‘Land deal in Batangas with Chevron in onerous’ - DOF

It seems to be no end in the different onerous agreements being found by this administration where the government is at the disadvantage.

The Department of Finance (DoF) uncovered an “onerous” land deal between Chevron Philippines and the subsidiary of a state-owned firm.

It reported that the National Development Co.’s (NDC) subsidiary, Batangas Land Co. Inc. (BLCI), allowed, Chevron to pay a monthly rental fee of 74 centavos per square meter (sqm) on a 120-hectare or 1.2-million-sqm state property in Batangas.

Chevron, an American chain of fuel refilling stations, secured the Batangas lot through the 1946 Bell Trade Act which granted the right for US nationals to own land here, the DOF said. When the trade deal expired, the firm was given "preferential treatment" to occupy a huge parcel of land inside the Batangas industrial park. (photo credit to owner)

Based on the NDC appraisal reports, the current fair market rental value in that area should be about P17.90 per sqm per month, it added.

Chevron has been paying the government at a minuscule rental fee for the 1.2-million-sqm industrial park in San Pascual, Batangas that it uses as an oil import terminal.

DOF said at P10.66 million per year since 2010, the rent Chevron had been paying was only around 4 percent of the estimated current fair rental rate of P257.76 million per year.

Finance Secretary Carlos Dominguez 3rd, calls the lease deal as “another government contract with onerous provisions.”

“Dominguez said the request for renewal of the deal was recommended by some offices to the Privatization Council, which found the contract grossly disadvantageous, based on current fair values,” it added.

“Based on documents submitted to the NDC board, the DOF emphasized that rentals paid by Chevron over the 44-year period covering 1975 to 2019 totaled to only P146.51 million or about P3 million per year, in addition to real property taxes paid by Chevron under the lease agreement.

DOF added that the property’s current market value is estimated at about P4.9 billion to P5.3 billion — translating into a rental yield of only about 0.2 percent of the property’s value.

“Based on current standards that 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,” Dominguez said.”

If all the adjustments are made the monthly rental should be at  above P20 million a month or P257.76 million annually, the DOF said.

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Report from MAnila Times