PNOC asks Petron to decide on land lease contract renewal

PNOC asks Petron to decide on land lease contract renewal

The Philippine National Oil Co. (PNOC) is pushing the Petron Corp in deciding whether to renew and raise its rental fees in its land lease contract for its service stations and bulk plants.

A letter to Petron president and CEO Ramon Ang from PNOC president Reuben Lista said that the oil firm’s lease agreements will end on August 31, 2018 and it should be decided whether it will be renewed or not.

PNOC is also eyeing to raise its rental fees for facilities leased to Petron by over 700 percent this year in order to reflect the current fair value of the properties where its 24 bulk plants and 67 service stations are located.

However, the state firm has asked Petron to nullify certain provisions of the lease agreements that are a “stumbling block” before proceeding to re-negotiate the renewal.

The provision “the rental rate at the time of expiration plus two percent thereof and subsequent rental rate shall be escalating by two percent per annum,” is disadvantageous to the government, Lista said in a report.

“Petron is a private partner of government and we don’t want to put additional burden to them but the contract is really onerous, burdensome and disadvantageous to the government,” he said.

In a legal opinion posted by the Office of the Solicitor General in March, it said that if the PNOC will follow the terms in present lease contract, they will violate a provision of the Anti-Graft Corrupt Practices Act.

“Clearly, if PNOC will comply with the terms in the present lease contract, it will be in violation of… RA 3019,” it said.