The Department of Finance said it might bid out the new lease agreement for Batangas Land Co. Inc. as the government plans to terminate the allegedly onerous contract with Chevron Philippines.
READ: Govt opts to sell Batangas property leased to Chevron
The move of Finance Secretary Carlos Dominguez III to bid out the new lease contract for BLCI as well as reviewing all government contracts with private companies aims, according to him, to protect taxpayers and ordinary Filipinos from onerous provisions of these transactions that subvert the common good.
He also assured the business community that while the government was undertaking this review, the process would be fully transparent and would “follow the law to the letter.”
“That [BLCI] lease is about to expire and that’s why they came to us for renewal and we said we don’t want to renew. They said, well we still own 40 percent of the company, in that case, we will close the company. And we will pay you, we will pay you and we are allowed to close the company after 25 years,” Dominguez said.
‘We are following the law to the letter. We have not terminated that contract…We are just saying, we are not going to renew it, we are going to buy you out of that contract, buy you out of your share in the company,’ he said.
“You wanna bid? You’re free to do it. But don’t take advantage of us for another 25 years. You already had 44 years of a good time. Enough is enough,” Dominguez added.
Dominguez said the government had committed no violation because, rather than pre-terminate the contract with Chevron, it had merely decided to close down in 2021 the company that is the second party to the deal.
This is the legal option exercised by the government to put an end to the onerous provisions in the contract, he added.
The onerous provisions of Chevron’s lease contract for the use of the 120-hectare industrial park in San Pascual, Batangas came to the DOF’s attention because the firm had asked for a renewal of the agreement.
While the National Development Co. eventually decided to close down BLCI next year to enable the government to take back the property in Batangas and get better terms for it, Dominguez said NDC has assured Chevron that it would be fully compensated for the 40-percent shares it owns in BLCI.
Dominguez said the decision to close down BLCI is a valid legal option that the government had opted to exercise to protect the interests of government and the Filipino taxpayers.
He said at the forum that among the onerous provisions of the lease contract was the renewal of the agreement in 2010 based on the old valuation of the property in 1975″•equivalent to 74 centavos per square meter when the current market value should be about P18.00 per sq. m.
Under the terms of its lease contract with BLCI, Chevron has been paying a miniscule rental fee to the government for the 1.2-million sq. m. industrial park in San Pascual, Batangas that it uses as an oil import terminal.
At P10.66 million per year since 2010, the rent Chevron has been shelling out is only around 4 percent of the P257.76 million per year that current fair market rental rates in the area would suggest.
Based on documents submitted to the NDC Board, the rentals paid by Chevron over the 44-year period covering 1975 to 2019 amounted to only P146.51 million or a measly P3 million per year, in addition to real property taxes paid by Chevron under the lease agreement.
This property’s current market value is estimated at about P4.9 billion to P5.3 billion.
READ: 'House must probe onerous deals'