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CPA finalizing lease agreement with Shell
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Posted on Apr 21 2005
Following a year of negotiations, the Commonwealth Ports Authority is now finalizing its agreement with Shell Marianas for the lease of a Puerto Rico property.
Yesterday, the CPA board of directors agreed to the last remaining amendments that Shell requested made to the contract.
One of the amendments was the establishment of an arbitration process to resolve possible conflicts that might arise between CPA and Shell in relation to sub-lessees or third-party users.
Another change involved the so-called “penalty provision,” which addresses CPA’s compensation in the event that Shell decides not to renew the agreement after the initial 10-year term.
Based on CPA’s draft provision, Shell would have to pay an advance rent for the following 10 years if the company failed to find a new lessee.
Shell suggested, however, that the oil company be allowed to pay the rent on a monthly basis, rather than force it to make a lump-sum payment. That way, CPA would not be receiving double payment when a new lessee signed an agreement with CPA in the middle of the 10-year term that Shell had already paid for.
Negotiations between CPA and Shell started early last year for the 13,866-sq.m. property that the oil company is renting at the Saipan seaport area.
