PNOC chief faces Ombudsman raps

Oil refiner and distributor Petron Corp. is set to file a case against Philippine National Oil Co. president Reuben Lista with the Office of the Ombudsman on alleged corruption and “unexplained wealth,” Petron’s top executive said over the weekend.

Petron president Ramon Ang said in a chance interview he would file the case against Lista this week before the Ombudsman on allegations of “unexplained wealth.”  He did not provide further details, pending the filing of the case.

“We will file the case at the Ombudsman next [this] week,” Ang said.

The impending case is on top of the complaint filed by Petron against PNOC on Oct. 20 for alleged breach of a binding and compulsory sale-leaseback contract that threatens to hurt Petron’s operations.

Ang said PNOC’s move to create a negotiating panel was “too late [as] it’s been a year.” He said Petron offered to negotiate the agreement with PNOC as early as 2016.

“He is challenging us.  Now it’s us who are filing the charges against him,” Ang said.

Energy Secretary Alfonso Cusi, who also sits as PNOC chairman, earlier directed the government’s oil and gas arm to negotiate with Petron. PNOC through Lista has been trying to get a higher lease rental from Petron, citing provisions in the current contract that were allegedly disadvantageous to the government.

Petron earlier said in a statement the company was constrained to seek judicial intervention when Lista communicated early this year that state-run PNOC would terminate the lease agreement with Petron.

Petron said PNOC’s action not only posed a threat to the company’s shareholders but to the broader economy that relies on its petroleum products.

Petron, in its complaint before the Mandaluyong regional trial court, through counsel Poblador Bautista and Reyes, asked for the issuance of a temporary restraining order to “stop PNOC from performing acts aimed at ousting Petron of its leased properties.”

“If PNOC will continue to disregard its reciprocal obligations on the conveyance of our land, then they should return the properties to us. Petron has invested billions of dollars on these properties. PNOC’s actions clearly jeopardizes the country’s fuel supply security and government’s thrust to develop key industries,” Petron said.

Petron has existing lease agreements with PNOC for the sites of its $3-billion refinery in Bataan, 24 bulk plants and 67 gasoline stations. The company supplies more than a third of the country’s petroleum requirements.

Lista sent two additional letters dated Aug. 1 and Aug. 31, demanding “to nullify certain provisions of the lease agreements that pose a stumbling block before we can proceed to negotiate the renewal.”

Lista asked Petron to abandon and clean up the contested sites on or before expiration of the lease in August 2017.

Petron said Lista also offered the properties covered by the subsisting leases to interested new independent oil companies, “in total disregard of the rights of Petron.”

Petron said the leased properties were originally owned by Petron,  and acquired over several years to be used for its refinery, distribution and sales operations.  Petron said it was compelled to give up its land to PNOC in 1993 to comply with the requirements of its privatization.

The company said the transfer of the properties was enabled through a deed of conveyance and lease agreements that guaranteed its long-term and continuous use by Petron in a bid to secure foreign and local investments in Petron and ensure stability of its operations.

“The conveyance with lease-back transaction between Petron and PNOC involves a reciprocal obligation: a) Petron conveyed to PNOC the leased properties at book value; b) in consideration of PNOC leasing the properties back to Petron on a long-term basis and according to its operational requirements,” Petron said.

The oil firm said among the principal considerations for Petron’s conveyance of its properties to PNOC was PNOC’s obligation to lease back the same properties to Petron.”

“By unilaterally setting aside the renewal clauses of the lease agreements and by categorically declaring its refusal to honor them, PNOC committed a fundamental breach of its lease agreements with Petron,” the company said.

“PNOC disregarded the true consideration for the leasehold rights acquired by Petron over the properties, which included not only the rental payments but the properties themselves, which Petron had conveyed to PNOC pursuant to privatization,” Petron said.

Topics: Petron Corp. , Philippine National Oil Co. , PNOC president Reuben Lista , Office of the Ombudsman
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