Press Release
November 18, 2014

Budget Sponsorship Speech by Senator Sergio Osmeña III
Chairman, Sub-Committee "B"
COMMITTEE ON FINANCE

Mr. President, esteemed colleagues:

As chair of Sub-Committee "B"of the Senate Committee on Finance, it is my privilege to sponsor and present for consideration of this chamber the Fiscal Year 2015 budget proposals for the agency and offices under the Department of Energy and seven (7) corporations as follows: National Electrification Administration; National Power Corporation; Aurora Pacific Economic Zone & Freeport Authority; Authority of the Freeport Area of Bataan; Cagayan Economic Zone Authority; Credit Information Corporation; and Zamboanga City Special Economic Zone Authority.

This Sub-Committee also heard the budgets, performances, and the annual reports of the three (3) Energy Attached Corporations, namely: National Electrification Administration, National Power Corporation and the Philippine National Oil Company.

In order to assess, scrutinize and evaluate the proposed budgets and performances of the agencies and corporations under Sub-Committee B, we have conducted a total number of almost fourteen (14) hours in a span of five (5) hearing days.

As embodied in the Fiscal Year 2015 National Expenditure Program or the President's Budget, the total proposed new appropriations for the departments/agencies under Sub-Committee "B" amounts to EIGHT BILLION THREE HUNDRED SIXTY NINE MILLION NINE HUNDRED EIGHTY TWO THOUSAND PESOS (P8,369,982,000), to wit:

GRAND TOTAL, SUB-COMMITTEE "B" 8,369,982,000
Department/Agency/Other Executive Offices 3,726,830,000
1. DOE-Office of the Secretary 3,319,772,000
2. OEO-Energy Regulatory Commission 407,058,000
   
Budgetary Support to Government Corporations 4,643,152,000
1. DOE-National Electrification Administration 2,000,000,000
2. DOE-National Power Corporation 2,000,000,000
3. DTI - Aurora Pacific Economic Zone & Freeport Authority 251,289,000
4. Other Executive Offices 391,863,000

4.1. Authority of the Freeport Area of Bataan

100,000,000

4.2. Cagayan Economic Zone Authority

-

4.3. Credit Information Corporation

45,000,000

4.5. Zambanga City Special Economic Zone Authority

246,863,000

The amount of TWENTY SIX BILLION TWENTY EIGHT MILLION THREE HUNDRED SEVENTY FOUR THOUSAND PESOS (P26,028,374,000) constitute the budgets of the three (3) Energy Attached Corporations:

Particulars Amount
Energy Attached Corporations 26,028,374,000

NG Support

4,000,000,000

Corporate Borrowings

-

Corporate Funds

22,028,374,000
   
1. National Electrification Administration 7,630,915,000

NG Support

2,000,000,000

Corporate Borrowings

 

Corporate Funds

5,630,915,000
   
2. National Power Corporation 17,301,767,000

NG Support

2,000,000,000

Corporate Borrowings

 

Corporate Funds

15,301,767,000
   
3. Philippine National Oil Company 1,095,692,000

     NG Support

 

     Corporate Borrowings

 

     Corporate Funds

1,095,692,000

The Fiscal Year 2015 President's Budget and the General Appropropriations Bill (House Bill No. 4968)

The House of Representatives basically approved the budgets of the agencies and corporations under Sub-Committee B without amendments.

The Fiscal Year 2015 General Appropriations Bill (HB No. 4968) and Sub-Committee "B" recommendations/amendments on the proposed budgets under its jurisdiction

Sources of Additional Funds

1. Aurora Pacific Economic Zone and Freeport Authority

As recommended in the Fiscal Year 2015 National Expenditure Program and as contained in the General Appropriations Bill (HB No. 4968), the budget of the Aurora Pacific Economic Zone and Freeport Authority amounts to Two Hundred Fifty One Million Two Hundred Eighty Nine Thousand Pesos (P251,289,000).

The sub-committee believes that the economic zone in the Aurora province should only get "maintenance budget" for FY 2015 for its failure to bring its promised economic growth in the area. The current budget of the Authority is Forty Eight Million Five Hundred Thousand Pesos (P48,500,000) which is just enough for maintenance and some personnel requirements.1 This committee reduced the budget of the APEZFA by Two Hundred Eleven Million Two Hundred Eighty Nine Thousand Pesos (P211,289,000).

With the proposed amendment, the recommended subsidy of APEZFA will now amount to only Forty Million Pesos (P40,000,000) as its "caretaker budget" for the Fiscal Year 2015.

2. Zamboanga City Special Economic Zone Authority

The Fiscal Year 2015 budget of the Zamboanga City Special Economic Zone Authority (ZCSEZA) amounts to Two Hundred Forty Six Million Eight Hundred Sixty Three Thousand Pesos (P246,863,000) to support its subsidy and equity requirements in accordance with its programs.

In a hearing conducted last 21 October 2014, this Committee told the Authority that their budget will be submitted but will be at the same level as the current year as to the extra National Government Subsidy, thus, a reduction in the allocation for Capital Outlays by One Hundred Forty-Six Million Eight Hundred Sixty Three Thousand Pesos (P146,863,000).

With the proposed cut, the sub-committee recommends approval of One Hundred Million Pesos (P100,000,000) budget intended for Subsidy of Fifty Million Pesos (P50,000,000) and for Equity of Fifty Million Pesos (P50,000,000) requirements of the Authority for FY 2015.

Application of Additional Funds

1. Office of the Secretary (DOE)

The Department of Energy (DOE) endeavors to ensure the delivery of secure, sustainable, sufficient, affordable and environment-friendly energy to all economic sectors, in line with its overall vision of promoting better quality of life for the Filipino people.2

Briefly, the DOE projected a substantial power capacity deficiency in the Luzon grid that may result in power interruptions in 2015. This is attributed to the increase in load demand particularly in the use of air-conditioning units further aggravated by shutdown of some power plants because of scheduled periodic maintenance. In line with this, and as prescribed in the Philippine Energy Plan (PEP) 2012-2030, the Department continues to implement the National Energy Efficiency and Conservation Program (NEECP), which aims to reduce the country's energy demand by 10 percent or yearly average reduction of 2,956 KTOE based on the country's final demand and forecast from 2012-2030.3

A key component to ensure success of the government's efficiency and conservation program is the aggressive implementation of an effective information, education and communication campaign.

With the above scenario, the Sub-Committee proposes to increase the budget of the Office of the Secretary by putting additional funds of One Hundred Fifty Million Pesos (P150,000,000) to the Promotion of Energy Sector Innovation (MFO 2) particularly on the Promotion of alternative fuels and technologies development and utilization, energy efficiency and conservation.

The funding of P150,000,000 will cover ad placements in the tri-media (print, TV and radio) including digital/social media; conduct of seminars; multi-sectoral fora; conferences and other events; and production of collaterals and infomercials, to disseminate and promote various programs and activities on energy technologies, and energy efficiency and conservation.4

With the proposed increase, the Department of Energy -Office of the Secretary's budget will now amount to Three Billion Four Hundred Sixty Nine Million Seven Hundred Seventy Two Thousand Pesos (P3,469,772,000) in FY 2015.

2. Energy Regulatory Commission

The Energy Regulatory Commission (ERC) is mandated by RA No. 9136 to promote competition, encourage market development, ensure customer choice, discourage/penalize abuse of market power in the restructured electricity industry and enforce the rules and regulation of the Act.

For Fiscal Year 2015, the Commission shall be provided Four Hundred Seven Million Fifty Eight Thousand Pesos (P407,058,000) in the President's Budget and as contained in House Bill No. 4968. Under this Committee, Mr. President, we propose an increase in allocation by Seventy Million Two Hundred Ninety Six Thousand Pesos (P70,296,000) for Electric Power Industry Regulatory Services distributed to:

a) Regulation of transmission, distribution, electric utilities and transmission/transmission wheeling charges, rates and other levies, price of coal, piped gas and other energy resources and institutionalization of Demand-Side Management Program in the Electric Industry in the amount of Twenty Nine Million Three Hundred Eighty Thousand Pesos (P29,380,000); and

2) Promotion of competitive market and market operations, including but not limited to, licensing and market monitoring and prohibition against cartelization, monopolization and anti-competitive or disciplinary behavior amounting to Forty Million Nine Hundred Sixteen Thousand Pesos (P40,916,000).

The additional budget for these two activities shall defray the cost of securing technical assistance in enhancing the monitoring and enforcement framework of the Commission over the industry with particular focus on electricity markets and lowering costs of generation through market competition; and

Additional performance standards as well as an effective regulatory compliance system shall be formulated by this project with enhanced technology capability to effectively perform its mandate under the Renewable Energy Law and the Electric Power Industry Reform Act or EPIRA (RA No. 9136).

With the proposed increase, the Energy Regulatory Commission's budget will now amount to Four Hundred Seventy Seven Million Three Hundred Fifty Four Thousand Pesos (P477,354,000) in FY 2015.

This sub-committee also recommends approval of the budgets of the following corporations as contained in House Bill No. 4968:

1. National Electrification Administration with a Subsidy of Two Billion Pesos (P2,000,000,000);

2. National Power Corporation with a Subsidy of Two Billion Pesos (P2,000,000,000);

3. Authority of the Freeport Area of Bataan (AFAB) with an Equity of One Hundred Million Pesos (P100,000,000); and

4. Credit Information Corporation with a Subsidy of Forty Five Million Pesos (P45,000,000).

In summary, Subcommittee "B" wishes to enumerate the Fiscal Year 2015 budgetary allocations of the agency/other executive offices/corporations with amended amounts as follows:

1. Department of Energy-Office of the Secretary, Three Billion Four Hundred Sixty Nine Million Seven Hundred Seventy Two Thousand Pesos (P3,469,772,000);

2. Energy Regulatory Commission, Four Hundred Seventy-Seven Million Three Hundred Fifty Four Thousand Pesos (P477,354,000);

3. National Electrification Administration, Two Billion Pesos (P2,000,000,000);

4. National Power Corporation, Two Billion Pesos (P2,000,000,000);

5. Aurora Pacific Economic Zone and Freeport Authority, Forty Million Pesos (P40,000,000);

6. Authority of the Freeport Area of Bataan, One Hundred Million Pesos (P100,000,000);

7. Credit Information Corporation, Forty Five Million Pesos (P45,000,000); and

8. Zamboanga City Special Economic Zone Authority, One Hundred Million Pesos (P100,000,000).

The subcommittee also recommends approval of the budgets of the following Energy Attached Corporations as contained in House Bill No. 4968:

1. National Electrification Administration, Seven Billion Six Hundred Thirty Million Nine Hundred Fifteen Thousand Pesos (P7,630,915,000);

2. National Power Corporation, Seventeen Billion Three Hundred One Million Seven Hundred Sixty Seven Thousand Pesos (P17,301,767,000); and

3. Philippine National Oil Company, One Billion Ninety Five Million Six Hundred Ninety Two Thousand Pesos (P1,095,692,000)

Annex A

Sub-Committee "B"
Comparative Summary, FY 2015
Senate Version vs. General Appropriations Bill
(In thousand pesos)

  In thousand pesos
Department/Agencies/Corporations 2015 Amendments Net Senate
GAB Increase Decrease Change Version
GRAND TOTAL, SUB-COMMITTEE B 8,369,982 220,296 (358,152) (137,856) 8,232,126

Total, Attached Regular Agencies

3,726,830 220,296 - 220,296 3,947,126

Total, Attached Corporations

4,643,152  -  (358,152) (358,152) 4,285,000
Departments and Agencies 3,726,830  220,296  - 220,296 3,947,126
A.Department of Energy 3,319,772 150,000 - 150,000 3,469,772

1.Office of the Secretary

3,319,772 150,000    150,000 3,469,772
D.Other Executive Offices 407,058 70,296  - 70,296 477,354

1.Energy Regulatory Commission

407,058 70,296   70,296 477,354
Budgetary Support to Government Corporations 4,643,152  - (358,152)  (358,152) 4,285,000
A.Department of Energy 4,000,000 - - -  4,000,000

1.National Electrification Administration (Subsidy)

2,000,000     - 2,000,000

2.National Power Corporation (Subsidy)

2,000,000       2,000,000
B.Department of Trade and Industry 251,289 - (211,289) (211,289) 40,000

1.Aurora Pacific Economic Zone & Freeport Authority

251,289   (211,289)  (211,289) 40,000
D.Other Executive Offices 391,863 -  (146,863) (146,863) 245,000

1.Authority of the Freeport Area of Bataan

100,000     - 100,000

2.Cagayan Economic Zone Authority

-   - -  

3.Credit Information Corporation

45,000      - 45,000

4.Zamboanga City Special Economic Zone Authority

246,863   (146,863)  (146,863) 100,000

 

_____________________

1 Sen. Sergio R. Osmena III, Rappler dated 21 October 2014.
2 Department of Energy-Office of the Secretarybr /> 3 DOE-Osec
4 DOE-Osec (justification)

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