PNOC asks Petron to address environmental issues before lease ends

PHILIPPINE NATIONAL Oil Co. (PNOC) renewed its call for Petron Corp. to submit plans on how it will address environmental issues ahead of the expiration of its lease contract for the state-owned firm’s properties around the country.

Reuben S. Lista, PNOC president and chief executive officer, told reporters on Tuesday that he sent a letter to Petron Corp. President and CEO Ramon S. Ang on Aug. 31, pointing out a previous request for the listed company to conduct environmental impact studies should it decide not to renew its lease.

“As you may very well be aware, the lease agreements will expire one year from the date of this writing,” Mr. Lista said in his letter to Mr. Ang. “For PNOC’s part, the decision to renew or not will have to be arrived at sooner considering the implications.”

Petron is leasing 24 PNOC properties as sites for bulk fuel plants, and 67 other lots for gasoline stations. The properties have an area ranging from 321 square meters (sq.m.) to almost 377,000 sq.m., interested lessees previously said. In all, the leased assets cover about 32.2 hectares.

The contract started about 24 years ago when Petron was still owned by PNOC. Petron has the right of first refusal over the properties, Mr. Lista said.

“I’m worried that they [Petron] may not be interested in renewing their contract,” Mr. Lista told reporters.

“They haven’t answered my two letters,” he said, referring to an earlier letter dated Feb. 6 addressed to Petron General Manager Lubin B. Nepomuceno. That letter requested Petron to submit remediation plans.

Mr. Lista also referred to a letter sent to Petron on Aug. 1, requesting the company to nullify certain provisions of the existing lease agreements that he said “pose a stumbling block before we can proceed to negotiate the renewal.”

He said provisions covering the service station and bulk plant properties state, among others, 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 shall be the rental rate at the time of expiration plus two percent (2%) thereof and subsequent rental rate shall be escalating by two percent (2%) per annum.”

Mr. Lista said if the lessee decides to reduce the area of the leased property, the rentals would be reduced on a per sq.m. or per location basis.

He also noted the reduction of rental for each affected property would take effect on the succeeding month, after PNOC receives a written notice from the lessor.

“In the alternative scenario that Petron cannot waive the same, we would like to request that Petron already submit the remediation plans so that the abandonment and cleanup of the sites may already be discussed and the timeline for the implementation of the same be firmed up with the view of completing the same on or before the expiration of the lease agreement,” he said.

Mr. Lista said he recognizes Petron’s importance as the partner of the government in moving the nation forward.

“Whether we like it or not, Petron is contributing to the economy,” he said.