2015 National RAC-Partners-EAP Meeting

1. Prof. Miriam Coronel Ferrer
Chair, Government Panel for MILF Talks
Professor, Department of Political Science,
University of the Philippines

2. NATIONAL ECONOMY & PATRIMONY
“The goals of the national economy are a more equitable
distribution of opportunities, income and wealth…” (Art.
XII, Sec. 1)

3. SOCIAL JUSTICE & HUMAN RIGHTS
“The Congress shall give highest priority to the enactment of
measures that protect and enhance the right of all the people to
human dignity, reduce social, economic, and political inequalities,
and remove cultural inequities by equitably diffusing wealth and
political power for the common good.” (Art. XIII, Sec. 1)

4. SHARING AND UTILIZATION OF NATIONAL WEALTH
“Local governments shall be entitled to an equitable
share in the proceeds of the utilization and development
of the national wealth within their respective areas, in the
manner provided by law, including sharing the same with
the inhabitants by way of direct benefits.” (Art. X, Sec. 7)

5. In order to effectively discharge its powers and
to carry out its functions, the Bangsamoro must
be equipped with ADEQUATE RESOURCES.
WEALTH CREATION is important for the
operation of the Bangsamoro…among the
most underdeveloped in the Philippines due to
the decades-long conflict.

6. SHARING OF REVENUES

7. Sharing of ‘Central Government income from taxes
derived from the exploration, development and
utilization of all natural resources’ in the Bangsamoro
ARMM (RA 9054)
Strategic minerals: 50:50
Non-strategic minerals: 60:40
in favor of the ARMM
Non-Metallic Minerals
Bangsamoro
100%
Central
Government
0%
Fossil Fuels
Central
Government
50%
Bangsamoro
50%
Metallic Minerals
Bangsamoro
75%
Central
Government
25%

8. What comprises Central
Government income from taxes?
 Minerals under MPSA – 2% excise tax
 Fossil Fuel – 60% production share (net
income)
Note that other national taxes collected in
the region (income tax, VAT, other excise
taxes) are shared with the Bangsamoro
75:25, in its favor).

9. Law Investors National Regional LGU Jurisdiction
PD87 &
RA9054
40% 30% 9% 21% National
PD87 &
RA7160
40% 36% - 24% National
Draft
BBL
40% 30% 30% Total To be
determined
Shared
12/15/2015 confidential 9
Existing sharing arrangements
(Fossil Fuels)

10. REVENUE SOURCES (PD 87)
Production
Sharing
Government = 60% of net income; Contractor = 40% of net
income
Corp. Income Tax 30% of net income on petroleum operations- paid out of
government share
Signature Bonus Minimum of USD 50,000
Production Bonus -
Oil
Minimum of:
USD 300,000 at start of production; USD 500,000 at 25,000
BOPD; USD 1MM at 50,000 BOPD; and USD 2MM at 75,000
BOPD
Production Bonus-
Gas
Minimum of:
USD 300,000 at start of production; USD 500,000 at 250
MMCFGD; USD 1 MM at 500 MMCFGD; and USD 2MM at 750
MMCFGD
12/15/2015 10confidential
The BBL does not amend PD 87 as to financial obligations of private contractors.

11. 12/15/2015 confidential 11
Terms for Oil Exploration Contracts (PD 87)
Hectarage ~ 400,000 to 1,100,000
Contract Duration 7 years extendible to max of 3 years for exploration; 25 years
extendible for 5 years up to maximum of 3 extensions;
provided that the total number of years of the contract from
exploration to production shall not exceed 50 years
Filipino Participation
Incentive Allowance
1.5% to a maximum of 7.5% of gross proceeds where the
contractor allows at least 15% participation by Filipino
companies
Cost recovery Maximum of 70% of gross income per calendar year; 100 %
recoverable costs for non-capital expenditures and capital
expenditures depreciated over 5 to 10 years; unrecovered costs
for the current calendar year to be carried over in the
succeeding calendar year
Training Allowance Minimum of USD 20,000 per year during exploration period
(cumulative); Minimum of USD 50,000 per year during
production year (cumulative)

12. Section 33. Share of the Constituent Local Government Units. – The
share of the Bangsamoro Government in the revenues referred to in the
immediately preceding section shall include those for its constituent local
government units. The Bangsamoro Parliament shall enact a law detailing the
shares of such local government units.

13. The draft BBL does not
amend wealth-sharing
provisions in laws
relating to alternative
energy:
- RA 7638, Department
of Energy Act of 1992
- RA 9136, Electric Power
Industry Reform Act of
2001
- RA 9513, Renewable
Energy Act of 2008.
Note: LGUs get 40% of
Government share.
There is no allocation for
the region.
Note: Geothermal energy: 1.5%

14. *FROM AN ARTICLE BY FRANCISCO DELFIN, JR.
Lanao del Sur in the ARMM collected the biggest LGU share from hydropower,

15. *FROM AN ARTICLE BY FRANCISCO DELFIN, JR.

16. ART. XII (Fiscal Autonomy), Section 34. Share of
Indigenous Communities. – Indigenous peoples shall have an equitable
share from the revenues generated from the exploration, development
and utilization of natural resources that are found within the territories
covered by a native title in their favor. The share shall be provided for in
a law to be passed by the Bangsamoro Parliament.
The Bangsamoro Parliament shall enact a law that shall provide
in detail said sharing system, including the percentage of the shares of
the indigenous peoples and communities, and the mechanisms therefor.

17. IP REITERATION OF RIGHTS
over natural resources
 Section 12. Rights of Indigenous Peoples Over
Natural Resources. – The Bangsamoro Parliament shall
enact a law recognizing the rights of indigenous peoples in
the Bangsamoro in relation to natural resources within the
territories covered by a native title, including their share in
revenues, as provided in this Basic Law, and preferential
rights in the exploration, development and utilization of such
natural resources within their area.
The right of indigenous peoples to free and prior informed
consent in relation to development initiatives shall be respected.
(Article XIII, Economy and Patrimony)

18. Territorial Scope of Application
 The wealth (and power) -sharing
arrangements) apply to the natural
resources found in the land mass that
comprise the Bangsamoro territory as well as
the waters that are within the territorial
jurisdiction of the Bangsamoro (the
Bangsamoro Waters).
 Wealth-sharing in revenues that may be
generated from the Zones of Joint
Cooperation in the Sulu Sea and Moro Gulf
shall be determined by the Joint Body for
these Zones. (Art XIII, Sec. 20)

19. Municipal waters – up to 15 km
BANGSAMORO WATERS – up to 22.224 km (12 nautical miles)
ZONES OF JOINT COOPERATION – LIME GREEN SHADED AREA (INDICATIVE MAP ONLY)
Indicatiive Map Only

20. Indicative Map Only

21. Some parts of the
Liguasan Marsh
Areas for offer by
the DOE are in
Maguindanao
province and are
among the 39
barangays in
North Cotabato
province,
particulary in the
municipalities of
Pikit, Midsayap
and Aleosan,
Kabacan, Carmen,
and Pigkawayan.

22. Several
Petroleum
Service
Contracts in
the Sulu Sea
are inside the
Zones of Joint
Cooperation.
Geothermal
potential is
found in Mt.
Dakula, Sulu;
Malabang,Lanao
del Sur; and
Tuayan,
Maguindanao.

23. Prospective
mineral
resources
in the
Bangsamoro
core territory.
So far, very
little
geological
assessment
work has been
done in the
region.
(Bangsamoro
Development
Plan, 2014)

24. III. a. Situational Analysis

26. THE DRAFT BANGSAMORO BASIC LAW
HOUSE BILL 4994
SENATE BILL 2408

27. ARTICLE XII, Section 2. All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The State
may directly undertake such activities, or it may enter into co-
production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum
of whose capital is owned by such citizens. Such agreements may be for
a period not exceeding twenty-five years, renewable for not more than
twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply
fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.

28. THE BANGSAMORO
GOVERNMENT
... IS PART OF THE PHILIPPINE STATE.
STATE POWERS CAN BE DELEGATED AND DEVOLVED
FROM THE CENTRAL TO THE LOCAL GOVERNMENTS.
JURISDICTION IS NOT THE SAME AS OWNERSHIP
(REGALIAN DOCTRINE REMAINS INTACT).
THE PRESIDENT SHALL EXERCISE GENERAL SUPERVISION
OF THE BANGSAMORO TO ENSURE THAT LAWS ARE
FAITHFULLY EXECUTED.
(ART. VI, SECTION 3, BBL; ART. X, SEC. 16, 1987
CONSTITUTION)

29. Section 13. Mines and Mineral Resources. – The Bangsamoro Government
shall have authority and jurisdiction over the exploration, development, and
utilization of mines and minerals in its territory. Permits and licenses and the
granting of contracts for this purpose shall be within the powers of the Bangsamoro
Government.
Section 14. Financial and Technical Assistance Agreements. – The
applications for financial and technical assistance agreements (FTAAs) covering
mineral resources within the Bangsamoro shall be commenced at and recommended
by the Bangsamoro Government to the President.
The manner by which the Bangsamoro Government shall make the
recommendation shall be in accordance with the mining policy that shall be adopted
by the Bangsamoro Parliament.
Section 15. Regulation of Small-Scale Mining. – Small-scale mining shall be
regulated by the Bangsamoro Government to the end that the ecological balance,
safety and health, and the interests of the affected communities, the miners, the
indigenous peoples, and the local government units of the place where such
operations are conducted are duly protected and safeguarded.

30. SMALL-SCALE MINING… The Congress may, by law, allow small-
scale utilization of natural resources by Filipino citizens, as well as cooperative
fish farming, with priority to subsistence fishermen and fish- workers in rivers,
lakes, bays, and lagoons.
FTAA:The President may enter into agreements with foreign-owned
corporations involving either technical or financial assistance
for large-scale exploration, development, and utilization of minerals, petroleum,
and other mineral oils according to the general terms and conditions provided
by law, based on real contributions to the economic growth and general welfare
of the country. In such agreements, the State shall promote the development
and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution

31. Section 17. Bangsamoro Mining Policy. - Policies on mining and other
extractive industries shall be drawn up by the Bangsamoro Parliament in accordance
with its Comprehensive Sustainable Development Plan, as well as its over-all medium-
term and long-term Bangsamoro Development Plan.
Section 16. Legislating Benefits, Compensation for Victims and
Communities Adversely Affected by Mining and Other Activities that
Harness Natural Resources. - The Bangsamoro Parliament shall enact laws for
the benefit and welfare of the inhabitants injured, harmed or adversely affected by
the harnessing of natural and mineral resources in the Bangsamoro. Such laws may
include payment of just compensation to and relocation of the people and
rehabilitation of the areas adversely affected by the harnessing of natural and
mineral resources mentioned above.
The Bangsamoro Parliament may, by law, require the persons, natural or juridical,
responsible for causing the harm or injury mentioned above to bear the costs of
compensation, relocation and rehabilitation mentioned above wholly or partially.

32. Section 10. Exploration, Development, and Utilization of
Fossil Fuels and Uranium. - The Bangsamoro Government and
the Central Government shall jointly exercise the power to grant
rights, privileges and concessions over the exploration,
development and utilization of fossil fuels (petroleum, natural gas,
and coal) and uranium in the Bangsamoro.
The Central Government, through the Department of Energy
(DOE), and the Bangsamoro Government shall adopt a competitive
and transparent process for the grant of rights, privileges and
concessions in the exploration, development and utilization of fossil
fuels and uranium. …

33. The Bangsamoro Government shall have authority to regulate
power generation, transmission, and distribution operating
exclusively in the Bangsamoro and not connected to the
national transmission grid. It shall promote investments,
domestic and international, in the power sector industry in the
Bangsamoro. Power plants and distribution networks in the
Bangsamoro shall be able to interconnect and sell power over
the national transmission grid to electric consumers. The
Bangsamoro Government may assist electric cooperatives in
accessing funds and technology, to ensure their financial and
operational viability. When power generation, transmission,
and distribution facilities are connected to the national
transmission grid, the Central Government and the
Bangsamoro Government shall cooperate and coordinate
through the intergovernmental relations mechanism;

35. 35. Inland waterways for navigation;
36. Inland waters;
37. Management, regulation and conservation of all fishery, marine
and aquatic resources within the Bangsamoro territorial jurisdiction;
45. Water supplies and services, flood control and irrigation systems in
the Bangsamoro, provided that with regard to water supplies and
services, flood control and irrigation systems that connect to or from
facilities outside the Bangsamoro, there shall be cooperation and
coordination between the Bangsamoro Government and the
appropriate Central or local government bodies;

36. LAKE LANAO
 INLAND WATER
 HYDROPOWER SOURCE
 FISHERIES RESOURCE
DIFFERENT PROVISIONS APPLY DEPENDING
ON THE SUBJECT MATTER

37. Section 11. Preferential Rights of Bona Fide Inhabitants of the Bangsamoro. – Qualified
citizens who are bona fide inhabitants of the Bangsamoro shall have preferential rights over
the exploration, development, and utilization of natural resources, including fossil fuels
(petroleum, natural gas, and coal) and uranium, within the Bangsamoro territory. Existing
rights over the exploration, development and utilization of natural resources shall be
respected until the expiration of the corresponding leases, permits, franchises or
concessions, unless legally terminated.
Section 10. On Fossil Fuels & Uranium:
….The DOE and the Bangsamoro Government will identify and select prospective contract
areas to be offered for exploration and development. A qualified Filipino citizen who is a
bona fide resident of the Bangsamoro will receive a rating higher than other proponents
during the evaluation process. The award of the service contract shall be made jointly by the
DOE and the Bangsamoro Government.

38. The Central and the Bangsamoro Governments shall work together to
regulate the waters that comprise the Zones of Joint Cooperation in the Sulu
Sea and the Moro Gulf. Policies shall be jointly drawn up for the following
purposes:
… d. ensuring the exercise of the preferential rights of the Bangsamoro
people, other indigenous peoples in the adjoining provinces, and the
resident fishers in the Bangsamoro over fishery, aquamarine, and other living
resources in the Zones of Joint Cooperation. The Joint Body shall promulgate
rules and regulations as to the exercise of these preferential rights. The
preferential rights granted to the Bangsamoro people under this section
shall extend only to those who can establish that they are Bangsamoro as
defined in this Basic Law or descendants of a Bangsamoro as of February 2,
1987.

39. PREFERENTIAL RIGHTS
 … are not exclusive rights over the natural
resources.
 …there shall be free movement of vessels,
goods and people in the Zones of Joint
Cooperation.
 … Zones of Cooperation are not part of
Bangsamoro territorial jurisdiction (wealth-
sharing & power-sharing arrangements do
not apply)