PNOC disputes COA findings on abolished PNOC-AFC deals

By Ben Rosario

The Philippine National Oil Company disputed Saturday the audit examination findings made by the Commission on Audit on the PNOC-Alternative Fuels Corporation, a PNOC subsidiary ordered abolished in 2014 by then President Benigno Aquino III.

Philippine National Oil Company (MANILA BULLETIN)

Senior Vice President Graciela Barleta said PNOC, the mother agency, was “never a party” to transactions that COA auditors questioned in the 2018 annual audit report for PAFC.

In the 2018 audit report, COA said they found a “significant gap” between the actual rental charge and the prevailing market rental rate for the lease of five out of 6 PNOC-AFC properties, thus, resulting to “opportunity loss estimated at P240.06 million.”

The state auditors were referring to the leasing of PNOC-AFC properties in Bataan covering 97.7 hectares in Mariveles town and 910 hectares of industrial land in Limay.

PNOC, headed by retired Adm. Reuben Lista, has been assigned to pursue the winding up operations of PNOC-AFC, thus, the COA report was addressed to the state run firm.

Barleta said PNOC “fully absorbed the operations of the abolished PNOC-AFC in 2017 when no additional liabilities were incurred and income generation capabilities were sustained.”

“PNOC is now actively managing the Industrial Park,” she revealed.

Barleta pointed out that what auditors compared were PAFC properties located within the Freeport Area of Bataan (FAB).

She stressed that there cannot be a point of comparison between the two properties because ‘the FAB properties are far more developed and with superior incentives for its locators.”

The PNOC executive pointed out that FAB areas have “full complete facilities that will justify higher rental rates.”

“On the other hand, the PNOC Industrial Park only offers moderate developments and no incentives to locators,” said Barleta as she explained that such factors have a strong impact on rental rates imposed by the lessors.

Barleta told COA that concluding that PNOC is not getting an equitable return on the rent of its properties is ‘incorrect.”

“Proximity alone does not guarantee that two properties will offer the same lease rates,” she stated.

But the current PNOC management took note of the audit findings that it has “aggressively marketed” the PNOC-AFC property at a rental rate of P220 per square meter per year.

Barleta also belied the claim that the memorandum of agreement between the PNOC-AFC and the Mariveles property lessee did not provide for an annual escalation clause.

According to her, the escalation provision is included in the MOA for the lease period from March 1, 2009 to February 28, 2014. She also pointed out that the lessee, Philippine Resins Industries Inc., has been occupying the property as early as 1976.

Reacting on the COA claim that PNOC has not taken legal action against PNOC AFC’s private partners in the Jatropha Biodiesel Project, Barleta declared that PNOC had been pursuing the recovery of the P64.50 million working funds from the partners.

Aside from sending demand letters to the private partners, PNOC “is closely working with the Office of the Solicitor General to pursue appropriate legal actions,” Barleta disclosed.

READ MORE: Former PNOC-AFC losing P240 million annually due to disadvantageous lease of lands — COA