Petron agrees to hike lease payments on PNOC properties

Published January 25, 2017, 10:01 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/01/25/petron-agrees-to-hike-lease-payments-on-pnoc-properties/

Leading oil firm Petron Corporation has agreed in principle to renegotiate and increase the lease fees it has been paying for its use of the properties of state-run Philippine National Oil Company (PNOC).

According to Petron President and Chief Executive Officer Ramon S. Ang, he was already filled in with the inclination of PNOC President Reuben S. Lista to hike the oil firm’s lease payments and he is agreeable to it – but on condition that they seek third party “fairness valuation” of the subject real estate assets.

“His people have been suggesting increase in lease payments and to renegotiate (the terms) and that is okay with us,” he noted.

Ang further indicated that he is already scheduled to meet with the PNOC chief executive, “I am just waiting for him to return from overseas travels.”

Tentatively, he disclosed to media that they are arranging for a meeting next week and discuss concerns on the continued tenancy of Petron at the state-run firm’s properties.

Ang emphasized that the only major question now is “how do we determine the price? So we need to have the properties appraised, to have ‘fairness valuation’. So we need to tap a third party… Petron can get its own third party to do the valuation; and PNOC can also tap its own.”

And from there, the Petron chief executive proposed that they will have to negotiate on a “compromise price” that Petron will be paying to its former parent firm.

Lista previously noted that the P475,000 annual rent being paid by Petron at their 4.3-hectare Mabini property in Batangas is “way below market”; and has been causing too much foregone revenues for the state-owned company.

The same goes for the other PNOC properties that have been serving as project sites for heaps of Petron assets – including its depots in various parts of the country.

This has been prompting PNOC then to advance negotiations with the oil firm – way ahead of the lapse of their lease contract by next year.

On a deeper legal sphere, it was noted that negotiations may also delve with the arrangements that Petron had sealed with PNOC when some properties were placed under latter’s charge as its partner-firm then Saudi Aramco, a foreign entity, cannot own real estate properties in the country.