy (DoE) said on Wednesday, in a move that the agency hopes to create wealth for the industry to fund more energy development projects.

“We will be conducting the energy contracting program for petroleum and coal, and we are targeting December as our launching month. So hopefully we’ll be discovering additional reserves,” said Ismael U. Ocampo, assistant director of the DoE’s energy resource development bureau (ERDB).

He made the statement during a press conference to launch the department’s information campaign called “E-Power Mo” at the Philippine International Convention Center.

Mr. Ocampo said the program would be the sixth Philippine Energy Contracting Round, a competitive system of awarding service contracts for petroleum and coal prospecting areas.

During the press conference, Undersecretary Felix William B. Fuentebella described ERDB as “the bureau that creates wealth for all of us. “If the bureau discovers something” the energy resource development fund becomes bigger, he added.

“As far as the moratorium (in disputed areas) is concerned, we have always deferred to the DFA (Department of Foreign Affairs). In the conduct of this [contracting program] it will be subject to clearance from the DFA,” he said.

Mr. Ocampo said he hopes the new contracting program will discover another Malampaya, referring to the offshore Palawan gas find that supplies a number of power generation plants in Batangas that deliver about 20% of the country’s electricity requirements. The government receives a portion of the revenue from the project.

He said the areas to be offered under the new contracting program include parts of the West Philippine Sea, Sulu sea and areas around Palawan province. In the fifth round the DoE offered 11 areas with a total scope of about 4.8 million hectares.

Mr. Ocampo expects issues in the past contracting rounds to be resolved, including the lifting of a moratorium on oil exploration in parts of the West Philippine Sea. The ban was imposed by the DoE as some contract areas fell within the scope of the arbitration case filed by the Philippines against China.

On July 12, 2016, the Permanent Court of Arbitration in The Hague in the Netherlands ruled that Reed Bank is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea.

Mr. Ocampo said he expects the moratorium to be lifted before December. He said he received information that the DFA was drafting a “directive” instructing the DoE to resume oil and gas exploration in the West Philippine Sea.

He said the department will try to conduct seismic tests in the area and if China does not complain, then exploration might proceed. He said Filipino fishermen in the area were able to fish unhampered. He said he would be following up with the DFA on the status of its directive. — Victor V. Saulon

WATER industry stakeholders said priority legislation is needed to improve management of the resource, with proposed measures including a unified government body to oversee the various agencies specializing in water issues and to expand rainwater collection.

After seven water conferences in various parts of the country, stakeholders said other propoasals include a cost-benefit process for deciding the allocation of irrigation funds; water-related data colletion by the Philippine Statistics Authority (PSA); a sift to cost-effective water technologies; and initiatives to prevent future water damage.

The recommendations will be presented to President Rodrigo R. Duterte at a national water roadmap and summit conference.

There are about 30 government agencies that handle water-related issues, including the Department of Agriculture (DA), Local Water Utilities Authority (LWUA), NWRB (National Water Regulatory Board), and the Department of Public Works and Highways (DPWH), among others.

About 73 persons die daily in the Philippines because of water-related diseases, and the counry collects only 4% of rainwater, well off the Indian level of 60%. The Philippines ranked in the bottom quarter of the Asian Development Bank (ADB) water studies rankings in 2013 and 2016.

In her remarks at the latest pre-summit conference, Sen. Loren B. Legarda, chair of the Senate Committee on Climate Change, warned that problems in water can worsen with the effects of climate change.

“Water stress, amplified by climate change, will lead to a real and growing security challenge,” she said.

The issue of reforming the water sector came to President Rodrigo R. Duterte’s attention when the Agri-Fisheries Alliance (AFA), a stakeholder group from the private sector, met with the then-candidate in April 2016.

Ernesto Ordoñez, convenor of the AFA and concurrent Secretary-General of the National Water Roadmap and Summit, said that the timeline for the action points gathered from the Water Pre-Summits range from six months to three years.

Socioeconomic Planning Secretary Ernesto M. Pernia said that people should realize that “water is life”, even if it “sounds like a cliche”, and that the need for water is greater than the need for other necessities.

“It trumps other needs such as power (electricity)… Water resources have to be distributed equitably, across the country, and across the regions as well, across social sectors,” Mr. Pernia said.

The priority bill to create a single body overseeing water aims to harmonize all water-related functions under one government office, according to Mr. Pernia.

“The issue now is we have too many agencies or bodies looking after water. What we need to do is just have one apex body, it can be the NWRB, but it should be properly authorized and financed so it can be a powerful body, [and it will be] the only apex body… concerned with water issues and problems.”

Mr. Ordoñez said that the summit’s goal is to have the bill “certified as priority,” noting that an urgent certification is the only way for the bill to hurdle Congress.

“If [this is not certified as urgent, then]…nobody listens, [and] it will continue to gather dust,” he added.

Mr. Pernia added: “I don’t see how anybody can oppose or object to improving our water supply.” — Patrizia Paola C. Marcelo

MINES and Geosciences Bureau (MGB) Acting Director Wilfredo G. Moncano became the bureau’s sole head Monday after Concurrent MGB Director Mario Luis J. Jacinto went on extended leave for health reasons.

“My health condition due to complications from diabetes requires me to go on extended medical leave. With the permission of (Environment department) Secretary (Roy A.) Cimatu, I requested that Director Moncano now take over as MGB Director,” Mr. Jacinto said in a mobile message on Wednesday.

Mr. Jacinto was designated concurrent director of the bureau by President Rodrigo R. Duterte in an order dated July 26, 2016. He remains Undersecretary for the department.

“I hope Dir. Moncano will be at the helm of the MGB for the long time to push for pro-active programs in the mining industry regulatory and development regime,” Mr. Jacinto added.

Mr. Moncano said the bureau under his watch will continue to remove red tape, in line with the administration’s direction.

“There’s a review now ongoing at the MGB for the possible streamlining of the processing [of permits]. If there are redundant steps in the application process then we might remove them to make the application process simpler,” Mr. Moncano said in a phone interview yesterday.

Mr. Moncano will retain his acting director designation until he is granted Career Executive Service Officer rank.

Mr. Moncano was appointed as acting director by the President in September 2016, replacing former MGB Director Leo L. Jasareno.

The Chamber of Mines of the Philippines (CoMP) said it welcomed Mr. Moncano’s new status at the MGB.

“The industry will work well with the new director who understands mining, being a mining engineer and a lawyer,” the group said in a Wednesday statement.

The CoMP added that it is confident that a reversal of the orders issued by former Secretary Regina Paz L. Lopez “have already been studied.”

Mr. Moncano said the bureau continues to review the orders but will not announce its position for now. — Janina C. Lim

Taxwise Or Otherwise — By Cyril B. Pestilos

To acquire juridical personality, a partnership and a corporation must register first with the Securities and Exchange Commission (SEC) before registering with the Bureau of Internal Revenue, the Local Government Unit having jurisdiction over the place where the entity intends to operate and locate, and the mandated social agencies such as the Social Security System, Pag-IBIG and PhilHealth.

Once registered, companies are enjoined to comply with various requirements. For instance, every amendment to the Articles of Partnership or Incorporation and the By-laws must be filed with the SEC. During the course of business operations, corporate entities may also find themselves needing to file a request for opinion to secure confirmation or a ruling from the SEC on issues affecting their rights and interests. Likewise, the Certificate of Good Standing, which has come to be a popular requirement of other government offices nowadays, may be needed to establish proof of compliance with reportorial requirements of the SEC.

On top of the annual reporting requirements, the foregoing transactions suggest why agents or representatives of partnerships and corporations need to ensure that they are up to date in regard to SEC compliance requirements and policy changes.

For those unaware, the SEC head office is no longer located at the intersection of EDSA and Ortigas Avenue. It is now at the Secretariat Building, PICC Complex, Roxas Boulevard, Pasay City. Apart from the change in location, other changes recently adopted by the SEC are, as follows:

1. Downloadable Stock and Transfer Book (STB) and Membership Book (MB).
As you may know, the STB for stock corporations and MB for non-stock corporations must be registered with the SEC within 30 calendar days from the issuance of the Certificate of Incorporation. Pursuant to SEC Resolution No. 546, series of 2016, the STB and MB are now downloadable from the SEC website.

Unlike manual books of account, which are readily available at your local bookstore or office supplies shop, STBs/MBs seem only available at the SEC offices. Although it may appear that the SEC has a monopoly over the issuance of these books, the limited demand and its regulated purpose may have curbed other printing press companies from retailing them on the market. Fortunately, they are now readily downloadable.

Based on the SEC Resolution, the downloaded STB and MB are registrable only at the SEC Satellite Offices located in: 1) Ali Mall, Cubao, Quezon City; 2) SM North, Quezon City; 3) Robinson’s Galleria, Ortigas Avenue, Quezon City; and 4) SM Manila, City of Manila. The STB is composed of 60 pages, excluding the first page as the registration page, while the MB is composed of 30 pages, excluding its registration page. Just like its hardbound counterpart, each page of the downloadable STB or MB must be certified correct by the Corporate Secretary.

2. New SEC consolidated schedule of fees and charges
As approved by the Department of Finance, the SEC has issued Memorandum Circular (MC) No. 03 series of 2017 dated March 7, 2017 to publish the full text of the “Consolidated Schedule of Fees and Charges” to be imposed and collected by the SEC.

Under the new schedule, the name reservation fee is now P100 per allowable name for 30 days.

While there is an apparent additional cost to the transacting public, the increase is only fair considering that the SEC took more than two decades to modify its fees. Moreover, not all transaction fees were increased.

3. Update on General Information Sheet (GIS) and Notification Update Form (NUF)
Under SEC MCs Nos. 14 and 16, series of 2016, revised templates of the GIS and NUF have been issued. Both can be downloaded from the SEC website. The GIS must be filed annually within 30 calendar days after the actual general annual meeting of the stockholders/members or after the anniversary date of the issuance of the SEC license while the NUF must be filed within 30 calendar days from the occurrence of the reportable change.

Markedly, the new GIS and NUF now have separate pages where the Tax Identification Numbers (TIN) and addresses of the Board of Directors/Trustees, Officers, Stockholders and Resident Agent have to be indicated. However, the separate sheet designated as the TIN Page will not be uploaded for public viewing in the SEC i-View (the Commission’s online database that is accessible to the public for a fee).

Further, the Corporate Secretary’s Certification has been revised to include, among others, the stipulation that failure to file the GIS for five consecutive years shall be construed as non-operation of the corporation, which is a ground for revocation, with the corporation considered as waiving its right to a hearing for the said revocation.

4. Reduced requirements for financing and lending companies
Part of the reform initiatives of the SEC to ease doing business in the Philippines is to modify the Application Form, Company Information Sheet and Personal Information Sheet, which are documents required by the Company Registration and Monitoring Department (CRMD) in securing a Certificate of Authority to Operate as a Financing Company/Lending Company. Likewise, the Treasurer’s Affidavit for this particular industry has been revised. The purpose of these modifications is to consolidate some of the documentary requirements and minimize redundancies in the elicited information.

Further, the CRMD dispensed with the following requirements: (1) local police clearance; (2) certificate of good moral character; (3) work permit from the Department of Labor and Employment for foreign directors and officers; and (4) location map and copy of the lease contract or title of the building/unit where the company intends to locate or is located.

However, there is an additional requirement of submitting a valid clearance from the National Bureau of Investigation (NBI clearance) for all incorporators and stockholders, regardless of nationality. The NBI clearance was previously required only from Filipino incorporators and stockholders, and from foreign directors and officers.

With the recently introduced changes, the SEC has turned a page on its institutional landscape by adapting to the demands and trends of the times. To stay on the path of competitiveness, the government must embrace change as its mantra for development. If the Philippines intends to engage the new world order of connectivity, it must define its framework for change. After all, innovation is the key to the future.

The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.

Cyril B. Pestilos is a Senior Consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 845-2728

cyril.b.pestilos@ph.pwc.com

THE GOVERNMENT’S economic managers will ask the President to certify as urgent the bill on lifting quantitative import restrictions on rice, replacing it with a tariff scheme.

Socioeconomic Planning Secretary Ernesto M. Pernia told reporters on Monday that the economic team will likely pitch its plan to President Rodrigo R. Duterte before his second State of the Nation Address (SoNA) on July 24.

“We will suggest to him that it could be declared a priority bill so that it can be approved sooner rather than later, so we don’t have to go through to this complicated process of extending trade concessions to countries or members of WTO (World Trade Organization) that might do something in exchange for our delay in tariffication,” said Mr. Pernia, who also co-chairs the Committee on Tariff and Related Matters.

“We are going to have a letter, I think, before the SoNA so that we will have the opportunity to raise the issue,” he added.

Mr. Duterte signed Executive Order No. 23 in April to maintain the quantitative restrictions (QR) on imported rice, meat and other products for another three years, pending the ratification of both chambers of Congress of the amendments to Republic Act 8178 or the Tariffication Act of 1996.

The law would authorize the President to set import duties on the staple grain, upon the expiry of the country’s waiver for the special treatment on rice on July 1.

“… [It] has to be deliberated by Congress before the ratification can take effect. In the meantime, as the deliberations in Congress will take some time what we are trying to do is to not infuriate the members of the WTO, in terms of retaliation,” said Mr. Pernia.

“2020 is quite distant, so we hope that the approval of the tariffication will come sooner so that we don’t have to be extending concessions,” he added.

The country was allowed to impose temporary QRs on rice after the government was allowed “special treatment” for the staple grain upon acceding to the WTO in 1995.

Through this arrangement, the Philippines was given more time to achieve self-sufficiency in rice, a move expected to counter the damaging impact of the expected influx of cheap rice imports.

During the negotiations for the second extension, which was granted in 2014, the Philippines had agreed to, among others, increase the Minimum Access Volume (MAV) to 805,200 metric tons and reduce the in-quota tariff to 35% corresponding to the Asean Trade in Goods Agreement duty and a most-favored nation rate of 40% for volumes imported outside the MAV.

The National Economic and Development Authority said that introducing competition in the domestic market through the tariffication scheme would encourage farmers to increase their self-sufficiency.

Finance Secretary Carlos G. Dominguez III said earlier that he is considering proposing a seasonal tariff for rice, with low tariff rates during the lean months and higher rates during harvest season — but Mr. Pernia said this scheme has yet to be reviewed by the economic team.

“We discuss things and arrive at common decisions. But we haven’t discussed (seasonal tariffs) yet,” Mr. Pernia said. — Elijah Joseph C. Tubayan