COA questions accuracy of P424.7-B gov’t revenue from Malampaya

The Commission on Audit (COA) has questioned the accuracy of the government's revenue share in the Malampaya Natural Gas Project from 2002 to 2017 worth P424.7 billion due to delays in the inspection of the accounts of contractor Shell Philippines Exploration B.V.

In the 2017 audit report of the Department of Energy, COA said the Conventional Energy Resources Compliance Division (CERCD) of the agency "did not perform its mandatory audit of the books and accounts of Shell, thereby casting doubt on the accuracy of the reported government shares" for 15 years.

The CERCD is tasked to inspect and audit the books of Shell within one year as provided under Section 15.2 of Service Contract No. 38 which created the Malampaya project.

However, COA said the division "could not provide the requested data except for the dates of the issuance of the audit reports."

Verification of the CERCD reports showed that only the audit reports for 2002 to 2004 were audited on time while some reports were delayed by one to four years. The audit for 2006, meanwhile, was delayed by four years.

The COA further said CERCD only started its audit for 2013 on February 17, 2016. The audit for 2014, meanwhile, started only on June 5, 2017.

The CERCD explained that Shell is "a large size company with very complex transactions" while some field audits were interrupted by other issues such as congressional hearings.

The division added its audit was affected by Shell's transfer of office from Makati to Alabang and lack of manpower within DOE.

The COA said the lack of guidelines within the CERCD also contributed to the delay in audits for the government's share in the Malampaya gas project.

"A formal audit manual/guide could have provided the CERCD specific timelines for the conduct of audit, as well as established standards for audit planning, audit execution, reporting, and monitoring activities," state auditors said in the report.

The COA urged DOE management to fast track its audit, formulate guidelines for the CERCD, and regularly submit a status report on the audit of all service contracts.

Non-collection of assistance

Meanwhile, COA flagged DOE for its non-collection of training commitments and development assistance worth P820.4 million from its service contractors.

The amount is divided into P429.3 million worth of training commitments and developmental assistance valued at P391 million.

"We observed, however, that DOE opted to collect these financial obligations only if they wish to, through written requests. As a result, the DOE was deprived of the benefits that may be derived from the immediate collection thereof," COA said.

The COA also questioned why DOE chose to to receive development assistance in-kind, instead of cash deliverables which have been deemed as more advantageous to the government.

The COA said this mode of assistance has no assurance that the DOE received the goods at the most advantageous price.

The COA recommended for the DOE to require its CERCD and Energy Resource Development Bureau to regularly submit the status of its training commitments and developmental assistance.

It said service contractors must also be required to remit their obligations when they are due. —KBK, GMA News