PMS says SEC has jurisdiction over PNOC-EC

State-owned PNOC Exploration Corp. has no choice but to submit a Code of Corporate Governance Manual following a ruling issued by the Presidential Management Staff of Malacanang that the PNOC-EC is within the Securities and Exchange Commission’s jurisdiction and should therefore comply with the SEC’s directive.

The SEC directed PNOC-EC last August to come up with its own Corporate Governance manual and file the same with the corporate watchdog agency.

PNOC-EC, however, sought a definitive opinion from the PMS on whether or not it is covered by the SEC requirement.

In its ruling, the PMS said: "The PNOC-EC, being a company incorporated under the provisions of the Corporation Code, is within the SEC’s jurisdiction and subject to its power of supervision. The fact that the government may own the controlling interest in a corporation does not divest the SEC of its jurisdiction and power of supervision over such corporation."

PNOC-EC corporate secretary Elpidio Gamboa Jr. said the company would be able to submit the required manual on or before Dec. 13.

Corporations were given until September to submit their respective corporate governance manuals. The manual is aimed at increasing the accountability of corporate directors and officers, enhancing shareholder activism, and increasing transparency.

In a bid to perk up liquidity in the stock market, the government wants the PNOC-EC to spin off a new company for the Malampaya oil and gas find which will serve as its corporate vehicle when it finally goes public.

The Malampaya project is majority owned by the Royal-Dutch Shell group and US firm Texaco with a 45 percent stake each. The remaining 10 percent is held by the government through PNOC-EC.

The project, costing $3.4 billion, commenced operations in mid-2001. The government stands to earn a net share of around $10 billion over a 20-year period or until 2021.

The Malampaya project involves the extraction of natural gas from 3,000 meters below sea level in water depth of 820 meters. It contains gas reserves of at least 2.7 trillion cubic feet and 85 million barrels of condensate, enough to provide power for more than 20 years.

The product will be transported through a subsea gas pipeline and onto onshore gas plants for final processing and delivery to three power stations with a total generating capacity of 2,700 to 3,000 metric tons that would power 3,000 megawatts of power plants.

The Malampaya consortium would also supply gas to First Gas Power Corp., which operates the 1,000 megawatt Sta. Rita and 500 megawatt San Lorenzo project starting this year.

Gas will also be sold to National Power Corp.’s 1,200 megawatt Project in Batangas under a turnkey arrangement with Korean firm Kepco Philippines Co.

The government also expects to save a total of $7.8 billion from foreign exchange costs, electricity costs, and environmental costs.

The agreement among the consortium members states that revenues to be generated would be divided thus: 70 percent to SPEX while the government and Texaco will share the remaining 30 percent. – Zinnia dela Peña