Araneta group’s offer on property non-compliant – PNOC
The board of directors of state-run Philippine National Oil Company (PNOC) has rendered the lease offer submitted by Energy Oil and Gas Holdings, Inc. (EOGHI) of businessman Gregorio Araneta III as “non-compliant” to a government contract because the price tender was way lower than the valuation set for the PNOC Industrial Park in Bataan province.
That has been the justification set forth by the PNOC and its board relative to an earlier letter-complaint elevated by the Araneta group to the office of Finance Secretary Carlos Dominguez III.
“The terms of EOGHI’s offer in the lease agreement did not comply with the standards expected of a government contract,” PNOC stated.
It has been emphasized that the PNOC industrial park’s valuation had been pegged at 178 per square meter/annum at the time that the state-owned company was negotiating with EOGHI, but the latter’s offer was way lower at 163 per square meter/annum.
The state-owned company has similarly indicated the changing offers of EOGHI – which was actually slashed eventually to as low as 139 per square meter/annum.
“The proposed lease rate is way below the fair rental value of the property which is 178/sqm/annum at that time,” PNOC has reiterated.
The state-owned company further stipulated that “EOGHI’s changing and decreasing offers for the rental rate is clearly unacceptable. Therefore, the PNOC is sufficiently justified in disapproving the proposal and in subsequently terminating the negotiations with EOGHI.”
On record, the original agreement that EOGHI had entered into was with PNOC Alternative Fuels Corporation (PAFC), and upon that subsidiary’s dissolution more than three years ago, it was deemed that its parent firm PNOC was not actually legally bound to honor the memorandum of agreement it entered into with the Araneta group.
The duration of the PAFC-EOGHI agreement was from June 19, 2014 to June 19, 2015 – which in essence had already expired. However, PNOC still opted to negotiate with Araneta’s group beyond that contract period.
Araneta’s EOGHI for its part has been leaning on its 138.6-million initial payment – which it claims to be a “lease rental” it advanced to the state-run firm. PNOC, nevertheless, qualified that “the alleged lease rental, amounting to 138,600,000.00 is in fact a reservation fee in consideration of the one-year period wherein PAFC has exclusive rights to the PNOC Industrial Park, as stated in the MOA.”
Araneta’s group has set interest on the PNOC industrial park on goals of turning that government property into what EOGHI dubbed as the “Energy City” project.