Big 3 oil firms threaten legal action vs PNCC

The Big 3 oil companies are threatening to take legal action if the Philippine National Construction Corp. (PNCC) will allow new players to put up service stations along the North and South Luzon Expressways.

"Likely, (we) will file for a temporary restraining order (TRO). It’s our right under an existing agreement," an official from an oil major who requested anonymity said.

This was welcomed by PNCC chairman Luis Sison who said they are ready to face the three oil firms in court.

The oil majors are worried that the decision of PNCC to open up the expressways to new players will affect their incomes which come mostly from rentals paid by merchants occupying part of their service stations.

"Naturally, if they (new players) will be allowed to put up full service stations there (north and south expressways), it will attract part of the volume (of our sales)," the official said.

The official said PNCC should "honor the memorandum of agreement (MOA) until after they have recovered their investment."

Under a MOA signed in 1997, the three major oil firms – Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Phils. Inc. – were given "exclusive rights" to put up service stations in the north and south expressways.

The MOA will expire in 2007 by which time the three oil firms expect to have recovered their investments.

The official said it was PNCC that convinced them to put up service stations in the expressways. "They should consider our position. We are just asking them to allow us to recoup our investments," the official said.

In a recent interview, Sison said they have finalized the terms of reference (TOR) that will govern the setting up of new service stations in the expressways.

The TOR is set to take effect three weeks after publication. Formal bids are expected in the first week of May.

There are active applications from Totalfinaelf Phils. Inc. and Seaoil to put up service stations along the expressways.

Sison said there are only three remaining slots available: one in the South Expressway southbound; one in the North Expressway coming from Manila; and another one going towards Clark.

An oil company that intends to put up a full service station in the expressway will have to shell out about P120 million, Sison said.

A full service facility should include: convenience stores, cafeterias, mini-restaurants, shops and rest areas, which are necessary for the traveling public.

Sison said they are ready to face the oil firms in court. "If they will file a suit. Let them be. If this will be the case, then it only goes to show that they do not want full deregulation and don’t want a level playing field and healthy competition," he said.