PNCC owes national gov’t P7.6 B in debt – COA report

MANILA, Philippines - The Philippine National Construction Corp. (PNCC) owes the national government more than P7.621 billion in financial obligations.

In a 2013 report released yesterday, the Commission on Audit (COA) said the debt has cast doubt on the government-owned and controlled corporation’s capability to continue operating.

The PNCC has incurred net losses over the past years.

For the past 28 years, PNCC has failed to settle with the Toll Regulatory Board (TRB) concession fees of P4.754 billion; toll fees of P1.537 billion; and revenue and dividends from joint venture companies amounting to P1.329 billion.

The COA said the debts do not include PNCC’s liabilities with interests reaching P58.034 billion to various government financial institutions that the national government had assumed but were not converted to equity.

PNCC management told state auditors that it intends to settle the debts out of the proceeds of the sale through public bidding of a portion of the 12.9-hectare Financial Center Area property in Pasay City for at least P7.4 billion.

However, PNCC cannot get possession of the title since the national government is reluctant to surrender PNCC’s title to the property.

State auditors said PNCC must coordinate with the national government for the immediate disposal of the FCA property to be able to pay its debts.

“As shown in the financial statements, the company incurred a net loss of P211.246 million for the year ended Dec. 31, 2012, and while it reported a net profit of P1.642 billion for the year ended Dec. 31, 2013, this was due substantially to the gain in the change in the fair value of its investment property,” state auditors said.

The COA said PNCC’s current liabilities exceeded its current assets by P7.684 billion and P7.876 billion.

PNCC has accumulated deficit and losses of P9.7 billion and P8.056 billion.

Its capital deficiency of P1.525 billion as of Dec. 31, 2012 was wiped out as of Dec.  31, 2013.  

The COA said the primary purpose when PNCC was incorporated in 1966 was to undertake general contracting business, but due to losses, it has veered  away from construction since 2002 and focused on the operation and maintenance of tollways.

“However, its franchise to operate the tollways was not renewed when it expired on April 30, 2007,” the COA said. 

“Then on, its revenues had drastically decreased.”