PrC calls PCGG on IRC's lease arrangements at "Payanig" property

The Privatization Council (PrC) reminded the Presidential Commission on Good Government (PCGG) that disposition of government-owned surrendered properties should be undertaken via public bidding and results of the bidding are subject to the final approval of the Council on March 25.

The reminder came after the Council received reports that about 6 hectares of the entire 18.5-hectare "Payanig" property in Ortigas have been leased out to various lessees.

The property has existing lease contracts entered into by Independent Realty Corporation (IRC) with 3 to 4-year terms and in effect as early as September 2002.

Under existing privatization laws and regulations, a lease arrangement can be considered as a disposition activity that needs to be undertaken via public bidding. The "Payanig" property is scheduled for public bidding by second quarter of 2004 with the approved floor price of P61, 900/sq.m.

The 18.5-hectare property is located in Brgy. Ugong, Pasig City and under the Mid-Pasig Land Development Corporation account, a company under the IRC Group of Companies surrendered to the National Government by Jose Yao Campos in 1986 through a compromise agreement with PCGG. (M. Donovan with reports from N. Villafuerte).

Privatization revenues reach P8.9M for Q1'04

The Privatization Council (PrC) approved several sale transactions for the first quarter of the year bringing P8.9 million expected revenues to the government's coffers.

The privatization receipts were largely due to the sale of the transferred assets, real estate assets specifically, of Peninsula Development Bank and Wright Patterson Manufacturing Corporation handled by the Privatization and Management Office (PMO).

The Government auctioned-off three residential lots belonging to Peninsula Development Bank located at Peninsula Homes Subdivision, Pagbilao, Quezon for a total consideration of P489, 000.00.

While the bulk of the proceeds came from the sale of 8.9-hectare property located in San Jose Occidental Mindoro to WRI-PAT Neighborhood Association, Inc. for P8.4 million.

The sale transaction was awarded through the Community Mortgage Program of the National Home Mortgage and Finance Corporation (NHMFC), (M. Donovan with reports from R. San Juan)

FTI settles obligations to gov't, portions of Lot 35 for socialized housing

The Privatization Council (PrC) allowed the nation's largest food and container terminal, Food Terminal, Inc. (FTI), to settle its P1.2 billion debt obligation to the National Government via dacion of portion its Lot 35 property on February 17.

FTI has been identified for privatization and its debt obligations to the National Government ballooned to P1.2 billion by the end of December 31, 2003. According to the records of the Bureau of the Treasury (BTr), the company owes the government some P357.2 million while records of the Privatization and Management Office (PMO) showed FTI's obligations reaching P914.3 million.

FTI officially disclosed that President Arroyo instructed them to develop 11.5 hectare or the Lot 35 property for socialized housing and they also wanted to settle their outstanding obligations to the National Government.

The company owns 120 hectares of land by virtue of proclamations issued by Presidents Marcos and Aquino and FTI is proposing to dacion 4.5 hectares (2.4 hectare to PMO and 2.1 to BTr) of the 11.5-hectare property to the National Government while the remaining 6 hectares to be developed for socialized housing.

Finance officials have no problem with the dacion as long as the property for transfer is unencumbered and has no informal dwellers. While Treasury officials emphasized that the Treasury would only agree to the arrangement provided that all taxes, fees and other expenses to be incurred in the segregation and transfer of title would be shouldered by FTI as the assignor.

However, FTI reports showed that squatters grew to the 11.5 hectare property following the pronouncement of the President that parcels of land would be awarded to bonafide recipients through the National Housing Authority (NHA). Consequently, it is difficult for FTI to give the assurance that the properties subject to the dacion en pago are 100% free of squatters.

According to the latest valuation conducted by eValue, the property value stands at P14,000/sq.m. (M. Donovan)

PNOC-EC to sell 49% of its 10% interest in Malampaya project

The Privatization Council (PrC) approved the sale of 49% interest of PNOC Exploration Corporation (PNOC-EC) in Malampaya project under Service Contract 38 either through a sale in a corporate form via PNOC Malampaya Production Corporation or through a direct sale of PNOC-EC to investors or direct trade sale on January 26.

The Council approval was subject to the conditions that Philippine National Oil Company complies with relevant privatization laws and regulations and mode adopted would give the best offer for the Government.

PNOC-EC is 100% owned by PNOC and is engaged in energy exploration activities. The company has 10% participating interest under Service Contract 38 of the Malampaya Project which is equivalent to 4.9% exposure in the entire project. PNOC, as the parent corporation and PrC designated disposition entity for PNOC-EC, proposed for the divestment of 49% in PNOC-EC's 10% participating interest in the project.

PNOC's reason to retain 51% interest is for the company to continue having a stake in a prestigious and profitable company considering PNOC-EC is already generating income. DOF and DOJ officials believe that the move is a good financial mechanism wherein PNOC's retention of the majority of the board with its 51% in a special purpose company, the company can consolidate the same in the books of PNOC-EC and they can sell the remaining stake at a higher price.

The privatization of PNOC-EC's share in SC 38 was one of the conditions for the Department of Finance (DOF) to confirm its willingness to guarantee PNOC's 10-year US$175-200 million syndicated term loan from Citibank to refinance its existing loans. This funded PNOC-EC's investment in SC 38 and provides the legal basis for the privatization of PNOC-EC's 10% participating interest in the Malampaya project. (M. Donovan)

Technical Working Group to study NBP privatization

To improve jail services and downsize detention facilities into smaller permanent facilities, the Privatization Council (PrC) approved the creation of a technical working group consisting of representatives from the Department of Justice (DOJ), Department of Finance (DOF), the BOT Center and the Privatization and Management Office (PMO) to formulate the privatization plan of the National Bilibid Prison (NBP) property on January 26.

The group is expected to work closely with DOJ and the Bilibid Privatization Committee following the Presidential directive to develop and privatize the property in view of improving jail services and penology in the country.

The Bilibid property is located in Barangay Poblacion, Muntinlupa City and totaling to 551 hectares. Its border reaches the Ayala Alabang Village and Green Heights subdivision in the north, Victoria Homes subdivision in the south and the South Superhighway in the east. DOJ personnel have already been allocated with about 107 hectares of the Bilibid property for the "Katarungan I & II" housing projects of the Justice Department. (M. Donovan)