Chevron Philippines, formerly known as Caltex Philippines, is under fire after Department of Finance (DOF) Secretary Carlos Dominguez III disclosed that they have discovered an anomalous lease contract.
The contract involves a deal between Chevron Philippines and a subsidiary of the state-owned National Development Company (NDC), Batangas Land Company Incorporated.
Chevron Philippines rents a 1.2-million-square-meter property in Batangas for 74 centavos per sqm. DOF said that the current fair market rental value should be around P17.90 per sqm every month.
Located in San Pascual, Batangas, Chevron Philippines used the property as an oil transport terminal.
At 74 centavos per sqm, Chevron Philippines shells out only P10.66 million a year for rent. The DOF states that the company should be spending more than P20 million per month or P257.76 million every year.
According to the documents sent to NDC, Chevron Philippines paid only P146.51 million or around P3 million per year from 1975 to 2019, in addition to the real estate taxes paid under the deal.
DOF added that the property has a current market value of around P4.9 billion to P5.3 billion. The government’s deal with Chevron Philippines yields only about 0.2% of the property’s value or less than one percent.
DOF noted that the anomalous deal is unfair to the government and the Filipino people.
But why just now?
Overall, Chevron Philippines and, perhaps, the people behind the transaction enjoyed and took advantage of the deal for a total of 44 years.
President Rodrigo Duterte won the election in 2016 and the DOF, under his administration, took three years to uncover such a questionable agreement. That’s equivalent to half of the President’s six-year term in the Philippines, ending in 2022.
But why Chevron Philippines?
Chevron Philippines is the local arm of Chevron Corporation, an American multinational energy company.
For the record, Duterte has not been a fan of the United States (US) and its companies, with his favor inclining more toward China. This is in spite of the latter’s growing presence in the West Philippine Sea (WPS).
Duterte’s lukewarm relationship with the US worsened with Millennium Challenge Corporation’s (MCC) decision. The US-backed aid agency decided to delay and review the financial aid worth $200 million for the Philippines.
Such an amount is substantial to further push the government’s multi-trillion peso “Build, Build, Build” infrastructure program.
MCC’s recommendation came up after evaluating the country’s growing concerns around the rule of law and human rights linked to Duterte’s bloody war on drugs.
Is the investigation happening now on Chevron Philippines part of the Duterte administration’s campaign against the US and its companies? If it so, then this might alarm other American companies and make them decide to pull out their investments in the country. US net foreign direct investments slid down by 4% to $9.8 billion in 2018 from $10 billion in 2017.
Hopefully, the government and its agencies are not only focused on investigating US companies. With the increasing number of businesses and people coming from Mainland China in the Philippines, it’s not impossible that anomalous transactions are taking place. It’s another matter that the government should look and anomalies should be discovered as early as possible.