A positive light

This refers to the article entitled “Subsidies to GOCCs surge to P46.3 billion in June written by Ms. Zinnia B. Dela Peña and published on Aug. 15, 2014.

While we appreciate the media’s vigilance on state subsidies to GOCCs, we recommend that media distinguish between Operational Subsidies and Project Subsidies in its reporting for the benefit of the public.

Operational subsidies are given to GOCCs that are not yet financially viable and are therefore unable to finance their operations from their own revenues for various reasons. This particular kind of subsidy requires the media’s and the public’s vigilance as the “GOCC Governance Act of 2011” (R.A. No. 10149) itself mandates that all GOCCs should be financially viable and capable of financing their own operations. The Governance Commission has been working to reduce this kind of subsidy through either reorganizing or abolishing GOCCs, as well as other policy reforms.

On the other hand, Project Subsidies are granted to GOCCs that are actually financially viable and capable of funding their own operations, projects and programs. However, the number of projects and programs that can be completed within a year are necessarily limited by the GOCCs finances. Accordingly, Project Subsidies are granted to expedite or increase the number of projects and programs a GOCC can accomplish beyond the limitations of the GOCC’s finances. This kind of subsidy should be viewed in a positive light since it is given to GOCCs – not as financial support – but as implementing agencies of priority projects and programs. As stated in the news article, the bulk of the subsidies went to GOCCs that carry out projects such as the National Electrification Administration’s (NEA) Sitio Electrification Program.

Despite the increase in total subsidies, data from 2012 up to present shows that the share of operations subsidies remains at a very low level.

Subsidies to the governance corporate sector(in P Million)

Source:    2014 GAA, Department of Budget and Management

                2012-2013, Bureau of the Treasury

                (Amount are exclusive of GOCCs outside the GCG’s coverage)

                From Btr, total subsidies including GOCCs outside the GCG coverage in 2012 amounts to P42.637 Million while in 2013, P66,329 Million.

As corporations, GOCCs have more operational flexibility and are often used to undertake such projects for quicker and more efficient service delivery. The Department of Budget and Management (DBM) and the Governance Commission also ensure that GOCCs are held accountable for the efficient implementation of these projects through their respective GOCC Performance Scorecards.

Details on GOCCs’ Performance Scorecards as well as the Governance Commission’s Annual Report may be accessed on our website,www.gcg.gov.ph.

Very truly yours,

PAOLO E. SALVOSA

Spokesperson