The Department of Finance (DOF) is opposing the plan of the state-run Philippine National Construction Corp. (PNCC) to lease out a prime lot in Pasay City below fair market value rates.
To avoid a deal which “may be considered disadvantageous to the government,” the DOF said in a statement on Tuesday that its attached agency, the Privatization and Management Office (PMO), sought a review of the PNCC’s proposal to rent out the 9.9-hectare Financial Center Area (FCA) along Macapagal Avenue.
Proposal
The PNCC’s lease proposal for this Pasay property also had “[no] apparent consideration toward the repayment of its existing obligations to the national government and various other government entities already amounting to billions of pesos,” the DOF quoted the PMO as saying.
As such, the PMO also questioned the legality of the PNCC’s plan to manage and develop the lot.
According to the DOF, PNCC president and chief executive Miguel Umali in July sought the PMO’s comment on the proposed lease agreement entailing only P300 per square meter, inclusive of 12-percent value-added tax. The proposal will cover a 25-year lease period, renewable by another 25 years, and with just a 3-percent escalation rate every two years.
But the PMO’s chief privatization officer Gerard Chan told Umali the proposed rental rate “does not reflect fair market values and may be disadvantageous to the government.”
Settlement of obligations
Chan also flagged the current rental rate of P500 per sq. m, which the PNCC was collecting from an existing occupant of a 3-ha portion of FCA, as it “does not appear to be updated for current market values.” Construction firm Pacific Concrete Products Inc. is currently occupying the said location.
Chan also recently told Finance Secretary Carlos Dominguez III that the PNCC “[has not] taken any steps regarding the settlement of their obligations to the national government.”
Citing a 2018 report of the Commission on Audit (COA), Chan noted that the PNCC owed the Development Bank of the Philippines, National Development Corp. and Philippine Guarantee Corp. a combined P66 billion.
The PNCC also had unpaid obligations to the Toll Regulatory Board amounting to P8.35 billion, Chan added.
He also cited possible mismanagement of the land asset, highlighted by a 2020 COA report that cited an estimated P1.5 billion in foregone revenues as the property had been idle for three years.