Business

Gov't to end 'onerous' land deal with Chevron in 2021 — DOF

Gov't to end 'onerous' land deal with Chevron in 2021 — DOF

MANILA, Philippines — The Department of Finance said Wednesday it recommended dissolving one of the subsidiaries of state-run National Development Co. so the government can end an “onerous” land deal with Chevron Philippines Inc. (formerly Caltex Philippines).

The DOF earlier said it discovered that Chevron Philippines has been leasing a 120-hectare (1.2 million sq.m.) property in Batangas for a measly 74 centavos per sq. m. per month.

Now valued at around P5 billion, the DOF said Chevron Philippines is paying only 4% of the current monthly fair market rental estimate of P17.90 per sq. m.

In a statement, the DOF said the NDC Board, acting on a recommendation by Finance Secretary Carlos Dominguez III, decided in December last year to terminate in 2021 the corporate life of the lessor of the property — the NDC subsidiary Batangas Land Co. Inc. (BLCI).

Dominguez, a member of the Board, made the recommendation after the DOF had reportedly uncovered “onerous” provisions in BLCI’s more than four-decade-old lease contract with Chevron, which uses the property as an oil import terminal.

Dominguez earlier described the lease deal as “another government contract with onerous provisions.”

He said that “based on current standards the State imposes on similar contracts, to have a rental yield of less than 1 percent is surely grossly disadvantageous to the government and the Filipino people.”

The supposed sweetheart deal between the NDC unit and Chevron Philippines is the latest contract signed between the government and the private sector that the Duterte administration has reviewed.

Since December last year, President Rodrigo Duterte has berated Manila Water Company Inc. and Maynilad Water Services Inc. and threatened to jail their owners for supposedly forging water contracts with “onerous” provisions.