Village Connect
DENR has unearthed a veritable “mother lode” of revenue in the form of Financial and Technical Assistance Agreement (FTAA) which is essentially a production-sharing agreement between the Philippine government and a large-scale mining company.
More than a historic first, the FTAA revenue amounted to P1.129 billion representing the additional government share (AGS) of minerals produced by Oceana Gold Philippines Inc. (OGPI), operator of Didipio Mine in Northern Luzon.
DENR Secretary Maria Antonia Yulo Loyzaga says that in fact, the first FTAA payout from OGPI has been remitted to the National Treasury on the day it was received by the DENR’s Mines and Geosciences Bureau on April 23.
The DENR chief lauded OGPI for the quick release of the AGS. “This is a testament to OGPI’s contractual commitment as it practices safe and responsible mining,” Secretary Loyzaga said.
Atty. Joan Adaci-Cattiling, President/Chief Executive Officer of OGPI called the payment the “first from the Didipio Mine this year, and the first ever from an FTAA holder in the country.”
OGPI’s payment for AGS was on top of P979 million in excise taxes and P2.5 billion in other local taxes and fees that were all paid in 2023.
OGPI said it would be paying local business taxes for 2024 in the amount of P421.8 million with the agreement of three municipalities in the provinces of Nueva Vizcaya and Quirino where Didipio Mine operates.
OGPI is one of the only five FTAAs in the Philippines. Under the FTAA that was renewed on July 14, 2021, the Philippine government and the mining firm agreed to a 60-40 sharing deal wherein the government was to receive 60% of the net revenue while OGPI was to take the balance of 40%.
The arrangement was guided by the principle that the government expected a reasonable return in economic value for harnessing non-renewable natural resources. OGPI could also expect a reasonable return on its investments given the high risk exploration, development, terms and conditions prevailing locally and internationally in the industry.
All taxes and fees paid to the government are deducted from the Government’s 60% share of net revenue to arrive at any AGS payable, according to the FTAA, which grants a company like OGPI the title, exploration and mining rights within a fixed fiscal regime.
The fiscal regime had been in place since the FTAA was executed on June 20,1994 between the government and OGPI’s predecessor-in-interest. The constitutionality of the FTAA, including its fiscal regime, was upheld by the Supreme Court.
Section 11.5 of the FTAA states in part: “The Government’s Share. xxx
- The GOVERNMENT shall receive 60% of Net Revenue less the following costs, taxes, duties, fees, and other expenses paid by the CONTRACTOR or otherwise accrued by the CONTRACTOR in its books as an expense for any given Contract
- The GOVERNMENT’S share as provided herein shall be payable within four (4) months from the end of each Calendar Year and shall be accompanied by a statement from the CONTRACTOR outlining the calculation of such share.”
Living up to its corporate social responsibility, OGPI’s Didipio Mine allocated P608.6 million for its projects and programs for 2024 under its Social Development and Management Program Fund (for the host and 10 neighboring barangays and two municipalities), Community Development Fund (for communities in the greater Nueva Vizcaya and Quirino areas) and Provincial Development Fund (for the provincial local government units of Nueva Vizcaya and Quirino)
In 2023, the mining sector contributed P170.10 billion to the country’s gross domestic product in terms of local production and exports, according to data from the Philippine Statistics Authority.
