State-run Philippine National Oil Co. has asked Petron Corp. to strike out allegedly “onerous” provisions in their lease agreements that pose a stumbling block to ongoing negotiations to renew the contracts for the bulk plant and service stations.
PNOC president and chief executive officer Reuben Lista asked Petron president and chief executive Ramon Ang to nullify the provisions that the government company considers “onerous, burdensome and disadvantageous to the government.”
A provision in the contracts states that “in case the parties fail to come to an agreement, the same terms and conditions shall apply except the initial rental rate for the renewal period… “
The lease rental covers 67 stations and 24 bulk plants around the country.
“Personally I am worried that they might not be interested because they have not responded to my two letters. We cannot renew because we feel that the provision is onerous, burdensome and disadvantageous to the government,” Lista said.
Lista wrote Ang two letters regarding PNOC’s request for the nullification of the controversial provision to allow the negotiations to start. The lease agreements will expire by end of August next year.
“The decision to renew or not will have to be arrived at sooner considering the implications,” he said.
Lista recognized Petron’s contribution to the economy and stressed that he does not want to “unduly burden” Petron.
Petron is the country’s biggest oil company, owning a 180,000 barrel-per-day refinery in Bataan. It is owned by San Miguel Corp., one of the country’s biggest conglomerates.
Lista said PNOC received a letter from the Office of the Solicitor General, warning that the company would be in violation of a provision of the anti-graft law for entering into a grossly disadvantageous contract.
“Clearly, if PNOC will comply with the terms in the present lease contract it will be in violation of the above-mentioned provision of RA 3019,” the OSG said.