JV with Chevron dissolved as gov’t consolidates ownership

Published January 22, 2020, 12:00 AM

by manilabulletin_admin

By Bernie Cahiles-Magkilat and Chino S. Leyco

The National Development Co. (NDC) has approved the dissolution of its subsidiary Batangas Land Corporation, Inc. (BLCI) effectively ending its joint venture (JV) with American oil firm Chevron Philippines, formerly Caltex Philippines, on the 120-hectare Batangas property as the Duterte government wants to consolidate its ownership.

Trade and Industry Secretary Ramon M. Lopez, who is also NDC chairman, said the BLCI during its meeting in December has approved its dissolution. Lopez issued this following a statement by Finance Secretary Carlos G. Dominguez III describing the deal as another government contract with “onerous” provisions.
The dissolution will be effective in 2021 yet. NDC is the government’s investment arm attached with the DTI.

“The NDC Board, which DTI chairs and has DOF as one of the members, has already directed the NDC to work on the dissolution and non-extension of the life of BLCI, the joint venture between NDC & Chevron. Government would like to consolidate its ownership of the land and buy out the shares of Chevron. The NDC and DOF technical team has been working on this. In fact, the latest board meeting of the BLCI already approved its dissolution,” said Lopez, who is attending the World Economic Forum in Davos, Switzerland, in a Viber message to reporters. The dissolution will be made effective in 2021 yet, he said.

In a text message, Lopez supported the DOF saying: “We’ve been working on that with DOF to consolidate government ownership by buying out the shares of Chevron.” The existing lease term is one that started almost 50 years ago, and ending 2025, which needs a renegotiation or bidding under the new set up, he said.

Sources said that the DOF would like the NDC to consolidate all its properties with lease contracts covered by the Laurel-Langley law. Dominguez, also a member of the NDC Board, already raised the issue of consolidation of these government assets during the NDC Board meeting on December 3 last year.

There are three other NDC properties under a 60-40 joint venture and falling under the Laurel Langley Law but the Chevron property is the biggest. The three others are Goodyear in Alabang, Zapote road, the GE property (1.8 hectare near The Circuit), and several gas stations of Pilipinas Shell.

The American firm Caltex was able to acquire the Batangas lot and other prime properties owned by the government under the 1946 Bell Trade Act passed by the United States Congress. Under this law, American entities were granted Parity Rights on land ownership in the country as condition for the US government’s payment of $800 million wage damage claims to the Philippines.

In a statement, Finance Secretary Carlos G. Dominguez III said yesterday that he recommended to the board of the National Development Co. (NDC) to shut down one of its subsidiaries, BLCI, by next year.

Dominguez explained the termination BLCI is necessary for the government to take back its sprawling 120-hectare property in San Pascual, Batangas, which is being leased out to Chevron for a measly 74 centavos per square meter a month.

He said Chevron’s rent is only four percent of the current monthly fair market rental estimate of P17.90 per square meter.

Heeding the recommendation of Dominguez, the NDC Board decided last December to terminate in 2021 the corporate life of BLCI.

Dominguez, a member of the NDC Board, made the recommendation after the DOF had uncovered onerous provisions in BLCI’s more than four-decade-old lease contract with Chevron, which uses the P5 billion property as an oil import terminal.

Shortening BLCI’s corporate life will finally allow the government to exercise “full ownership, control, and rights over” this prime lot and other real estate properties occupied by Chevron, which are strategically located for the country’s future energy projects, Dominguez said.

He pointed out that the government should have exercised these rights as early as 1975, but Chevron was able to obtain preferential treatment to continue occupying and using these properties under the then-Marcos administration.

Dominguez said “these properties (including the Batangas property) should have been turned over to the Government as early as the 1970s, not only legally speaking but, more importantly, based on the principle that these properties should truly benefit the Filipino people.”

“These companies were given sufficient time to transition and pass on full ownership to the government. It is now high time for the government to exercise its rights,” Dominguez added.

On Tuesday, The finance chief said that the local unit of American multinational energy firm Chevron Corp. was paying a “minuscule” rent to the state because of its “onerous” contract with BLCI, which are “grossly disadvantageous” to the government.

Meanwhile, Chevron Philippines said its lease contract with BLCI on the Batangas property was entered into in compliance with all Philippine laws and regulations.

Chevron also said the lease contract has been beneficial to both the government and the oil company.
“As one of the pioneer energy companies in the Philippines which has been operating here for over a hundred years, our commitment to the Philippine market remains strong,” Chevron said in a statement.

“We will maintain open communication with the Government, an important and valued partner, on this matter,” the company added.

 
CLICK HERE TO SIGN-UP
 

YOU MAY ALSO LIKE

["business","business"]
[951944,3004599,3004587,3004602,3004584,3004607,3004547]