October 11, 2017
PETRON Corp. said the state-run
Philippine National Oil Company (PNOC) violated three lease contracts when it
sought to nullify the renewal clauses in its concession agreement.
In a statement issued on Tuesday,
the country’s largest oil refinery company stressed its agreements with PNOC
covering the operations of its $3-billion refinery in Bataan, 24 bulk plants,
and 67 gasoline stations in the country are valid and binding.
“It is Petron’s position that the
lease agreements for the three properties and the renewal clauses therein are
valid and binding. They are not in violation of any law nor manifestly and
grossly disadvantageous to the government. Accordingly, your letters — because
they deny without legal causes Petron’s contractual right to renew — constitute
fundamental breach of the three lease agreement,” Petron general counsel Joel
Angelo C. Cruz said in a letter sent to PNOC President and Chief Executive
Officer Reuben S. Lista.
The contracts started about 24 years
ago when Petron was still owned by PNOC.
The provisions in question are
Sections 2 and 3 of the lease agreement, which pertain to the rental rates for
the 32.2-hectare land being leased by Petron from PNOC.
The statement follows Mr. Lista’s
letter asking Petron to waive provisions in the lease agreements — set to
expire in 2018 — because they are inequitable.
“So that the abandonment and
clean-up of the sites may already be discussed and completed before the
expiration of the lease agreements next year,” Petron quoted Mr. Lista as
writing.
Petron further said that PNOC has
been disregarding Petron’s rights when Mr. Lista supposedly offered the properties
covered by the agreement to interested independent oil companies.
“As you very well know, the
long-term lease by Petron of the subject properties and the properties
denominated as Refinery Properties which are the subject of a third lease agreement
between Petron and PNOC was the primary consideration for Petron’s conveyance
of said properties at book value to PNOC. Hence, the consideration for Petron’s
leasehold rights is not only the rental payments provided for in the Lease
Agreements but the conveyance of the properties to PNOC,” Mr. Cruz said.
Petron President and Chief Executive
Officer Ramon S. Ang earlier said the company is even planning to increase the
size of the property it is leasing from the PNOC to give way for the expansion
of its refinery in Limay.
Mr. Ang had said the refinery
expansion would require an additional 100 hectares, some of which could come
from PNOC’s property.
Petron generated P8.2 billion in
consolidated earnings in the first half of 2017, 56% higher year on year as it
sustained sales volume growth from both Philippine and Malaysian operations.
Shares in Petron added two centavos
or 0.20% to close at P10.14 each at the Philippine Stock Exchange on Tuesday. —
Arra B. Francia
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