Government to securitize at least $500M of Malampaya earnings

TABANGAO, Batangas city — The National Government plans to securitize a minimum of $500 million of the projected $13-billion proceeds from the Malampaya natural gas revenues, Energy Secretary Vincent S. Perez said, yesterday.

In an interview after the inauguration of the Shell Group’s Malampaya Deep Water Gas to Power project here, Perez said they have already formed a committee to handle the terms of reference for the securitization of government’s share in the $4.5-billion Malampaya project.

The committee is composed of representatives from the Department of Finance and the Department of Energy.

He said that so far, about six to eight investment banks have indicated their keen interest to handle the planned securitization program. While he declined to give their identities, Perez said these interested parties come from Europe, the US and Germany.

He said they would send the formal invitation to these interested financial institutions by end-November or early December this year. "By this time, we would probably have an appropriate structure for the planned securitization."

Perez said that everything is in place in the next six weeks, they would choose the issue manager by end of this year. He added that the whole process of securitization would likely start by the first or second quarter of 2002.

The setting up of a minimum amount to be covered by the securitization, Perez said, is part of the criteria being drawn by the government as an effort to immediately realize earnings from the proceeds of Malampaya.

The government had earlier estimated between $8 to $10 billion in royalties from the project, but, President Arroyo said the government is likely to earn more or up to $13 billion.

These revenues, however, would be spread in a period of 20 years. The revenues from Malampaya, will start coming in next year with an initial revenue of $125 million in the first six years and about $650 million in the succeeding years.

Perez said the securitization should also be done through outright sale and not as a form of loan. "Government will sell some financial instruments not necessarily equity. It would be backed or secured by future National Government royalties," he said.

The $4.5-$4.8-billion Malampaya project — a joint venture between the Royal Dutch/Shell Group, Texaco, Inc. and the Philippine National Oil Co. — is the single largest foreign investment in the Philippines.