The subsidiary of state-run National Development Co. (NDC), whose over 40-year-old lease agreement with the Philippine unit of oil giant Chevron had been found containing allegedly onerous provisions, will be shuttered in 2021, the Department of Finance said (DOF).
In a statement, the DOF said the NDC board last December decided to terminate by next year the corporate life
of Batangas Land Co. Inc. (BLCI), lessor of the 120-hectare property in San Pascual, Batangas, hosting Chevron (formerly
Caltex) Philippines’ oil terminal. BLCI is a joint venture between NDC and Chevron, with the first owning 60 percent of the firm. The government intends to buy out Chevron and consolidate its ownership of the land.
Once BLCI is dissolved, NDC will designate a team to renegotiate the contract with Chevron, Finance Secretary Carlos Dominguez III said in a text message.
On Tuesday, Dominguez said the government would “implement a totally transparent method of getting the best deal for the rental of all [public] property” to come up with contracts that would be advantageous to taxpayers.
Dominguez, who sat on the NDC board, earlier recommended the closure of BLCI after the DOF-attached Privatization and Management Office (PMO) found the onerous provisions in the BLCI-Chevron contract. He also called for a review of all government deals with the private sector that could have onerous provisions.
The PMO found out that Chevron was currently paying monthly lease of only P0.74 per square meter, or just 4 percent of the fair market rate of about P17.90 per sqm.
As such, Dominguez had declared the BLCI-Chevron deal as one of those contracts that put the government at a disadvantage.
“Shortening BLCI’s corporate life will allow the government to exercise full ownership, control and rights over this prime lot and other real estate properties occupied by Chevron, which are strategically located for the country’s future energy projects,” Dominguez said.
In the meantime, Chevron Philippines claimed its lease contract with BLCI “was entered into in compliance with all Philippine laws and regulations, and has been beneficial to both the government and CPI.” —Reports from Ben O. de Vera, Ronnel W. Domingo and Roy Stephen C. Canivel