MANILA, Philippines ? Publicly listed PNOC-Exploration Corp. has declared P501.1 million in cash dividends, of which P500 million will be turned over to the government.

The remaining P1.1 million will be paid to public stockholders, said PNOC-EC, the upstream petroleum and coal arm of state-owned Philippine National Oil Co.

The company?s shares of stock are 99.78 percent owned by the government.

According to PNOC-EC chair Jacinto Paras, the P500 million cash dividend, which will be turned over to the government next week, is expected to help plug the country?s ballooning budget deficit.

It will also raise the government?s total cash dividends to P1.5 billion for this year.

In a disclosure to the Philippine Stock Exchange, PNOC-EC explained that its board of directors had passed and approved a resolution declaring a cash dividend of 25.03 centavos a share from the company?s estimated unrestricted retained earnings as of Dec. 31, 2009.

"The dividend will be paid out to all shareholders of record as of Dec. 28, 2009 and the payment date is on Dec. 29, 2009,? PNOC-EC added.

Meanwhile, the sale of the government?s 40 percent stake in PNOC-EC is still pending due to unfavorable market conditions.

A senior government official, who declined to be named, had said that the prices being offered were ?unfavorable,? or lower than the current valuation of the PNOC-EC stake, which was placed at P11 billion.

Even officials of the PNOC-EC had bucked the sale of the 40-percent stake, explaining that it could only lead to a ?fire sale? or a sale at a very low price.

?Any forced privatization may not be advantageous to the corporation and the government. As far as PNOC-EC is concerned, its privatization at this time is untimely due to depressed stock market prices,? PNOC-EC earlier said.

?The PNOC-EC board thinks it?s better to wait for the economy to improve,? it added.

The government earlier targeted to sell the PNOC-EC stake before the end of 2008 for P16 billion, but had postponed the planned sale a number of times as it waited for favorable market conditions and an eager response from local and foreign investors.

PNOC-EC has interests in nine service contracts as well as a 10-percent stake in the $4.5-billion Malampaya deep water gas-to-power project off Palawan.

Malampaya is the country?s biggest natural gas field, fueling three power plants in the country.

PNOC-EC also owns coal operating contracts, particularly in Zamboanga Sibugay, Isabela and Surigao del Sur.

It also operates coal terminals in Zamboanga Sibugay, Cebu, Batangas and Navotas.