Automatic Fare Collection System

 
The proposed project aims to facilitate efficient passenger transfer to other rail lines and reduce inconvenience due to ticket payment delays.  It also addresses outdated technology concerns of both MRT-3 and LRT-1 fare ticketing system, and increases the fare collection efficiency by reducing leakage and fraud.

Implementing Agency:

Department of Transportation and Communications (DOTC)

Project Description:

The project involves the decommissioning of the old-magnetic-based ticketing system and replacing the same with contactless-based smart card technology on LRT Line 1 and 2 and MRT Line 3, with the introduction of a centralized back office that will perform apportionment of revenues.  The private sector will operate and maintain the fare collection system.

Estimated Project Cost:

PHP 1.72 Billion  |  USD 38.22 Million

Cooperation Period:

10 years inclusive of 2 years development/delivery

Private Proponent:

AF Consortium

source:  Public Private Partnership Center

 

P5-B Pasig project anomalous – Aquino

THE P5-billion project involving the dredging of the Pasig River four years ago was tainted with irregularities and President Benigno Aquino 3rd wants the contractor, a Belgian firm whose deal to dredge the Laguna de Bay was scrapped in 2010, held liable for shortchanging the government.
Aquino, in his commencement speech at the graduation rites of the Philippine

Science High School (PSHS) in Quezon City, disclosed that the government is now working to identify those responsible for the anomaly, including officials of the foreign firm.

“The contractor said they conducted dredging. To be sure, I asked the DOST [Department of Science and Technology] and experts from the UP [University of the Philippines]-National Institute of Geological Sciences. The result of their study indicated that if there was dredging, it was sure the contractor did not follow what was stipulated in the contract,” the President said.

Aquino was referring to the Pasig River Dredging Project undertaken by the Baggerwerken Decloedt en Zoon or Belgian Dredging Co. (BDC) that required the removal and containment of nearly 3 million cubic meters of debris and sediment in a 19-kilometer stretch of the river.

The project, which ran for a year beginning late 2009, cost P5.038 billion, inclusive of the P34.05-million grant by Belgium to the Philippines. Of this amount, around P646 million was acquired through a soft loan payable for about 14 years after the completion of the project with zero interest. The remaining P4.392 billion was covered by a commercial loan payable for 10 years with an interest rate based on prevailing European commercial rates.

The Pasig River Rehabilitation Commission (PRRC), which supervised the project, said the loan package was made possible through the Belgian Supersubsidy Facility and was covered by six credit agreements.

Aquino cited the project as among those tainted with corruption that was approved during the time of his predecessor, former President and now Rep. Gloria Arroyo of Pampanga.

“Now, we are making steps to ensure that those who are answerable will be made answerable,” he said.

The President told fellow government officials, PSHS graduates and guests that public funds should be spent prudently and wisely, especially for big-ticket projects.

“We will spend for what is due so that government funds will not be wasted. That is why I have ordered the DOST to form a group of experts who cannot be fooled by suppliers, especially when it comes to big-ticket items,” Aquino said.

Crazy
For her part, PRRC Chairman Gina Lopez of the ABS-CBN Foundation described the dredging project as “crazy,” judging by the amount spent for a project that ran only for about a year.
Lopez, who is in the US, told The Manila Times in a text message that Aquino’s sentiments against the project were “rightfully so.” She confirmed that the subject of the President’s tirade was the project of the foreign group.

“Five billion pesos. That [was] the amount spent. I think it’s crazy. We could have used that money so much better,” Lopez said.

She clarified that she was not yet the chairman of PRRC “when the whole thing happened.”
“I never would have agreed. But there are staff in PRRC that were there when the whole thing happened,” Lopez pointed out.

The dredging project’s implementation was initially planned to run for six years but then Environment Secretary Lito Atienza cut down the duration to three years.

PRRC officials and BDC engineers announced that they will make use of two Underwater Placement Overdepth with Capping (UPOC) somewhere in Manila Bay that could accommodate 2.8 million cubic meters of sediments from the Pasig River. The dredged materials will be contained using the UPOC technology, a confined disposal facility that involves the excavation of the containment cell at the seabed using a tractor suction hopper dredger or mechanical clamshell bucket.

The project aimed to improve water quality of the river to reduce health risks, enhance water transport potentials and eliminate or mitigate flooding in Metro Manila.

Scrapped
The BDC was supposed to undertake dredging of the Laguna Lake in 2010 but Aquino scrapped the deal because of the controversies surrounding the Pasig dredging project.

The P18.7-billion Laguna Lake Rehabilitation Project (LLRP) that BDC was supposed to implement within 750 days after the contract was approved was the first contract of a foreign firm that Aquino voided on suspicion that it was a “midnight deal” of the Arroyo administration because it was approved in February 2010 or just three months before the elections for president.

BDC is a 150-year-old firm that specializes in dredging projects in Europe and other parts of the world.
Justice Secretary Leila de Lima, in an August 2010 legal opinion, found nothing wrong with the bay project, saying it “cannot be construed as a midnight deal since it is covered by official development assistance from the Belgian government.”

Critics see the scrapping of the project as the primary cause of flooding in the provinces of Laguna and Rizal, the South Luzon Expressway and parts of Metro Manila.

Laguna de Bay, they said, was so much silted that it could not contain the heavy monsoon rainwater that comes annually.

Besides the cancellation of the project, BDC has become the subject of dispute before the International Center for Investment Disputes. The Belgian firm demanded P6 billion in damages while the government was said to likely incur legal costs of about P1 billion.

SOURCE:  Manila Times

SMC revives proposal for $10-B new airport

By Lawrence Agcaoili (The Philippine Star)


MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) has revived a proposal to put up a $10-billion airport to replace the congested and more than three-decade old Ninoy Aquino International Airport (NAIA).

SMC president and chief operating officer Ramon Ang confirmed the conglomerate is set to present to President Aquino next month the proposed international gateway to be situated in an 800-hectare property in Manila.

Nikkei reported that SMC plans to build the $10-billion international gateway that would have four runways and higher passenger capacity as against the single-runway of NAIA located in a 400-hectare property in Pasay City.

Nikkei also reported that the airport project would be offered to the government under a build-operate-transfer scheme where ownership would be turned over to the government after 25 years.
SMC has a 49 percent stake in national flag carrier Philippine Airlines Inc. (PAL) along with Lucio Tan, who owns the other 51 percent.

The diversified conglomerate announced plans to put up an international airport early last year and was supposed to present the plan to Aquino in February last year.

Ang, however, announced in March last year that it was postponing indefinitely the presentation of the proposed international gateway, citing unclear policy from the Department of Transportation and Communications (DOTC).

The government has allocated P1.3 billion for the rehabilitation of the NAIA Terminal 1 being undertaken by DM Consunji Inc. and another P1.9 billion for the retrofitting of NAIA Terminal 3 being conducted by Takenaka Corp. of Japan to be completed in time for the country’s hosting of the Asia Pacific Economic Cooperation (APEC) summit scheduled in 2015.

The NAIA Terminal 1 is congested and operating beyond its design capacity of 4.5 million passengers as it is now handling over eight million passengers.

The retrofitting of NAIA 3 would help accommodate the excess passengers from NAIA 1 as it is only operating at about half of its total capacity of 13 million passengers a year.
Data from the Manila International Airport Authority (MIAA) showed the number of domestic and international passengers served by NAIA climbed over three percent to 32.865 million last year from 31.877 million in 2012.

For his part, Transportation and Communications Secretary Joseph Emilio Abaya said the government is veering away from unsolicited proposals and pursuing competitive biddings for major infrastructure projects.
Abaya said the DOTC has yet to receive a proposal from SMC regarding the construction of a new airport.

“We haven’t sat down with them but based on policy, that would be an unsolicited proposal. It is not prohibited, however, there is a bias of government against it. We tend toward more open and transparent bids,” he added.

Abaya, however, clarified the DOTC would study the proposal of SMC.
“We will digest it once we have the proposal,” he said.

Abaya earlier said the DOTC is looking at Sangley Point in Cavite and Laguna de Bay, as proposed by the Japan International Cooperation Agency (JICA), as the possible site of a new international gateway.
“But JICA has now firmed up its position on Sangley. That was the report, they are firming that up,” he said.

The DOTC wants to put into operation a new international airport by 2027 with the joint development of the congested NAIA in Manila and the Clark International Airport in Pampanga.

NGCP, Chinese partner set aside politics for transmission business

SHANGHAI, China – The National Grid Corp. of the Philippines, the country’s power grid operator, remains unfazed with the current geopolitical issues facing Manila and Beijing as it continues to seek ways on how to improve its operations with the help of its Chinese technical partner, the State Grid Corp. of China (SGCC).

“What politics divide, businesses unite,” NGCP president and chief executive officer Henry Sy Jr. said in text message.

During a technical visit to its facilities here, NGCP highlighted various ways on how it can learn from its technical partner in improving the business.

“Among these technological advances is the smart grid technology that we have began implementing in the Philippines. We will have a pilot substation in Antipolo, which we will commission soon. This will help us better integrate the systems and allow us to accept renewable energy sources,” said NGCP spokesperson Cynthia Alabanza.

“A smart grid would help us maximize the grid capability. Apart from the physical technology, SGCC is also helping us with procedural technology systems the way we can go about the transmission business in the most efficient manner so the technology transfer is something that SGCC wants to emphasize and as a foreign partner of NGCP. We hope to bring back this technology to the Philippines,” she added.

Eyeing the long-term development of the Philippine grid, NGCP took advantage of SGCC’s advanced technology and technical expertise to effect positive changes to the country’s transmission system, she said.

SGCC sent its specialists to share the latest in the fields of transmission grid planning and design, smart grid technology, renewable energy integration, calamity management, and grid operations.

Furthermore, SGCC also helped the establishment of transmission standardization, which paved the way for NGCP’s improved procedures and more efficient operations which, in turn, reduced the cost of transmission projects and upgraded the transmission system’s reliability, NGCP said.

NGCP also credits the technology and knowledge transfer from SGCC for its outstanding performance based on the Energy Regulatory Commission’s set of indicators.

In 2013, NGCP posted its best performance since it started five years ago with a 60 percent decrease in cases of line tripping since the start of operations, 100 percent compliance with the required frequency level for the Luzon grid, and an average of 99.77 percent compliance with the required voltage level for the entire grid in the last three years.

Benefitting from SGCC’s experiences in handling natural calamities, NGCP was also able to establish a new Supervisory Control and Data Acquisition System (SCADA)  and Overall Disaster Control Center (ODCC). All these best practices helped NGCP supervise and monitor power grid more effectively and mitigate the damages brought by typhoons, earthquakes and other calamities that struck the country in recent years.

SGCC was also a major player in the restoration of the high-voltage direct current (HVDC) facility of NGCP damaged by Super Typhoon Yolanda in 2013. A technical team came to the country to repair the facility which allowed the sharing of power supply from Luzon to the Visayas. The facility augmented the power supply in Visayas while generators in the area were not yet online. The restoration of HVDC system saved time and reduced losses of disaster-affected areas both directly and indirectly.

SGCC, as a technical partner of NGCP, also has investments and operations in other developed and developing countries and regions such as Australia, Portugal, Brazil and Hong Kong.

It has given NGCP its assurance to continue sharing its best practice and experience to help achieve the goal to be the best transmission service provider in Southeast Asia.

“SGCC is more mature than NGCP in terms of technology and industry practices. NGCP hopes to further develop the Philippine transmission grid through SGCC’s expertise, particularly in research and technologies. NGCP and SGCC will continue to work together to expand and strengthen the country’s transmission network to make it at par with foreign counterparts,” Alabanza said.

Zhu Yue, deputy director of technical and telecoms of SGCC Shaanxi Electric Power Corp., said having a smart grid would help provide customers better and safer electricity service.
“We are working on customer safety,” he said.

By Iris C. Gonzales (The Philippine Star) 

Corruption in the airport project

With a little over two years before the May 2016 presidential election, board rooms and coffee shops abound with speculations on who will run, and who will not.

There is talk that Vice President Jojo Binay will surely run for President, having already announced his intention. As for the who will be the anointed one of President Aquino as his successor, there is no doubt that it will be Interior and Local Government Secretary Mar Roxas —although the President is not yet saying it.

The speculation is more on who the running mates will be.

The most viable, they say, is a Binay-Jinggoy Estrada tandem. This will appeal to both officials’ masa base.

Senators Bong Revilla and Alan Peter Cayetano have also said that they would both run. Senator Bongbong Marcos may go together with Cayetano.

A survey recently commissioned by Malacañang showed that Senator Chiz Escudero was a more viable presidential candidate of Mar than Cayetano.

Some are also saying that Joseph Estrada may opt to run for President again. Sure, he is already 76 years old, but remember that he came second to President Aquino in 2010. Had the Iglesia ni Cristo chosen him, Estrada would have likely become President again.

This is what gives rise to rumors that an Erap-Binay tandem is also possible. Erap will serve for only three years and Binay will serve for the rest. And then Binay can run for another six-year term.
This rumor is boosted by the case of plunder hanging over the head of Jinggoy, who is said to be preparing to succeed his father as mayor of Manila.

The issues of poverty, joblessness and corruption will be on the top of the list in the coming elections. Unfortunately, nothing much will be different then.

* * *
Since it’s graduation time again, I cannot help feeling nostalgic about my own graduation way back in 1950. I was among the last graduates of Ateneo de Manila in the ruins of Padre Faura before it moved to Loyola Heights.

I was then 21, feeling confident that I could conquer the world.

My classmate, former Vice President Tito Guingona (we used to call each other comrade; we thought of becoming communists, since communism was in vogue then) and I went job-hunting. We went to the National University to apply as professors but we were told that we lacked eligibility.

Frustrated, we went to San Miguel Corporation where we were told that the only jobs available were those for delivery truck drivers. We knew how to drive but we still could not qualify since being a mestizo was a requirement for all San Miguel Employees at that time.

We were told that there were vacancies at Pepsi-Cola. Thus we went and found that they needed “cargadores” or haulers of boxes for delivery, for the graveyard shift at that!

Tito and I almost gave up and resigned ourselves to be counted among the jobless.

Out of the blue, an oblate from Cotabato City came to the Ateneo to ask for volunteers to set up a newspaper called “The Mindanao Cross.”

My friend Rudy Tupas—who became ambassador to Libya during the Marcos era—and I applied. Rudy was editor-in-chief of The Guidon with me as associate editor. We stayed for two years in Cotabato.

I married a beauty who was from Cagayan de Oro but residing in Cotabato.

* * *
I can understand why Cebu Senator Serge Osmeña got hot under the collar when he read a news report that Executive Director Cosette Canilao of the Public-Private Partnership Program Center had said that the Department of Transportation and Communication was abiding by its end-March target of awarding the multi-billion pesos contract to the tandem of the Indian GMR Infrastructure Ltd. and the Filipino Megawide Construction Corp., which offered a P14.4-billion premium on top of the project cost.

The report refers to the Mactan Cebu International Airport project. The remark of the PPP official was carried in a business daily and was later mentioned in two national broadsheets.

Canilao denied making the announcement despite the fact that a similar report came out earlier, in the February 12, 2014 issue of another business daily.

This is what that report stated: “In another development, the government hopes to award the MCIA deal to the consortium of Megawide Construction Corp. and GMR Infrastructure Ltd. within the week. Ms. Canilao said that the government is about 70 percent done conducting due diligence to make sure that every issue is answered.”

Santa Banana, to my knowledge, Canilao never repudiated nor clarified this report. So, how can anyone now believe her denial?

All these seem to be consistent with Canilao’s other statements related to the issue. In the hearing on the MCIA project conducted March 11 by the House Committee on Transportation, Canilao said that delay in the implementation was due to the protest filed by the “losing bidder.” While she did not actually name the losing bidder, there was no mistaking the context and implication of her statement that the contract has already been awarded to a chosen bidder. There were references during that same hearing to the GMR-Megawide group a having made a P14.4 billion offer, which was subsequently declared as the “highest bid.”

On the other hand, the Filinvest-Changi consortium submitted a P13.99 billion offer and is deemed to have lost in the bidding, at least in the stage of the bidding process. It does appear, my gulay, that Canilao is jumping the gun on the DoTC. That’s because in the hearings conducted by the Senate and the House, both the PPP and the DoTC asserted that they were still studying the conflict of interest issue and evaluating the financial submissions of the highest bidder. They would arrive at a decision only by the end of the month.

As for DoTC’s role in this MCIA charade, Santa Banana, who would not be dismayed by the utter ineptitude and incompetence of the Pre-Qualification Bids and Awards committee that made it all a circus!

First, the head of the Technical Working Group (TWG), one Paul Pasion, said that after a two-month evaluation of all the documents and submissions of the bidders, he submitted a two-page report in the Pre-Qualification Bids and Awards Committee of the DoTC. If Osmeña was incredulous, who wouldn’t be.
 
My gulay, the pre-qualification process took all of two months!

Seven groups consisting of at least 14 different companies participated in the bidding. The construction cost of the project is P17.5 billion (excluding the premium offer). And the result of TWG’s work is a two-page report? Unbelievable!

source:  Manila Standard By Emil Jurado

SCTEx lot attracts seven bidders

SEVEN firms have expressed interest in bidding for the lease and construction of a planned service station along the Subic-Clark-Tarlac Expressway (SCTEx).

The state-owned Bases and Conversion Development Authority (BCDA) is auctioning off again the two-hectare Macangcung Service Area along the northbound side of the 94-kilometer SCTEx in Barangay Santiago, Concepcion, Tarlac.

“We look forward to the eventual submission of bids by these firms when the BCDA undertakes the public bidding for the SCTEX Service Area,” BCDA President and Chief Executive Officer Arnel Paciano D. Casanova said in a press statement.

Mr. Casanova said the interested groups at the March 7 pre-bid conference were Double Dragon Properties Corp.; LBC Express Business Solutions/Development; Manila North Tollways Corp.; Northern Star Energy and Fuel Distribution Corp.; Northwalk Land, Inc.; PTT Philippines Corp.; and Seaoil Philippines, Inc.

The winning bidder will construct and operate the service area, which must have a gasoline station and parking area along with restrooms, a first aid station, an emergency vehicle repair shop, and convenience stores.

Potential bidders can buy the Terms of Reference (ToR) for a non-refundable fee of P50,000, paid through manager’s check, from the BCDA before April 2, according to BCDA Asset Disposition Program Committee Chairwoman Nena D. Radoc.

Bidders must submit their eligibility documents and final proposals before 12:00 p.m. on April 4.

Upon contract signing, the winning firm will give the BCDA a security deposit matching their proposed budget and a Surety Bond with a face value of P7 million.

Ms. Radoc added that while the first four years of the lease are rent-free, the concessionaire will pay rent of at least P3.5 million in the fifth year, increasing by 5% every year thereafter. -- Anton Joshua M. Santos

 

source:  Businessworld 

China to help PH build smart grid

SHANGHAI, China: The Philippines is tapping the advanced technology and expertise of China’s principal utility, the State Grid Corporation of China (SGCC), in the ongoing construction of its smart grid pilot project in Antipolo, which is targeted for completion in 2016.

China has been getting significant attention because of its advanced efforts in the development of smart grid technology, and countries like the Philippines are just now starting to realize the technology’s full potential.

According to the National Grid Corporation of the Philippines (NGCP), a smart grid is a contemporary electric grid that makes use of digital automatic devices, intelligent primary equipment, and advance applications to improve the reliability, economics, and sustainability of a country’s power distribution and production.

“Among technological advances [that we can adopt from the SGCC)] is the smart grid technology that we have begun implementing in the Philippines. We will have a pilot substation in Antipolo which we will commission soon. This will help us better integrate the systems and allow us to accept renewable energy sources,” NGCP spokesperson Cynthia Perez-Alabanza told reporters during a technical visit to SGCC facilities in China over the weekend.

“Having a smart grid will help us maximize our country’s grid capability,” Alabanza said.

NGCP’s smart grid initiatives include the modernization of its supervisory control and data acquisition (SCADA) system, the upgrade of substation equipment, and expansion and upgrade of transmission lines and facilities.

The P3.2 billion Antipolo Substation is NGCP’s smart grid pilot project, which was approved by the Energy Regulatory Commission in September 2013.

The project forms part of NGCP’s 2012 Transmission Development Plan (TDP), a 10-year plan for ongoing and future construction, management, improvement, expansion, operation, maintenance, rehabilitation, and repair of the national transmission network.

NGCP recognizes that it is still relatively “too young” in terms of technology and industry practices.
The NGCP and SGCC, as its technical partner, are currently initiating various measures to narrow the technology gap and bring the Philippine grid up to par with those of other industrialized nations.
Over the long-term development of the Philippine grid, NGCP will take advantage of SGCC’s advanced technology and technical expertise.

“Apart from the physical technology, SGCC is also helping us with procedural technology systems so that we can go about the transmission business in the most efficient manner , so the technology transfer is something that SGCC wants to emphasize and as a foreign partner of NGCP, we hope to bring back this technology to the Philippines,” Alabanza further said.

Incorporated in 2008, NGCP won the franchise to operate, manage, and expand the electricity transmission business in the country in the biggest government auction held in 2008. A product of the Electric Power Industry Reform Act, the Franchise Law authorizes NGCP to operate the transmission grid for 25 years, renewable for another 25 years.

source:  Manila Times

Spain eyes PHL as next investment hub in Asia

Spain is now looking to the Philippines as the best hub to establish its presence in Asia in preparation for the Asean Economic Community in 2015, and cited infrastructure as a viable area of investment.

“I think the Philippines is the best hub we can think of to introduce our companies and our economy in Asia, and I hope that we can find good partners to start business in this part of the world,” said Spanish Minister for Foreign Affairs and Cooperation Jose Manuel Garcia-Margallo at the Makati Business Club (MBC) General Membership Meeting at the Mandarin Oriental Hotel.

This message comes at the heels of the economic recovery of Spain, which, according to Margallo, was among the European countries hardest hit by the global financial crisis.

Among the blows that the Spanish economy has experienced are a dramatic fall of its gross domestic product, high public deficit and a growing public debt.

However, with the significant fiscal reforms undertaken by the country in the past years, Spain is now changing its model based on enhanced competitiveness, productivity and export-driven, Margallo said.

Gross domestic product growth and employment rates are improving, as well as public deficit, Margallo reported and is looking to Asia, the Philippines, in particular, to be the next investment hub.

“That is why this important Spanish business delegation is here, to explore and take advantage of all the things that the Philippines may offer to Spain,” he said.  

Peter Angelo V. Perfecto, executive director of the MBC, revealed that with the Asean economic integration in 2015, Spain is looking to the Philippines as a possible hub from which Spanish economic presence can take hold in the rest of Asia.

Perfecto added that the 25-member Spanish business delegation presently in the Philippines will undertake meetings with Philippine companies, led by the Ayala Group.

 The MBC official added in a chance interview after the forum that the Spanish delegation is eyeing infrastructure development, in particular, as 37 percent of the whole transport infrastructure in the world is managed by Spanish companies.  

“We are exploring possibilities in many areas, but since the Philippines is aiming to have good infrastructure in order to attract investments to the country, infrastructure is one area that Spanish companies are especially qualified in,” said another Spanish trade official during the open forum.

Socioeconomic Planning Secretary Arsenio M. Balisacan, who also attended the forum, welcomed Spain’s  interest in infrastructure development and additionally called attention to tourism, agribusiness and  industrial manufacturing as ripe opportunities for Spanish businessmen.

The Spanish firms making rounds with their Philippine counterparts are engaged in various sectors but are mostly in infrastructure and tourism.

To solidify the commitment between Spain and the Philippines in developing business relations for both sides, a memorandum of agreement was signed on Monday between two business groups in Spain—the High Council of Chambers of Commerce, Industry and Navigation of Spain, and the Confederation of Employers and Industries of Spain—and the Makati Business Club.

According to data from the Department of Trade and Industry, bilateral trade between Spain and the Philippines grew by 19 percent from 2010 to 2012, or from $304 million to $362 million, and is the Philippines’s seventh-largest trading partner in Europe.

Bilateral trade between the two countries as of the first semester of 2013 is valued at $225 million.

In terms of tourism, 17,000 Spaniards have visited the Philippines in 2013, up by 7.7 percent from 2012, according to Department of Tourism statistics, while Filipino visitors to Spain were pegged at 50,000 in 2013.

source:  Business Mirror

MTD Philippines ready to invest P5B for regional govt centers

INFRASTRUCTURE development firm MTD Philippines Inc. is investing roughly P5 billion for the construction of regional government centers in the Southern Tagalog region and in Leyte.

“We are pushing through with the development of regional government centers because local governments are just renting office spaces. The government does not have funds to construct their own offices, so what we are doing is we are replicating the Putrajaya experience in Malaysia, wherein all offices are located in one hub,” MTD Philippines President Isaac S. David said in a chance interview.

He said his firm is pursuing the creation of a one-stop-shop government office, which will house at least 54 regional offices in the Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon) region. He said the initial cost for the project is pegged at about P1 billion.

“We also submitted an unsolicited proposal to do the Leyte Regional Government Center, so we’re offering to build a center without cash out from the local government,” David said, noting that the project costs roughly P4 billion.

He said the firm will turn over the facility to the local government after a 30-year concession period.

The company is expecting to recover its investment over the same period.

“The local government’s decisions for the projects are much faster compared to the national level, which has to go through the approval of the National Economic and Development Authority and other branches,” David pointed out, referring to public-private partnership (PPP) ventures.

“So, local governments, I think, are performing very well when it comes to PPP,” he stressed.

MTD Philippines is the local investments arm of Malaysian infrastructure giant AlloyMTD Group. The said local unit is participating in the bidding of several key infrastructure projects of the Aquino administration, including the P64.9-billion Light Rail Transit Line 1 Cavite Extension Project and the P35.42-billion Cavite Laguna Expressway Project.    

GMR-Megawide Consortium still needs to pass financial review

THE Department of Transportation and Communications (DOTC) is still in the process of reviewing the financial proposal of front-runner GMR Infrastructure Ltd. and Megawide Construction Corp. Consortium for the P17.5-billion Mactan-Cebu International Airport (MCIA) New Passenger Terminal Project.

Transportation Undersecretary Jose Perpetuo Lotilla said it is still possible should the GMR-Megawide Consortium fail to hurdle the review, the agency will have to review the proposal of the bidder with the second-best tender.

The partners offered a P14.4-billion premium on top of the project cost, allowing the Filipino-Indian consortium to secure the top position in the auction held last December.

Bidding rules, according to Transportation Secretary Joseph Emilio Abaya, provide that only the winning bidder’s financial evaluation shall be evaluated.

If its offer fails the review, that is the only time the agency can move forward to assessing the financial bid of the second-best bidder, which in this case is the tandem of Filinvest Development Corp. and Changi Airports Mena Pte. Ltd.

The Filipino-Singaporean partners offered a lower P14-billion premium for the project.

“If Megawide-GMR fails, the bids and awards committee will move to Filinvest-Changi. That’s what the rules provide,” Abaya told the BusinessMirror via text.

Awarding for the project was originally scheduled last January. It has been delayed for about three months now because of allegations of conflict of interest between two parties involved in the auction.

Filinvest-Changi alleged that the managing director of Malaysia Airports Holdings Bhd. Tansri Bashir sits as a director in four GMR airports, namely, Delhi International Airport Private Ltd., GMR Hyderabad International Airport Ltd., Istanbul Sabiha Gokcen International Airport Group and GMR Male International Airport (Maldives).

The Malaysian firm participated in the auction for the said project together with Filipino partner First Philippine Holdings Corp.

Megawide-GMR, however, explained that Bashir, who is a board member of the four airports enumerated, “has no role to play in the bid, since he is not a member of the Board of Directors of GMR.”

Transportation Spokesman Michael Arthur Sagcal admitted that the government is having a hard time collecting pieces of evidence to validate the accusation, noting that there is a “dearth” in the proof available.

“There is no decision yet as to which group will win the contract.  No recommendation has been made to the secretary,” Sagcal said. “[The agency] is being thorough in resolving the matter to ensure that its decision will be in accordance with what the law and the rules alone prescribe.”

“We will, of course, endeavor to achieve the target date,” Lotilla, who chairs the bids and awards committee of the agency, said separately.

According to bidding rules, the special prequalification bids and awards committee (Special PBAC) shall recommend a winning bidder to Abaya for the awarding of the project. After the Transport chief’s approval, the Mactan-Cebu International Airport Authority (MCIAA) shall then assess the recommendation.

The MCIAA Board of Directors will then decide on whether or not to approve such award.  Only after these steps are observed can the concession be considered as having been awarded.

The Special PBAC discusses and debates on the relevant issues throughout the procurement process, to ensure proper decisions are made.  From pre-qualification to post-qualification, the Special PBAC reviews the recommendations of the technical working group (TWG) and its consultants.

In each of the bidding stages, the TWG and the consultants are required to present their findings to the Special PBAC, which then has the opportunity to dissect the summary reports prepared and submitted by the TWG.

All these steps are taken in accordance with the Build-Operate-and-Transfer Law, which provides for the particular actions required in the conduct of bid activities.

Megawide has cemented its image as a mainstay in the government’s flagship infrastructure program, bagging a number of public-private partnership (PPP) projects: the P16.42-billion PPP for School Infrastructure Project (PSIP) Phase 1, two of the five contracts under the P8.8-billion PSIP Phase 2 and the P5.7-billion deal for the construction, operation and maintenance of the Philippine Orthopedic Center.

It has also purchased bid documents for the P64.9-billion Light Rail Transit Line 1  Cavite Extension Project and the P2.2-billion Integrated Terminal System Southwest Terminal Project.

The airport deal involves the construction of a new passenger terminal, renovation of existing terminal, operation and maintenance of both the new and the existing passenger terminals during the entire concession period, and relocation of Philippine Air Force facilities.

source:  Business Mirror

Phl must liberalize economy if it wants to join TPP

MANILA, Philippines - The Philippines needs to liberalize its economy, if and when it decides to join the Trans Pacific Partnership (TPP) agreement, an American business federation said.

“If the Philippines decides you want to do it (TPP), my advice would be to move, start liberalizing as quickly as possible because you will have to go to each of the current 12 partners and get their support. It has to be unilateral. All 12 have to agree,” US Chamber of Commerce vice president for Asia Tami Overby told reporters on the sidelines of the 2014 Asia Pacific Council of American Chambers Spring Summit yesterday.

She noted that as the US and 11 other Pacific countries such as Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam are in negotiations for the TPP, the Philippines needs to watch closely to determine whether being part of the agreement is in line with its national interest.

This, as she noted that joining the deal would entail commitments to high-level standards and market liberalizing measures.

The TPP aims to establish a free trade bloc which would represent more than half of global output and over 40 percent of world trade.

It sets standards for intellectual property, labor rights and environmental protection.

 

Overby said the Philippine Constitution’s restrictions on foreign ownership has to be looked into when the country decides it wants to be part of the TPP.

US Ambassador to the Philippines Philip Goldberg said in the same event that while there is growing interest in the business community for the Philippines to be part of the TPP, it is up to the government to decide whether taking part of the deal would be advantageous.

Finance Secretary Cesar Purisima acknowledged that the Constitution’s restrictions are among the challenges faced by the country in joining the TPP.

“We’re working with Congress on things we can do without changing the Constitution,” he said.
President Aquino has been firm in his stands on moves to amend the Constitution under his term.
Trade Secretary Gregory Domingo said earlier that while the Constitution’s limits on foreign ownership in certain sectors are not seen to meet the standards of TPP members, the Philippine government intends to seek flexibility to be allowed to join the pact.

“We will just have to negotiate so we will not have to do that (amend the Constitution),” he said.
Overby said seeking flexibility may not be an option once the negotiations are concluded and rules have been set by the members.

She said though that a longer period of transition to meet the high standards may be given.

“We will help the Philippine government learn about the processes so we will help them modernize their economy. It’s politically difficult to do but long term, from a competitiveness standpoint, its very smart in my opinion,” she added.

source:  Philippine Star

DOTC unveils P135-B subway project

MANILA, Philippines - The Department of Transportation and Communications (DOTC) unveiled yesterday major railway projects including the proposed P135-billion project to build an underground mass rail service between the Makati central business district and Pasay City.

During a meeting with prospective investors, DOTC Assistant Secretary Jaime Feliciano said the government is looking at increasing urban mass transport ridership to 2.2 million per day by 2016 or 2017 from the current level of 1.2 million per day under the government’s Rail Transport Development Plan.

Under the plan, Feliciano said the DOTC would develop intermodal facilities and at the same time improve transport linkages and efficiency to production and consumption markets.

On top of the list, was the P135-billion Mass Transit System including a “subway” or underground rail system to address the growing concern on traffic congestion in the fast growing urban centers in the cities of Makati, Pasay and Taguig.

The proposed 20-kilometer loop would consist of 16 kms tunnel and four kms elevated railway especially in the reclaimed area in Pasay City. The project would consist of 11 stations consisting of five underground, four interchanges and two elevated,” Feliciano said.

The DOTC is looking at forwarding the project to the National Economic and Development Authority (NEDA) for approval in the second or third quarter of the year afterwhich the government would bid out the project in the second quarter of next year.
 The DOTC also presented the proposed P284 billion North-South Commuter Rail stretching 89.7 kilometers from Malolos in Bulacan to Calamba in Laguna that could be extended to the Clark International Airport in Pampanga.

The agency also presented the P271-billion Integrated Luzon Railway project stretching 900 kms from Sorsogon in Bicol to Tugegarao in Cagayan.

The DOTC is also looking at establishing the 28-km Manila ( Quezon Ave.) bus rapid transit worth P4.65 billion. The bus service would start from Manila City hall to Philcoa in Quezon City and from Commonwealth to Fairview.

Likewise, the participants were also briefed about the Metro Rail Transit line 7 (MRT7) worth P66.5 billion stretching 22 kms from North Ave. in Quezon City to San Jose in Bulacan to be undertaken by diversified conglomerate San Miguel Corp. (SMC).

The agency is also set to bid out the operation and maintenance of the LRT2 being extended all the way to Masinag in Antipolo City .

Furthermore, the agency is also looking at extending the LRT1 all the way to Dasmarinas in Cavite on top of the ongoing bidding for the P65 billion LRT1 Cavite extension project to Bacoor also in Cavite .
Meanwhile, investors were lukewarm to the idea of the DOTC to bundle the bidding of the operation and maintenance of six different airports scattered in different parts of the country.

Noel Kintanar of conglomerate Ayala Corp. said it would be more feasible and viable if smaller airports would be bundled with bigger airports such as the Ninoy Aquino International Airport (NAIA) in Manila that has four terminals.

“If you want to drag along the smaller airports into a state of operation and maintenance that is world-class, the key is to bundle it with Manila . It is very clear opportunity to cross subsidize the poor airports with clear money making airports. You will hit two birds with one stone you address the issue un manila and you tag along the smaller airports,” Kintanar said.

The airports being offered include the New Panglao Airport , the Laguindingan Airport , Davao International airport, Iloilo , New Bacolod Silay airport, and Puerto Princesa Airport.

source: Philippine Star

DOTC: Lacks diligence, inept?

DOTC officials always say they are just being careful every time they justify their inability to get even one big ticket project going. We all accept the need to be careful. Even I assumed that the slow pace of public bidding, not one PPP project under construction after four years, is because their due diligence is thorough.

Well… prepare to be disappointed. I was going through the transcript of the Senate hearing on the Mactan International Airport and I hate to have my worse fears confirmed… there seems little due diligence to justify the delays.

Sen. Serge Osmeña’s questioning showed that they have been extremely bureaucratic in their approach to project proposals. Worse, their manner of evaluating project proposals can be described as perfunctory. In other words, token. A college student working with the help of Google should do a better job.

Now I understand the problem with DOTC. Now I see why they have used up so much time with very little to show. They are indecisive even in the application of rules they themselves formulated, as in that conflict of interest rule. Despite the battalion of lawyers, they are uncertain on the legal issues.
Just so my readers can get a flavor of the hearing, I will reproduce here relevant excerpts from the transcript. I hope P-Noy reads the full transcript so he will know he has a real problem at DOTC that demands his immediate action.

The characters here are: Sen. Osmena (SO), Sen. Trillanes, Cosette Canilao (CC), (Executive director of PPP Center), DOTC Sec. Abaya, Usec Lotilla, Usec T. Limcaoco, Atty. Pasion also of DOTC.

 

Sen. Osmeña is trying to find out from Atty Pasion, the head of the prequalification committee what kind of background checking or due diligence was done on the Mactan bidders.

SO: At that time, your official participation was head of PBAC?
Pasion: Yes, Your Honor.
SO: When was the PBAC organized?
 Lotilla: This was organized December 2012, Your Honor.
SO: 2012. Okay. So Atty. Pasion, you submitted a written report to the PBAC?
Pasion: Yes, Your Honor.
SO: How many pages was it?
Pasion: Just two pages, Your Honor. We stated there that ---
SO: You did your analysis in all of two pages?
Pasion: Yes, Your Honor. Just only a report, Your Honor, that the following ----
SO: It took you two months to write two pages. That is what you are telling the Committee?
Pasion: No, Your Honor. It took us about a month to evaluate all of the documents that were submitted.
SO: Sure. But don’t you explain what you evaluated?
Pasion: It was only a summary, Your Honor, that the following bidders are qualified to submit their bids for the project, Your Honor.
SO: … You are going to accept a two-pager that says, “Everybody is qualified”?

-o-

Here Sen. Osmeña tried to find out if they dug deeper into the claims made by the bidders in their submitted documents… Apparently, they merely took the word of the bidders and did not check if the bidders had problems in past projects.

SO: Well, they will never --- do you expect every bidder to say, “Well, these are the skeletons I have in my closet?”
CC: And on top of that, sir, we also stated there ---
SO: No, no, no. Answer that question first. Do you expect every bidder to be honest?
CC: Well, sir, the bidders are international operators, all of them and ---
SO: So, you’ve given them a seal of good housekeeping.
CC: Not only that, sir, but also --- There is this organization, the Aviation Council, Inc,…
SO: I want to know who undertakes the homework to look for the --- you know, here in the Senate, the Senate and House has a joint commission called the Commission on Appointments. And all the appointees all the nominees... undergo a background investigation. We do not depend on what the appointee says about himself.... So who undertook that for the DOTC?
CC: It’s also sir, in our --- it should be the technical --- and we also based this on the submissions of all the bidders.
SO: So, you’re saying, no one did?
CC: Actually, sir, informally, we also did because of our connections to the Aviation Council, Inc. And also…
SO: What do you mean “informally”?
CC: Yeah. Personally, sir, I made a presentation to the Aviation Council Inc. I think in 2012. And when I was there, I spoke to the president and also to some of the members of the ---
SO: And you called that a professional background check?
This line of questioning went on and on until:
SO: In other words, you did not have a professional group undertaking a deep background check on the qualifications, financial and non financial, of the various bidders concerned?
CC: It’s based on the sworn statement submitted by the bidders, sir.
SO: Oh, God! I’ll show you all the sworn statements that are submitted to us here. Really? If you believe them, then you would think they’re all candidates for sainthood. So you know, this is a very unprofessional way for you guys to go about these things. And, you know, which is why we questioned process because we want to perfect the process. And you guys are being so secretive that we don’t know what your damned process is. 
 ... But what you are telling the committee now, and correct me if I’m wrong, you didn’t do your homework…

-o-

SO: How far did you go in investigating the background of the various bidders?
Pasion: Sir, only insofar as their bid submissions are concerned, Your Honor.
SO: All right. Let me rephrase. Did you Google any of the bidders?
Pasion: No, Your Honor.
SO: No. You know, that’s the first thing my 14-year old daughter would do...
Pasion: No, Your Honor.
SO: Okay, Did you find out anything negative about, say, GMR?
Pasion: Like I said, beyond their submissions, Your Honor, I did not. 
SO: So, no one knew about these? All of these negative news that are coming out about GMR, none of you knew about because you are saying it was not in the rules and so, Usec Lotilla will tell me, “Well hindi naman ni-report iyan. He gave us a one pager.” That’s what you are telling the Committee?
SO: All right. And Secretary Abaya, the Committee would not be amiss in coming to a conclusion that the system that you’ve set up is flawed.

-o-

SO: You know, Mr. Secretary, it took me only one night of Googling to find out negatives about GMR. It took me about four or five hours including the printing and nobody in the DOTC did that...

-o-

SO: Megawide is a listed company. Meaning?
CC: When they presented to the BAC, it is also easy for the BAC members to countercheck.
SO: Which of the BAC members checked the background of Megawide?
TLimcaoco: Mr. Senator, for Megawide, being a publicly listed company, we relied on their financial statements that are submitted to the SEC. So that’s the background.
SO: You rely on their financial statements. That’s it?
TL: Yes, for their financial capabilities.
SO: Undersecretary Limcaoco, do you know everybody doctors their financial statements. That is the reason why there are phrases in the financial world that --- such as window dressing, such as and so, if they submitted it to the SEC, do you think the SEC checks? … So you don’t countercheck? You don’t go deeper. All right...

-o-

Eventually, Sen. Trillanes got an admission from Sec. Abaya that nothing has happened with the big ticket PPP projects.

ST: As correctly pointed out by the Chairman, this administration is on its fourth year and which among these big ticket projects have actually moved forward in the construction phase as compared to how many were launched, Secretary?

Sec. Abaya: In the construction, Your Honor, amongst the PPP, none yet.
ST: From day one, sir, of this administration?

 Sec. Abaya: None yet, Your Honor, for DOTC since day one. We would have wished LRT1 would have been the first and down the pipe, would have been AFCS and Mactan-Cebu, Your Honor. Again, this is only PPP, Your Honor. We have other projects that we’re undertaking for ports and airports and LTO, Your Honor.

Usec Lotilla subsequently claimed they have finished many airport and port projects, a hundred projects a year daw and cited the Daraga International Airport.

Usec Limcaoco claimed the same thing to me some months ago and when I checked with Albay Gov. Joey Salceda, he told me nothing was going on with the airport construction.

I checked again with Gov. Salceda the claim now of Usec Lotilla. The Governor’s response: “mukhang mas mabilis na ng konti but no cement yet.”
And that folks, is the story of DOTC.

Boo Chanco’s e-mail address isbchanco@gmail.com. Follow him on Twitter @boochanco

DEMAND AND SUPPLY By Boo Chanco (The Philippine Star)

Fitch sees PH 2014 GDP growth at 5.8%

The Philippine economy may grow “below potential” this year along with other economies in the Asia Pacific region, according to Moody’s Analytics.

In a commentary titled “Asia Pacific Outlook: A Slow Start to the Year,” Moody’s Analytics projected that Philippine gross domestic product (GDP) growth for 2014 may settle at 5.8 percent.

GDP is the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time.

The latest GDP forecast of Moody’s Analytics is way below its earlier forecast for the year of 6.5 percent and the Philippine government’s targeted growth range of 6.5 percent to 7.5 percent for 2014.
“Similarly, our 2014 forecast for Asia is broadly unchanged, although weak first-quarter data have accentuated downside risk. GDP growth for the full year will be below potential, particularly if the first quarter undershoots, but we expect growth to accelerate in the third quarter, nearing potential rates in most of the region by year’s end,” it stated.

The analytical firm also said it expects regional growth to be near 5 percent in the second half of 2014, from just above 4 percent in the opening half, with most economies reaching their potential growth rates in 2015.

On the other hand, it said that the rise in inflation later in 2014 will prompt some central banks to tighten monetary policy, adding that the Philippines’ Bangko Sentral ng Pilipinas will follow a rate hike among developed world central banks this year and into 2015.

“Rising rates will offset some of the capital outflows triggered by the US Federal Reserve’s moves to unwind its monetary stimulus, so most regional Asian currencies should finish the year only slightly weaker than they began it,” it added.

Moody’s Analytics also said that other risks to regional growth remain stable, but there has been talk among Southeast Asian central banks of an emerging housing bubble that would be vulnerable as the Fed unwinds its quantitative easing.

“Near-term risk appears low, but if house prices continue to rise in the next couple of years it could become a concern,” it warned.

The firm said that the challenge for all Asian central banks is that if the broader economy fails to improve enough to warrant higher interest rates, then these property markets, fanned by low interest rates, could inflate problematically and may require capital controls or some other form of macroprudential action.

Moody’s Analytics is a division of Moody’s Corp. and provides expertise in economic and consumer credit analysis, credit research and risk measurement, enterprise risk management and structured analytics and valuation.

source:  Manila Times

Restrictive policies ‘deter investors’

THE Philippines’ restrictive foreign ownership policy remains a major issue for many foreign companies, including those in Spain who want to invest in the country, according to the Spanish ambassador to the Philippines.

Ambassador Jorge Domecq, in a media briefing held at his residence in Makati City, said the Philippines should change some of its policies to attract foreign investments.

“We share the same concern as the other European Union [EU] countries, undoubtedly, that [foreign ownership policy] is an issue for many firms,” he said.

“I understand that it will require a law to enforce it but I think it will help encourage more Spanish investors down the road,” Domecq said.

The House of Representatives has started tackling a resolution that aims to amend certain restrictive economic provisions in the country’s 17-year-old charter. The measure specifically seeks to accelerate economic growth by removing restrictive economic provisions and offering foreign businesses a more conducive investment landscape.

The ambassador however noted that despite the country’s restrictive policies, Spanish firms continue to do business with the Philippines.

He said the first Public-Private Partnership (PPP) project involving the contract for the Daang Hari tollway was awarded to a consortium that includes Spanish engineering company Getina.

There are 10 major Spanish companies present in the Philippines including CEAMSA, the second largest producer of carrageenan, a product derived from seaweeds and used for preserving food.
Domecq announced the visit to Manila of Spain’s Minister of Foreign Affairs Jose Manuel Garcia-Margallo on March 24.

According to the envoy, Garcia-Margallo will meet with President Benigno Aquino 3rd and other key officials and will sign eight agreements between the Philippines and Spain, including the 6th Joint Commission for Technical Cooperation that deals with governance and disaster risk reduction.
“We will also be helping and will continue to support the peace process both with the Moro Islamic Liberation Front in Mindanao and throughout the country,” Domecq said.

Other possible agreements that will be signed during Garcia-Margallo’s visit are pacts on combating transnational crime; a cooperation plan between the University of the Philippines and Ateneo de Manila University and the Ministry of Education, Culture and Sports of Spain; memorandum of understanding on the Development and Promotion of Teaching Spanish Language and Culture between the Department of Science and Technology, Spain’s Ministry of Education and the Cervantes Institute and the Spanish Agency for international development cooperation; memorandum of agreement (MOU) between the National Statistics Office and the Consulate General of Spain in Manila and the MOU between the high council of chambers of commerce, industry and shipping of Spain and the Makati Business Club and the confederation of employers and industry of Spain.

source:  Manila Times

Electric companies’ P20-B highway robbery thwarted

There were two big news stories in the past two days affecting the lives of millions of Filipinos in Metro Manila and adjacent towns, but which, surprisingly or unsurprisingly, were buried in the inside pages of mainstream newspapers and reported only as in-the-meantime items. Except for this paper, that is. It bannered this news, for which I’m proud to be part of it.

The Energy Regulatory Commission has stopped the Manila Electric Company’s (Meralco) attempt in December and January to overcharge consumers by P20 billion.

Stung by public outrage that it wasn’t doing its job in protecting electricity consumers, the ERC last week ordered the Philippine Electricity Market Corp. (PEMC) that runs the wholesale Electricity Spot Market (WESM) to find out if Meralco’s claims of the high costs of electricity it bought at that market were correct.

Meralco had claimed that the steep rises of its rates for December and January were due respectively to the P33 per kilowatt-hour and P36/kWh price of the electricity it bought from the WESM in November and December.

False prices, PEMC president Melinda Ocampo reported Tuesday, because the power producers violated market rules, resulting in a colossal market failure. (See for clarification my January 5, 2014 column “USAID study: Electricity ‘spot market’ a farce.”)

Ocampo reported that her firm’s investigation showed that the WESM average price should be P6 per kilowatt-hour for November 2013, and P6.24/kWh in December—shockingly less than one-fifth of what Meralco claimed were the prices it paid for.

Meralco’s profits zoomed up in 2009, when the Indonesian tycoon Anthoni Salim’s firms took control of it.

(The WESM is the market in which companies are required to offer the power they produce, from which Meralco and other electricity-distribution firms purchase the electricity they need whenever the generator firms with which they have long-term supply contracts are unable to provide them with the power consumers need. )

Energy Secretary Carlos Petilla on Tuesday also pointed out: “The recalculated rates (of WESM) show a big gap.” And, “The (real) rate is a little over P6 per kWh. It’s an average price for both months. Compared to November and December, it’s a big drop,” said Petilla, who also chairs the PEMC.
This means the WESM power it bought in November should have cost Meralco not the P9.5 billion it reported, but just P2.1 billion, for a difference of P7.4 billion. For December, it cost Meralco not P12.3 billion that it claimed, but only P2.1 billion–a discrepancy of P10.2 billion.

The sum of the discrepancies of the two months is a staggering P20 billion.
An Oxford dictionary defines the idiom “highway robbery” as “the fact of someone charging too much money for something.” That’s a good definition as any for what Meralco and the power generators it bought from attempted to do.

This P20 billion cost would have been passed on in December and January to its captive market, the 10 million residents of metropolitan Manila and adjacent provinces, had the Supreme Court not stopped it in response to petitions claiming the rate hikes were illegal. The Supreme Court action, together with exposes by the independent press on the issue, drove the Energy Regulatory Commission and the PEMC to investigate Meralco’s pricing, especially the costs of its purchases from WESM.
Based on the more accurate WESM prices, the ERC yesterday ordered that Meralco adopt the more accurate rates. It should be P5.9/kwh for December, not the P9.1/kwh Meralco had claimed last year, and for January, P6.1/kwh, not P10.2/kwh.

Those false prices mean huge amounts for a consumer. If you consume 400 kilowatts per month, the more accurate computation would cut your bill by roughly P1,280 for December and P1,640 in January.

The necessity to report and explain the issues using per-kilowatt hour figures conceals the suffering — yes the suffering — inflicted by Meralco’s high rates on Filipinos, who have no choice but to get their electricity from Meralco.

A worker would have paid P1,820 for the 200 kilowatt hours he consumed in December, based on Meralco’s original billing. Under the more accurate bill ordered by the ERC, he would pay only P1,180 — P640 less, a boon that he he would use to buy more nourishing food for his malnourished family.
Try visiting a Meralco frontline office: It’s usually crowded as wageworkers and the poor try to beat the deadline to pay their bills. I’ve even seen poor folks begging, crying for more time to pay, and for the lineman to reconnect their electricity.

The P33/kWh and P36/kWh price at which Meralco bought from the market were the highest in WESM prices since July 2007, when it became fully operational. From that date to October 2013, WESM prices averaged only P7.8 percent, which would give the generators reasonable profit.
However , WESM average prices spiked in the 2012 months of March (P16.3/kWh), June (P20.7), and July (P14.7/kWh). These rate spikes however were not noticed at all, since no one complained against these by filing a suit at the Supreme Court.

The very valid question therefore arises: Were these spikes also unreasonable and due to market failures? Shouldn’t the ERC also investigate these to find out if consumers were actually fleeced by Meralco’s rates, pushed up by these “market prices”?

Discovering now that WESM prices in the last two months of last year were wrong, the ERC should fulfill its mandate for protecting consumes by investigating how Meralco’s profits have been zoomed up since 2009, the Indonesian Anthoni Salim’s firms became Meralco’s controlling stockholders. (See table, and also my column Jan.12, “Meralco’s been raking it in: Why?”)

Is this due to Meralco’s efficiency, to the skill of its new management, especially the purported management genius, its CEO Manuel Pangilinan?

Or is it due to ERC’s failures by allowing the utility company to raise its rates every year, a case of what has been called in economic literature as “regulatory capture”?

Indeed, Indonesian-owned First Pacific Co., Ltd that effectively controls Meralco reported in its 2011 annual report that Meralco’s core income rose to $344 million that year (from $270 million) “due largely to higher tariffs.” In 2012 when its core EBITDA* margin fell, the firm’s report said it reflected “a decrease in (Meralco’s) distribution charge.” (*EBITDA: Earnings before interest payments, taxes, depreciation and amortization.)

What I find outrageous is that even as we have been suffering higher electricity rates since the Indonesian tycoon took over Meralco, his corporate vehicle First Pacific, right after it gained control of Meralco, has jacked up its dividends from it, totaling $128 million from 2009 to 2012.
I’m afraid we’ve lost the capacity to be outraged.

tiglao.manilatimes@gmail.com
www.trigger.ph and www.rigobertotiglao.com

source:  Manila Times

12 airports up for upgrades

THE GOVERNMENT plans to upgrade 12 airports, including Manila’s dilapidated main international airport, as it seeks to attract 10 million foreign tourists by 2016 and help fuel one of Asia’s fastest growing economies.

Three of the projects have a combined cost of up to P54.6 billion while costs for others are still being finalized.

Half of the planned projects will be done through the Public-Private Partnership (PPP) scheme, Cosette V. Canilao, executive director at the agency overseeing the program, told reporters on the sidelines of an investors’ forum in Manila.

Ms. Canilao also said operations and maintenance of these airports could be "bundled" into one tender, which will be offered to investors later this year.

Transportation Undersecretary Rene K. Limcaoco said the government was looking at building a new terminal for the Ninoy Aquino International Airport (NAIA) in Manila, the Philippines’ main gateway, which is also undergoing repair.

The Puerto Princesa Airport on Palawan island, southwest of Manila, and Clark International Airport in Pampanga, north of the capital, are included in the list of gateways which the government wants to modernize and upgrade.

The planned upgrades will "ease our logistic costs, alleviate our traffic congestion and support the target of the Department of Tourism to achieve its 10 million tourists for 2016," Mr. Limcaoco said at the forum.

The Philippines attracted 4.7 million foreign tourists last year, 300,000 short of its goal, state data showed.

President Benigno Aquino wants to make the tourism sector one of the key drivers of the economy. The economy grew 7.2% in 2013, the second fastest in Asia after China.

Rehabilitation of NAIA Terminal 1 will be completed by early 2015 at the latest, while the airport’s Terminal 3 will be fully-operational in July this year, said Mr. Limcaoco.

He also said the Department of Transportation and Communications (DoTC) is sticking with its end-March target to award the P17.52 billion ($391 million) PPP contract for the Mactan-Cebu International Airport Terminal (MCIA).

‘WE WILL NOT BE BULLIED’
The consortium of GMR Infrastructure Ltd. and Megawide Construction Corp. (GMR-Megawide) has made the highest bid, P14.4 billion, for the MCIA project.

Awarding has been delayed two months, however, due to conflict of interest allegations by a rival bidder, the consortium of Filinvest Development Corp. and Singapore’s Changi Airports International (Filinvest-Changi).

There was also a Senate hearing earlier this month on GMR-Megawide’s ability to finance the project, which consortium officials assured in a press conference yesterday.

"The funds are ready. If we’re given the award, we’ll present the check," GMR Deputy Chief Executive Officer Andrew Acquaah Harrison said at the press conference in Cebu yesterday.

Mr. Harrison said "very advanced talks" are being held with three local banks. The Asian Development Bank, International Finance Corp. and Standard Chartered Bank have also issued testimonial letters on GMR-Megawide’s good financial standing, he added.

Manuel Louie B. Ferrer, Megawide chief marketing officer, said BDO Unibank, Inc., which also funds other Megawide projects, heads the consortium of local banks willing to support the airport projects. He added that the same group of local and foreign banks had also financed around 70% of the P14.4-billion upfront payment.

"We believe this [contract] is rightfully ours. We will not be bullied into retreating. We believe we have the financial and technical capability [to undertake the project]," Mr. Ferrer added.

CONFLICTING REPORTS
In a related development, Senator Sergio R. Osmeña III yesterday chided Ms. Canilao for purportedly announcing that the MCIA contract would be awarded to GMR-Megawide.

A newspaper had reported on its Web site on Tuesday that the PPP Center official had said the DoTC was keeping to its target to award the contract to the consortium by the end of March.

"It is highly irregular that Ms. Canilao has taken it upon herself to speak with authority that the DoTC is set to award the project to GMR-Megawide before the end of the month, even prior to the PBAC’s (Prequalification Bids and Awards Committee) submission of its findings and recommendations to the MCIA Board," Mr. Osmeña said in a press release yesterday.

Asked for comment, however, Ms. Canilao denied ever disclosing that the DoTC would do so.

"I don’t know where he [Mr. Osmeña] got the information that I said that. I did not [announce anything]," Ms. Canilao told BusinessWorld in a text message yesterday.

Mr. Osmeña, in turn, cited the said news report.

For his part, DoTC Spokesman Michael Arthur C. Sagcal told BusinessWorld in a separate text message that the department is still evaluating GMR-Megawide’s qualification requirements.

"We’re in the post-qualification stage, specifically financial evaluation." Mr. Sagcal said. -- Reuters with inputs from Marites S. Villamor in Cebu and M.L.V. Angeles in Manila

source:  Businessworld

Megawide, partner confident of getting Cebu airport project

By Lawrence Agcaoili (The Philippine Star) |

MANILA, Philippines - The tandem of Filipino-owned Megawide Construction Corp. and Bangalore-based GMR Airports is confident of bagging the P17.5 billion contract to expand the Mactan-Cebu International Airport.

In a statement, Louie Ferrer, chief marketing officer of Megawide, said the group is optimistic that it won the bidding conducted by the Department of Transportation and Communications (DOTC) last December for the expansion of the country’s second largest international gateway.

“We participate in PPP projects because we believe in President Aquino’s Daang Matuwid system. We are a young company, idealistic, and we want to build a good brand for Megawide,” Ferrer said.
He pointed out that the tandem of Megawide and GMR Airports would be guided by President Aquino’s vision of integrity and world standards in its infrastructure projects under the public-private partnership (PPP) program.

Ferrer issued the statement after DOTC Undersecretary Jose Perpetuo Lotilla confirmed that the agency’s bids and awards committee would finally issue a notice of award for the project before the end of the month.

The awarding of the project has been delayed due to the allegations made by the Filinvest Group on the conflict of interest committed by the Megawide-GMR Group in violation of the bidding rules.

Ferrer reiterated that the allegations of the Filinvest Group are baseless and far-fetched.
“All companies were pre-qualified based on strict guidelines set by the DOTC’s bid and awards committee. GMR-Megawide followed the process to the letter and passed all financial and operational criteria for the project,” he explained.

He added that the Megawide-GMR Group has already disclosed all relevant information to the DOTC pertaining to possible conflict of interest issues.

Contrary to allegations made during the Senate hearing on Tuesday, GMR Group maintains that it is in a financially healthy position and that the company makes operational and cash profits as it has done for the past six years.

Belying Filinvest’s claims, GMR stressed it is a BBB+ rated investment-grade company and they have never defaulted in any interest or debt payments throughout their history, and have raised more than $10 billion in debt for its various other projects.

“There is no ground for anyone to question GMR’s financial capability and we are confident that this is a non-issue with respect to the results of this bid,” Ferrer said.

The Megawide-GMR Group submitted the highest bid of P14.404 billion for the project last Dec. 12 followed by the Filinvest – CAI Consortium with P13.999 billion, and Premier Airport Group of SM Group of retail magnate Henry Sy with P12.5 billion.

Govt eyes probe of ‘Salim empire’

be enough evidence for such investigation to push ahead. “If our Constitution or any law was violated, of course it is the government’s duty to investigate and hold the culprits liable. That’s why if there’s information about that, it should be brought to the attention of the government,” Coloma said.
The Palace official was reacting to a series of articles written by The Manila Times columnist, former Ambassador Rigoberto Tiglao, detailing how Salim built his business empire in the Philippines, using the influence of businessman Manuel Pangilinan.
“Pangilinan owns only 0.09 percent of Salim’s flagship firm Metro Pacific Investments, and 1.4 percent in the parent company, First Pacific. The Indonesian tycoon’s holding companies own in those firms 56 percent and 45 percent, respectively, with the rest of the shares dispersed to thousands of stock market investors,” Tiglao said in his column.
“For his huge role in building up Salim’s empire, Pangilinan has no share at all in any of the three offshore firms, which at the end of the corporate layering ultimately own the empire,” he added.
The Times column further revealed that “according to Hong Kong-based First Pacific Co. Ltd. in its 2012 annual report, Salim’s holding and ‘command’ firm, profits from its Philippine operations now exceed those in the magnate’s home country, Indonesia, by about $200 million.”
Salim’s firms in the Philippines include the Manila Electric Co., the Philippine Long Distance Telephone Co., telecommunication companies Smart and Sun, and several other utilities and media outfits.
Coloma, meanwhile, said the issues should be made clear first by anyone who would formally accuse the businessmen of breaking the law and the Constitution itself.
“We should know the issue. It is the job of government to implement the law if particular complaints are raised by any group,” he stressed.
It was further alleged that Salim’s lieutenants are the ones pushing for the economic Charter change being espoused by no less than House Speaker Feliciano Belmonte Jr.
Pangilinan is known to have an interest in Belmonte’s Star Group of Companies that publishes, among others, The Philippine Star.

source: Manila Times

The newest media mogul to take control of Star

Fourth of a series on the Salim Empire in the Philippines.
And what—or who—is that emerging Philippine media giant?

It’s Philippine Long Distance Telephone Co., controlled by Indonesian tycoon Anthoni Salim, through its subsidiaries MediaQuest, Inc. and Hastings Holdings.

Hastings Holdings Inc., a wholly owned PLDT subsidiary,  is poised to take control this month one of the three largest broadsheets in the country, The Philippine Star.

As in the case of  its TV-5 television network, it could be a booster rocket for Philippine Star if PLDT  throws its advertising funds to the newspaper.

PLDT is a firm that is 64 percent controlled by foreigners, the Supreme Court itself had ruled in 2012. The biggest bloc of shares there, 27 percent, is held by Salim’s corporate vehicles under his First Pacific Co. holding company based in Hong Kong.

Manuel V. Pangilinan, who is the managing director and CEO of Salim’s Hong Kong-based holding firm First Pacific Co., is chairman of PLDT. He has   token shares of of only 0.1 percent of the company. Its president is Napoleon Nazareno, the only other director, though a non-executive one, in First Pacific’s board.


Philippine Star president Miguel Belmonte confirmed to this writer that Hastings Holdings is set to buy “an additional 31 percent of Philippine Star’s shares from the Belmonte family “to bring its stake to 51 percent.”

“The Belmonte family [headed by Speaker Feliciano Belmonte] will remain as minority shareholder with 20 percent,” he said. The next biggest shareholder is the estate of the late publisher and distinguished columnist, and nationalist, Max Soliven.

What the PLDT firm will be controlling is actually the newspaper’s corporate vehicle PhilSTAR Daily, which owns a printing press and three tabloids (Pilipino Star Ngayon, PM: Pangmasa, and Banat News). It also owns the venerable broadsheet Freeman, the first and oldest newspaper in Cebu established in 1919. (Freeman is actually the country’s third oldest newspaper, with Manila Times the oldest, followed by The Manila Bulletin.)

Belmonte explained that the sale to the PLDT firm has been agreed on, and all the documents are being finalized. “But the sale is not a sale, until we’re actually paid,” he said.

How much? “Much more than P2 billion,” Mr. Belmonte said. My sources claimed that the ballpark figure for the purchase is P5 billion.

The purchase will give Salim, through PLDT, full control of two national newspapers, the Philippine Star and business newspaper BusinessWorld. Also through Hastings Holdings, Salim has a minority—18 percent–stake in Star’s rival The Philippine Daily Inquirer..

Political force

Salim and his top executive Pangilinan, sources say, are on a tack this year of strengthening and expanding the conglomerate’s media outfits, in order to be a major force in the 2016 presidential elections. Last year, MediaQuest amassed a war chest of P8 billion for this, and made a move, unsuccessful, to take control of GMA-7, the second biggest television network.

Salim’s executives have recently moved to take full control of BusinessWorld, appointing their editor in TV5, Roby Alampay, whose career has been mainly in an NGO in Thailand, as the business paper’s editor-in-chief.

Another PDLT firm, MediaQuest, owns two major broadcast media companies. One is the Nation Broadcasting Corp. bought way back in 1998. It has six FM stations in the country’s six major cities and a commercial UHF television station (NBC-41), called AksyonBalita.

The second broadcast media outfit, is ABC Development Corp., which operates television network TV-5, the radio station Radyo5 92.3 News FM, satellite television channels Colours, Hyper and Weather Information Network, and media portals Kristn.com, Balut Radio and News5 Everywhere.
It also owns the news website interaksyon.com, which converts the broadcast entity’s content including its news videos to be accessed in cyberspace. The firm also owns Cignal TV, the “direct-to-home” satellite television service provider.

The Salim-PLDT media complex could become the most powerful one in the country, since it can combine the strengths of television, print (both broadsheet and tabloid), radio, the Internet, mobile telephony (which PLDT through Smart and Sun dominates)—and of course the financial resources of PLDT as well other major firms under the Salim empire.

Media survives not by subscribers, but by advertisements. And what companies are among the biggest advertisers in the country?
PLDT’s mobile phone firms Smart and Sun, which have a combined advertising budget of P5 billion annually.  Meralco has P2 billion, which is included in the expenses of the firm on which it bases its electricity charges.

Already, TV-5’s lifeline—which explains its endurance despite its losses allegedly of P5 billion since MediaQuest bought it in 2010—has been getting about P900 million annually of PLDT’s advertising funds of since 2010. PLDT disclosed this in its March 26, 2013 “SEC Form 17-A”:

“In 2010, PLDT and Smart entered into advertising placement agreements with TV5 a subsidiary of MediaQuest Holdings Inc. for the airing and telecast of advertisements and commercials of PLDT and Smart on TV5’s television network for a period of five years. Total prepayment under the advertising placement agreements amounted to Php893 million each as at December 31, 2012 and 2011.”

Synergized media

In his column last year when news of PLDT’s plans to take control of Star broke out, Jose Manuel “Babe” Romualdez, a Star columnist and personal friend of Mr. Pangilinan, wrote:

“The MVP group foresees synergized media operations, wherein the reporting pool of BusinessWorld, PhilStar and TV5 [the PLDT Group’s broadcasting network] will be serving as content providers while Cignal Digital TV will serve as the interactive media platform. Cignal just recently marked a milestone, reaching the 500,000 subscriber mark in just four years of its operation.”

What Mr. Romuladez missed is the immense reach the news content of Salim-PLDT’s news outfits could have through the companies’ mobile phones. Already, TV 5 is claiming in its ads: “Get fresh news daily straight on your mobile. Just text “News on” to 5353.” Smart and Sun operates that service, and they’ll get P1 for each news item it sends.

I doubt though that Salim and Pangilinan are really that interested in the income from such mobile phone based news delivery.

What if on the eve of elections in 2016, news article—even if a fabricated one—in Star or BusinessWorld comes out that Presidential Candidate B has fallen sick? And then this is sent to the 5.5 million subscribers of Smart and Sun?

Why has Salim gone into a crowded industry, whose profits would never be really stellar because of the Philippines’ small market, where the country’s richest tycoons like Henry Sy, John Gokongwei, and Jaime Augusto Ayala don’t dare go into?

Think about it. Now, do you still wonder why most Filipinos, even the elite have never heard of the Indonesian magnate Salim, even if the companies he owns are the ultimate beneficial owners of the biggest public utility firms? (See my article March 3)

Or is it that media, as one publisher said, are a “gun in the holster.” “A politician or a company would hesitate to shoot you, if you have a gun the holster,” he said.

But hold on, how can Salim get into media? Doesn’t the Constitution’s Article 16, Section11, totally ban any foreign participation in media?

If you think that it is so outrageous that a foreigner can control strategic industries in the country, you will be shocked how clever Salim has been—with the help of that renowned Filipino ingenuity in finding loopholes in any restriction—in going around that constitutional ban. That topic on Friday.
What kind of country have we become?

Our constitution is brazenly disregarded by a foreigner by exploiting regulatory loopholes, with the help of the best and brightest Filipinos.  An Indonesian magnate is in an industry reserved to Filipinos.
The late Star publisher Max Soliven, one of my idols in our industry, would have undoubtedly remarked, “Sanamagan!”

tiglao.manilatimes@gmail.com
www.trigger.ph or www.rigobertotiglao.com