Wednesday, December 31, 2014

EDITORIAL: While the iron’s hot

The year 2014 may well be remembered as the year when government policymakers woke to the reality that the economy needs their proactive involvement to achieve a faster growth rate.
For the first time since President Aquino assumed office, the administration actually started moving—and at an impressive pace—on the public-private partnership program, which is the cornerstone of its economic program. Not everything was smooth sailing, of course; just like anywhere else in the world, it never is. But government bureaucrats, or at least some of them, finally set aside their interminable planning sessions and overdone feasibility studies and decided to “just do it,” as that famous sneaker ad counsels.

This is important because, for all the professions of love that the administration has made for “inclusive growth”—that is, ensuring that the benefits of a resurgent economy are felt as much by the poor as the rich—it seemed to overlook the fact that the billion-peso fortune it continues to funnel into its Pantawid Pamilyang Pilipino subsidy program is but a stopgap measure. For genuine inclusive growth to take hold, only the participation of the private sector on a massive scale will do. But the administration, with its dogged focus on cleaning up the government in the first few years of its term,
appeared to forget that private-sector initiative can only be spurred with public-sector policies.
The administration’s moves to spur faster economic growth could not have come at a more opportune time. The Philippines has received another credit-rating upgrade from an international debt watcher, pushing the country higher into investment-grade territory. This means that all Philippine entities, from the government to private corporations, can borrow funds from overseas at lower interest rates. With global interest rates set to rise, this is a welcome development on which Filipinos should not fail to capitalize.

Indeed, there is a large infrastructure gap which the Philippines needs to bridge if it is to join the ranks of more developed nations and reduce poverty. This gap can only be reduced by a massive infrastructure program, and there is no better time to do it than the present, with the small window of low borrowing rates still open to the country. It is this small funding window that would allow the government to bring into higher gear the rehabilitation and reconstruction program it has put up in response to the damage Supertyphoon “Yolanda” wrought on Eastern Visayas.

Month after month in 2014, pundits expressed dismay at reports of persistent underspending by the government. It’s time for the administration to abandon this miserly approach to economic stimulus and actually start spending where the funds are needed.

Finally, there is the good news brought about by the drop in oil prices worldwide. The Philippines—being an importer of “black gold” to run everything from motor
vehicles to power plants—is widely expected to benefit from this phenomenon. Consumers are actually beginning to feel the benefits through lower petroleum prices and, slowly, lower public transportation fares.

The public is of course hoping that prices of consumer goods would soon follow the downtrend. But if economic theory and practice have anything to teach us, it’s that prices tend to be “sticky” on the upside. That is, once people get used to selling their goods and services at higher prices—whether they be large corporations, office employees, or the smallest traders—they become hesitant to settle for less, even when their costs have declined.

(The sharp drop in oil prices holds many risks as well, with some scenarios being quite devastating for the global economy. But that is for another, less festive, time.)

So once more, the onus falls on government policymakers to make the benefits of all these positive developments reach the lowest rungs of Philippine society’s ladder. With less than two years left, the Aquino administration must do so with utmost urgency. Barring that, it must unfetter the private sector with the same urgency and get rid of the bureaucratic roadblocks that have been hindering development.

It can well be this administration’s resolution for the new year: Move faster, or get out of the way. Good times never last, at least economically speaking. Everyone in the public and private sectors must strike while the iron is hot.

source:  Philippine Daily Inquirer

NAIA development now focused on 5th terminal, not runway -- Abaya

CONSTRUCTION of a fifth terminal at the Ninoy Aquino International Airport (NAIA) is expected to start in 2016, the Transportation department said, with plans for a third runway now on hold on the advice of consultants studying the project.

Transportation Secretary Joseph Emilio A. Abaya told reporters in an interview in Mandaluyong City on Dec. 22 that the department hopes to start construction of a new terminal “in 2016” after “consultants advised to shift our attention away from the building of a third runway.”

Although there is still no final location set for the new terminal, Mr. Abaya said: “It will be within the NAIA property,” and accessible from South Luzon Expressway and C-5 Road.

In September, the Department of Transportation and Communications and the Civil Aviation Authority of the Philippines announced that President Benigno S. C. Aquino III had ordered the construction of the third runway at NAIA, at the time estimated to cost about P2.4 billion.

The plan for the proposed 2,100-meter runway was to augment the two Manila runways servicing domestic and international flights and allow airlines to expand operations to meet growing demand. The runway was to have involved the relocation of about 142 families in Parañaque City, Mr. Abaya had said earlier.

“Offhand, the consultants we hired were saying, there are (better) prospects for a new terminal than a third runway,” Mr. Abaya told reporters.

“They really doubt (whether an additional runway) could add to (aircraft) movements... The consultants said the main thing to do is preserve your main runway, maximize your main runway, try to eliminate all forms of obstructions or delays on it, keep planes off it most of the time. Given that as your main objective in runway optimization, planes crossing that is definitely not a welcome operation,” he explained.

Mr. Abaya was referring to possibility of the third runway crossing the current primary runway, known as 06/24, which is used by aircraft approaching over Manila Bay or Rizal.

For the construction of the new terminal, Mr. Abaya said, that there will be “no need to expropriate land.”

“It will require less land so we don’t eat into private subdivisions, what would be affected are informal settlers within MIAA (Manila International Airport Authority) property. We don’t affect C-5. Once the consultant shows the numbers, we’ll go up to the President and present it,” he added.

Asked about the new terminal’s estimated capacity, Mr. Abaya replied: “None yet, but we will maximize it, because one of the challenges is that NAIA doesn’t have enough parking space.”

“We’re waiting for the decision on procurement. It will take them a year to study and recommend and execute the plan. We’ll know it before 2015 ends and I hope within 2016, we can start construction,” Mr. Abaya said.

He clarified, however, that the construction of a fifth terminal will not solve congestion at NAIA. “Even if we put this up, there will still be need for terminal space so we will create more space in terminals 1, 2, 3 and 4.”


source:  Businessworld

Sunday, December 28, 2014

Can government succeed with LLED?



AFTER several delays, the latest word is that the Department of Public Works and Highways (DPWH) has targeted the beginning of August 2015 for the awarding of the Laguna Lakeshore Expressway-Dike (LLED) project.
As we have previously written, this is an important project that will have substantial and offers long-term benefits to Metro Manila and the surrounding area. The first phase is a 47-kilometer-long six-lane road that incorporates a flood-control dike, bridges, pumping stations and floodgates. The expressway will run from the city of Taguig to the municipality of Los Baños in the province of Laguna.
The second part of the LLED will be the reclamation of approximately 700 hectares west of the expressway-dike in Taguig and Muntinlupa, separated from the existing Laguna de Bay shoreline by a 100-meter to 150-meter channel. The total project cost is estimated at P123 billion and is being undertaken as a public-private partnership (PPP) project.
As with all government infrastructure proposals, and perhaps particularly with the LLED, there are some controversies. The LLED is not simply building a new road, but will forever change the Laguna de Bay and surrounding area.
However, there is always going to be opposition to change, even if that change is useful and advantageous. It is only human nature.
The LLED is the largest PPP project in terms of cost. But the importance of the project is that it is a “game-changer” that will forever alter the region. This is not simply building a road or a flood-control dike.
While certainly on a much smaller scale, this is like China’s Three Gorges Dam in terms of economic and social impact. This project changes Metro Manila in a similar way that moving the Hong Kong International Airport to Chek Lap Kok island did. The LLED is like the Four Rivers Restoration Project of South Korea, combining economic and environmental goals.
The LLED will require the close cooperation of several critical national government agencies. The regional Laguna Lake Development Authority is deeply involved. Further, every local government unit along the path will be affected including that of the cities and municipalities of Taguig, Muntinlupa, San Pedro, Santa Rosa, Cabuyao, Calamba and Los Baños.
The LLED, though, is not just a major infrastructure project; it is a test for the government. Its success or failure depends solely on the Philippine government. Once and for all, the Philippine government, no matter who happens to be the president, will prove whether or not it has the ability to do its job in providing for the public.
That is the real legacy of the LLED.
source:  Business Mirror

Gov’t sets game changing infra projects in next 18 mos

The Aquino Administration said it will prioritize the implementation of “game-changing” and “strategic” infrastructure projects in the next 18 months or before changes in government leadership take place.
This developed following a meeting of Socioeconomic Planning Secretary Arsenio Balisacan, Finance Secretary Cesar Purisima, Public Works Secretary Rogelio Singson and Transportation Secretary Joseph Emilio Abaya. During the meeting, the four Cabinet officials agreed to identify and set the list of the Aquino Administration’s priority infrastructure projects.29infra projects
“Basically, we need to come up with our final last push for the last 18 months and where will we take infrastructure beyond us,” Abaya told reporters about the meeting.
Abaya and Singson are supposed to submit the list of priority projects of the Department of Transportation and Communications (DOTC) and the Department of Public Works and Highways (DPWH). The National Economic and Development Authority (NEDA) will then consolidate the list and decide on which projects are game-changing and strategic together with the Department of Finance (DOF).
For his part, Abaya claimed that all projects under the DOTC are game-changers and should be prioritized.
“We’ve mentioned everything (under DOTC) because even the operation and maintenance of Manila airport could be a game changer if you allow private sector like Changi or Incheon operating the whole NAIA complex. That in itself can be a game changer,” he said.
Abaya mentioned DOTC’s priority list that include all rail projects, especially the Philippine National Railways’ Integrated Luzon Railway and North-South Commuter Rail projects and the two subways planned in Metro Manila. All airport projects were also included, especially the new international gateway planned in Sangley Point, Cavite.
By prioritizing key infrastructure projects, Abaya said the Aquino Administration hopes to implement projects that will have more impact to the society.
“The plan is to carry connectivity, access and transportation even beyond this administration. These will be key strategic game changing infrastructure projects. Hopefully these will solve the headaches, woes and congestions of today,” he stressed out.
The list of priority projects will be finalized early next year and Abaya said it will be a noteworthy resource for the next administration.
“Hopefully, the next administration and whoever will replace us will continue these projects and see that these were crafted based on merits, without agenda or political interest. (This list of priority projects) will help them hit the ground running because from Day 1, they have plans laid out with the best interest of the people in mind,” he added.
It is not clear how many projects are still pending for awarding and implementation under the DOTC but the agency is the implementing agency of at least 25 projects currently in the Public-Private Partnership (PPP) pipeline.
To date, the DOTC has successfully bid out three out of the eight PPP projects awarded by the Aquino Administration.
source:  Manila Bulletin

Wednesday, December 24, 2014

SPRB (Strengthening Program for Rural Banks) Plus extended anew

A PROGRAM aimed at encouraging mergers and consolidations in the banking industry, set to expire next week, has been extended by regulators for another year.

In a statement on Tuesday, the Bangko Sentral ng Pilipinas (BSP) said that it and the Philippine Deposit Insurance Corp. (PDIC) “have approved the extension of the Strengthening Program for Rural Banks (SPRB) Plus from Dec. 31, 2014 to Dec. 31, 2015...”

This, the BSP said, was “in response to the clamor of banking industry associations for the program’s extension to accord opportunity and encourage more mergers, consolidations and acquisition of eligible rural banks and thrift banks by strategic third-party investors.”

In August 2012, the BSP and the PDIC launched SPRB Plus, a P5-billion program that encourages healthy banks to come to the aid of their troubled peers.

SPRB Plus allows universal and commercial banks to take over ailing rural or thrift banks. It is an enhancement of the SPRB launched in 2010, which only allowed strong rural banks to take over weak ones.

The program was created by the PDIC and the BSP to prop up troubled small banks and at the same time pave the way for orderly exits.

Strategic third-party investors or white knights can apply for branching incentives and financial assistance. Special branch licensing fees can also be waived, based on the amount of capital infused.

According to the statement, seven SPRB plus applications involving 14 banks have been approved by the BSP and the PDIC as of Dec. 18.

In addition, four strategic third-party investors were granted branching incentives, without the financial assistance component from the PDIC, for their acquisition of eligible banks, the central bank said.

The BSP also noted that two other applications for acquisition are currently being processed.

“With this extension, we expect to receive more proposals. We urge the industry to avail of this limited opportunity. Considering the much stronger condition of the banking system today, this may be the last extension,” BSP Governor Amando M. Tetangco, Jr. was quoted as saying in the statement.


source:  Businessworld

PPP director expects 9 projects for rollout by 2015

AT LEAST nine public-private partnership (PPP) projects could be rolled out by next year, the head of the PPP Center said on Tuesday, after three of these gained approval from a government economic planning panel earlier in the week.

PPP Center Executive Director Cosette V. Canilao told reporters during the PPP Yearender media conference in Quezon City that ”more or less nine projects as of today” will be rolled out by next year.

These concessions are the P374.5-billion Makati-Pasay-Taguig Mass Transit System Loop; the P177.215-billion North-South Railway Project (South Line); the P50.18-billion Regional Prison Facilities through PPP; the P35.4-billion Cavite-Laguna Expressway (CALAX); the P25.6-billion North Luzon Expressway (NLEx) -- South Luzon Expressway (SLEx) Connector Road; the P19.332-billion Motor Vehicle Inspection System Project; the P18.99-billion Davao Sasa Port Modernization Project; the P1.161-billion Civil Registry System-IT Project (Phase II); and the P400-million Tanauan City Public Market Redevelopment.

Three of these projects were approved on Monday night for rollout by the National Economic and Development Authority-Investment Coordination Committee-Cabinet Committee (NEDA ICC-CabCom). These are the new terms for the rebidding of CALAX, the NLEx-SLEx Connector Road, and Tanauan City Public Market Redevelopment.

Ms. Canilao said the new terms for the contract to build and operate the 47.018-kilometer CALAX was approved by the NEDA ICC-CabCom during its Dec. 22 meeting.

This follows Public Works and Highways Secretary Rogelio L. Singson’s statement earlier this month that the new auction will have a floor of P20.1 billion -- the top premium San Miguel Corp.’s Optimal Infrastructure Development, Inc. offered to pay apart from project costs in the scuttled first tender. He added that the arrangements will involve ”a shorter one-stage bidding process where both technical and financial bids will be opened simultaneously.”

The NEDA ICC-CabCom also decided to move forward with an unsolicited proposal for the NLEx-SLEx Connector Road, but rejected the original proponent’s request for a joint venture with state-run Philippine National Construction Corp. (PNCC).

Last Oct. 29, Metro Pacific Tollways Corp. proposed to the Toll Regulatory Board the PNCC joint venture.

The project aims to connect the capital’s two main north and south expressways. It involves the construction and operation and maintenance of a 13.4-kilometer, four-lane elevated expressway which starts in Caloocan City and ends in Buendia, Makati City.

“The NEDA-ICC-CabCom also approved the Tanauan City Public Market project... the first LGU (local government unit) PPP project approved by the ICC-CabCom,” Ms. Canilao said.

“We are hoping this will be replicated by other LGUs aiming to get the private sector to be their partner,” she added.

According to Ms. Canilao, the NEDA ICC-CabCom will meet again on Jan. 14 to take up other projects, such as the Civil Registry System-IT Project (Phase II), North-South Railway Project, and Makati-Pasay-Taguig Mass Transit System Loop.

“We’re hoping that we’ll able to get a NEDA board meeting by the end of January to secure approval for these projects and roll out these projects first quarter or early second quarter of next year,” she added.

Ms. Canilao said PPP Center plans to start the bidding process for the CALAX and the NLEx-SLEx Connector Road in the first quarter of 2015.

The North-South Railway Project, Motor Vehicle Inspection System, Makati-Pasay-Taguig Mass Transit System Loop, and Civil Registry System-IT deals, according to Ms. Canilao, are targeted for rollout in the first or second quarter next year after the approval of NEDA ICC-CabCom and NEDA Board.

The Davao Sasa Port Modernization Project ”could be rolled out before the end of this year or very early next year,” Ms. Canilao added.

Eight PPP projects have been awarded so far by the Aquino government since the late-2010 launch of this flagship infrastructure program.


source: Businessworld

Monday, December 22, 2014

BCDA confident of maximum bid

The Bases Conversion and Development Authority (BCDA), the government’s arm in the sale and development of former military properties, is confident to get a maximum revenue potential as it gears up for the price challenge for the 28-year contract to operate and maintain the 94-kilometer Subic-Clark-Tarlac Expressway (SCTEX).
BCDA President and CEO Arnel Paciano Casanova said they are inviting all interested parties including the Manila North Tollways Corp. (MNTC), which is BCDA logoowned by businessman Manny Pangilinan to attend the pre-selection conference on January 6, 2015 to discuss the terms of reference on the SCTEX price challenge.
Deadline of submission of eligibility, documents, technical and financial proposals is on January 30, 2015.
It could be recalled that BCDA and MNTC signed a business operating agreement on SCTEX subject to the approval of the President of the Philippines. As a condition for the approval, Malacanang ordered the price challenge in the interest of transparency.
“Interested proponents are expected to submit a higher price than MNTC’s upfront cash offer of P3.5 billion in addition to the 50-50 sharing of gross revenues,” Paciano said.
“We are pleased with MNTC’s keen interest in the undertaking because it only shows that SCTEX is a very profitable project that other parties will also find attractive,” he said.
In the SCTEX price challenge, Manila North Tollways Corporation (MNTC) will have the right to match the highest bid for the project.
The BCDA is bidding out the rights, interest and obligations in the management, operation and maintenance of the SCTEX under a business and operating  agreement (BOA) for a period of twenty-eight years or ending in 2043.
The SCTEX is a four-lane divided expressway traversing the provinces of Bataan, Pampanga and Tarlac and is directly linked to the North Luzon Expressway.
The BCDA and MNTC signed a business operating agreement on SCTEX subject to the approval of the President of the Philippines. As a condition for the approval, Malacanang ordered the price challenge in the interest of transparency.
Interested proponents are expected to submit a higher price than MNTC’s upfront cash offer of P3.5 billion in addition to the 50-50 sharing of gross revenues.
Foreign and local firms subject to eligibility requirements are expected to participate in the bidding process which starts this week. They can either be registered corporations or joint ventures and consortia.
To ensure the integrity of the process, Paciano said there should be no communication other than the official channels.
“We agree that the bidding process should be transparent and fair. As such, no one party should have undue advantage over the others by having a hand in the crafting of the terms of reference,” he said.
“We at the BCDA have been observing the requirements in the BOA in good faith. The price challenge is consistent with the BOA because it is a consequence of the President’s approval which is a condition precedent to the effectivity of the BOA itself. The BCDA is confident of the legality of its position,” he said.
source:  Manila Bulletin

Wednesday, December 17, 2014

IT-BPM, manufacturing drive C. Visayas growth

CEBU CITY -- The information technology -- business process management (IT-BPM) and manufacturing sectors have continued to drive the Central Visayas region’s growth, creating more jobs and generating dollar earnings, a local economic official said.

Direct employment as of the first half of this year increased 35% to 65,303 in IT economic zones and grew 4% to 120,989 in manufacturing ecozones in the region.

Central Visayas, the fourth largest regional economy in the country which recorded 7.4% growth in gross regional domestic product (GRDP) in the first half, is composed of the provinces of Cebu, Bohol, Negros Oriental and Siquijor.

Dionisio C. Ledres, Jr., assistant regional director of the National Economic and Development Authority, said in his presentation during a recent industry forum that Central Visayas region has proven to be among the attractive destinations for IT-BPM and manufacturing investments.

He noted that Cebu City, capital of Cebu province and the financial, commercial and transport hub of the region, is among the top 10 IT-BPM destinations in the country, next to Metro Manila, based on the Tholons annual list of top global IT-BPM destinations.

Citing Philippine Economic Zone Authority data, Mr. Ledres said the number of workers employed in IT parks and centers in the region has almost doubled to 65,303 as of June this year from 36,550 in 2011. IT-BPM exports have also increased to $608.17 million in 2013 from $398.49 million in 2011.

In manufacturing ecozones, employment has increased to 120,989 as of June from 103,593 in 2011. Exports from the ecozones, however, slowed down to $3.55 billion in 2013 from $3.62 billion in 2011.

Mr. Ledres also credited Tsuneishi Heavy Industries (Cebu), Inc. for its contribution to the regional economy and for making the country one of the biggest shipbuilding economies globally. Tsuneishi builds bulk vessels and employs about 13,000 skilled workers at its shipyard in Balamban town along Cebu’s western seaboard.

“Tsuneishi has built 190 ships since it started, including 20 ships this year. The company plans to make the Balamban facility the ‘mother shipyard’ in its Southeast Asian operations,” Mr. Ledres said. -- Marites S. Villamor


source:  Businessworld

BatMan 1 gas pipeline route, cost known by early 2015

THE FEASIBILITY study for the proposed Batangas-Manila (BatMan 1) natural gas pipeline may be completed early next year, with a preliminary draft due for presentation this month giving an indication of the route and preliminary cost estimates, an official from the Energy department said.

Undersecretary Zenaida Y. Monsada said in a recent interview that the study funded by the Project Development and Monitoring Facility (PDMF) of the public-private partnership (PPP) Center is nearing completion.

“The draft of the study will be presented to PNOC (Philippine National Oil Co.) this month for exchange of comments. It will be finalized by the first quarter of next year,” Ms. Monsada told BusinessWorld.

The BatMan 1 natural gas project involves the construction of a 105-kilometer transmission pipeline that will transport and supply natural gas to targeted markets located along its route from Batangas, Laguna and Cavite, and eventually to Metro Manila.

This is part of the state-run PNOC’s aim to develop the country’s natural gas industry and reduce its dependence on imported fuels.

Ms. Monsada said the ongoing study will determine the actual cost of the project, the route of the pipeline, as well as a demand analysis that would identify the potential off-takers of natural gas that will pass through the project.

“The study will also detail how PNOC should go about it,” she said.

She said the project can either fall under the government’s PPP program or under the Official Development Assistance (ODA) Act of 1996.

According to the law, ODA is a “loan or a grant administered with the objective of promoting sustainable social and economic development and welfare of the Philippines.”

The law provides that the ODA “must be contracted with governments of foreign countries with whom the Philippines has diplomatic, trade relations or bilateral agreements or which are members of the United Nations, their agencies and international or multilateral lending institutions.”

Ms. Monsada said the timeline of the project implementation will vary depending on the choice of the PPP or ODA route.

Either way, the Energy department hopes to ground break for the project by 2016.

“We want to start by early 2016. But we have to consider the entire process, which will include detailed engineering and design,” Ms. Monsada said.

“There will also be a lot of permits to secure and paperwork so that will also take time,” she added.

PNOC last April tapped Dutch firm Rebel Group International BV as the transaction advisor for the project.

Energy Undersecretary Donato D. Marcos, for his part, said the department wants this project to be under the government’s flagship PPP program.

“We really want it to be under the PPP because this is a relevant infrastructure project for the natural gas sector,” Mr. Marcos told BusinessWorld separately.

Last May, Energy Secretary Carlos Jericho L Petilla said that upon completion of feasibility study, PNOC would need at least four months to draft the terms of reference for the auction.

The PDMF board in January 2012 approved the inclusion of the BatMan project, along with three other infrastructure projects to receive technical assistance from the PDMF.

The other projects were identified as the Plaridel Bypass Toll Road under the Department of Public Works and Highways; the Manila-Makati-Pasay-Parañaque Mass Transit System under the Department of Transportation and Communications (DoTC); and the Philippine National Railways North and South Lines Development and Extension, also under the DoTC.

According to the PPP Center’s Web site, implementing agencies of projects apply to the PDMF board for technical assistance regarding pre-investment activities, including preparation of project pre-feasibility studies, feasibility studies and financial models, development of PPP options, project structuring, providing transaction advisory services during the bidding process and preparation of contract documents.

The assistance aims to help agencies draft PPP proposals for submission to the National Economic and development Authority (NEDA)-Investment Coordination Committee (ICC), the first step in an approval process that includes concerned local government units, the ICC Technical Board, ICC Cabinet Committee and the NEDA Board.


source:  Businessworld

Sumitomo, Sobrepeña to tap ally Metro Pacific for MRT-3 upgrade

SOBREPEÑA-led Metro Rail Transit Corp. (MRTC), builder of the Metro Rail Transit System Line 3 (MRT-3), and the line’s former maintenance service provider Sumitomo Corp. could build a joint proposal with Metro Pacific Investments Corp. (MPIC) to rehabilitate and upgrade the country’s most congested railway system.

MRTC Board Chairman Robert John L. Sobrepeña told lawmakers yesterday that his company, in partnership with Japan’s Sumitomo “is willing to partner with MPIC for MRT-3 rehabilitation and upgrade for a more comprehensive and fast-tracked proposal.”

Mr. Sobrepeña was speaking before a Senate Sub-Committee on Public Services conducting a probe into a series of mishaps at the MRT-3 -- from technical glitches to safety lapses to having the train run with its doors open.




Click to enlarge

The committee’s co-chair Senator Grace Poe-Llamanzares also wanted to discuss the results of an audit made by Hong Kong-based railway expert MTR Corp. Limited on MRT-3. 

In its report, MTR Corp. gave the railway’s track, elevators and escalators a “poor” grade; while rating its rolling stock and CCTV system as “unsatisfactory.” The report used the following grading system: “good” (system in good operation condition), “satisfactory,” “fair,” “unsatisfactory,” and “poor” (major or extensive defect exists).

“Where we are now is an emergency. On behalf of my consortium and Sumitomo, we’re willing to bend over backwards to ensure safety of passengers, and open to partner with MPIC for the benefit of the riding public,” Mr. Sobrepeña told lawmakers.

MPIC on Monday said it will submit a revised P23.3-billion ($524-million) proposal to rehabilitate and upgrade MRT-3.

MPIC’s fresh offer, which is a scaled-down version of a P25.1-billion ($565-million) proposal submitted in 2011, will include the rehabilitation of existing train cars, 25 additional coaches, a new signaling system, and settlement of the government financial institutions-held equity rental payments, MPIC President Jose Ma. K. Lim told lawmakers in a separate hearing at the House of Representatives on Monday.

On the sidelines of yesterday’s Senate hearing, Mr. Sobrepeña said his company, together with Sumitomo, will submit its formal proposal “within the week.”

The proposal of MRTC-Sumitomo, according to Mr. Sobrepeña’s presentation before the lawmakers, costs P4.38 billion ($98 million) and accounts for “a complete rehabilitation of existing train cars for over a period of 18 months.”

Asked how the alliance with MPIC will work, he replied: “We’ll be in charge of the rehabilitation of the existing cars, while MPIC will be the one adding new ones. Our proposal complements those of MPIC nicely. 

Our proposal is the fast-tracked one, while MPIC’s is the more comprehensive proposal.”

“We’ve talked to them (MPIC) a few days ago and they said they’re open to it, although nothing has been finalized yet. We both need to submit our own formal proposals to DoTC (Department of Transportation and Communications) before considering this plan,” Mr. Sobrepeña explained.

That won’t be the first time that the Sobrepeña group will be partnering with the MPIC of businessman Manuel V. Pangilinan.

The two groups are allies, with MPIC having an option to acquire a 48% stake in MRTC after signing cooperation agreements with the various groups that hold rights and interests in the company. MPIC, however, has yet to exercise this option.

NOT O&M
The rehab proposal is separate from the P2.4-billion operations and maintenance (O&M) contract that the government is putting on the auction block on Jan. 20.

Mr. Sobrepeña told lawmakers that MRTC and Sumitomo will not join that bidding. Instead, the MRTC head said a rehabilitation should be warranted to ensure whoever gets the O&M contract will not have much of a headache.

Until the government awards the three-year contract to a new service provider, Autre Porte Technique Global, Inc. will continue maintaining the 16.9-kilometer rail system, along with the shadowing team deployed by the Transportation department.

From 2000 to 2010, the maintenance of the MRT-3 had been contracted out to Sumitomo. That contract was then further extended for two years, Mr. Sobrepeña and Transportation Undersecretary for Legal Affairs Jose Perpetuo M. Lotilla both explained during the hearing.

After the maintenance deal with Sumitomo ended, the Transportation department had been bidding out the MRT-3 maintenance on short-term contracts, and so its upkeep has been passed from one service provider to another, including to Philippine Trans Rail Management and Services Corp.

The fresh maintenance contract now being auctioned off is good for only three years as by 2016, the government hopes it would have completed the buyout of the MRT-3 from MRT Holdings II, Inc., which is the majority shareholder of MRTC -- the owner of the railway system’s assets.

MRTC is the private group that was a signatory to the build-lease-transfer agreement for MRT-3.


source:  Businessworld

Tuesday, December 16, 2014

CALAX, other PPP projects up for approval

THE NEW TERMS for the contract to build and operate the 47.018-kilometer Cavite-Laguna Expressway (CALAX) for P35.42 billion under the government’s public-private partnership (PPP) program -- along with seven other PPP deals -- could be approved this Friday by the National Economic and Development Authority (NEDA)-Investment Coordination Committee-Cabinet Committee (ICC-CabCom), officials said yesterday.

PPP Center Executive Director Cosette V. Canilao told reporters during a media conference of the ASEAN PPP Forum at Sofitel Philippine Plaza in Pasay City that rebidding of CALAX “will have to secure new regulatory approvals as the terms were changed.”

“It will be the NEDA-ICC-CabCom and the Board which will approve the new terms of the rebidding, then we will forward it to the Office of the President,” she explained when asked what approvals are needed to move forward with the new project auction.

This was after Public Works and Highways Secretary Rogelio L. Singson was quoted by a PPP Center statement earlier this month as saying that the new auction will require a minimum bid of P20.1 billion -- the top premium San Miguel Corp.’s Optimal Infrastructure Development, Inc. offered to pay besides project cost in the scuttled first tender -- and that it “will undergo a shorter one-stage bidding process where both technical and financial bids will be opened simultaneously.”

This development comes in the wake of the expiry last Dec. 10 of a 15-day period within which the highest compliant bidder -- Team Orion of Ayala Corp.’s AC Infrastructure Holdings Corp. and Aboitiz Equity Ventures, Inc.’s Aboitiz Land, Inc. -- was allowed to file an appeal against Malacañang’s order for rebidding late last month. Ariel C. Angeles, director of Public-Private Partnership Service of the Public Works and Highways department, confirmed via phone interview on Tuesday: “We didn’t receive any appeal from Team Orion so we moved forward with the rebidding.”

CALAX is a 47-kilometer, eight-interchange tollway that will run between Cavite Expressway’s Kawit, Cavite end and South Luzon Expressway-Mamplasan interchange in Biñan, Laguna.

The first CALAX auction last June ended in controversy after Optimal Infrastructure -- which offered the highest premium -- was disqualified on a technicality involving its bid security.

That left Team Orion -- with a much smaller offered premium of P11.66 billion -- as being deemed the highest compliant bidder. The other two bidders were Metro Pacific Investments Corp.-led MPCALA Holdings, Inc. which offered an P11.33-billion premium and MTD Philippines, Inc. which offered P922 million. Optimal Infrastructure sought Malacañang’s intervention later in June. The Palace ordered DPWH on Nov. 19 to hold a new auction.

Of the four original bidders, only MPCALA and Optimal Infrastructure have renewed their bid bond, which guarantees that bidders have the financial muscle to carry out the project.

The department aims to publish a new invitation to bid this month and set submission and opening of bids in May next year.

OTHER PPP PROJECTS
Other projects up for discussion at the Dec. 19 NEDA-ICC-CabCom meeting are the: P19.33-billion Motor Vehicle Inspection System; P177.22-billion North-South Railway Project (South Line); P374.5-billion Makati-Pasay-Taguig Mass Transit System Loop; Light Rail Transit Line 1 Extension to Dasmariñas Project; Ninoy Aquino International Airport Development Project; the joint venture for the P25.6-billion North Luzon Expressway-South Luzon Expressway Connector Road; and the P1.16-billion Civil Registry System-IT Project (Phase II). -- Chrisee Jalyssa V. Dela Paz


source:  Businessworld

Investors sought for regional airport deals

THE GOVERNMENT yesterday formally called for bidders for P116.23 billion worth of contracts to develop, operate and maintain (O&M) six regional airports under its public-private partnership (PPP) program, according to a notice published in three newspapers.

Through an invitation to pre-qualify and bid, the Department of Transportation and Communications and Civil Aviation Authority of the Philippines sought interested parties to submit applications to finance, design, build, operate and maintain the facilities for 30 years.

The six projects are: P4.57-billion New Bohol (Panglao) Airport; P5.81-billion Puerto Princesa Airport; P14.62-billion Laguindingan Airport; P20.26-billion Bacolod-Silay International Airport; P30.40-billion Iloilo Airport; and P40.57-billion Davao International Airport.

The bid notice said the projects “aim to improve services and enhance the airside and landside facilities of the key regional airports by entering into concession agreements with the private sector.”

The document noted that Bacolod-Silay, Iloilo, Laguindingan and Puerto Princesa airports have already exceeded their estimated passenger capacity, while the Davao facility “is expected to breach its estimated design capacity in the next few years.” The planned new Bohol airport, on the other hand, will be designed to handle up to 1.7 million passengers a year.

Under the planned concession for Bacolod-Silay, Davao, Iloilo and Laguindingan airports, the winning private sector bidder will take over O&M and promptly start expanding the passenger terminal building, apron, other airside and landside facilities, as well as “any capacity augmentation... that may be required to cater to future demand throughout the contractual term.”

O&M for the new Bohol and the Puerto Princesa airports will be turned over to the winning bidder upon completion of construction. “The proponent shall also be required to develop/expand capacty to cater to future demand throughout the contractual term,” the notice read.

IN BUNDLES
Transportation Undersecretary for Legal Affairs Jose Perpetuo M. Lotilla said in an interview at the sidelines of a committee hearing at the House of Representatives in Quezon City yesterday that his department was looking at breaking up the airport tender into two contracts covering three projects each.

“[T]he BAC (bids and awards committee of Transportation department) is considering bundling them...,” Mr. Lotilla said, saying each bundle of three projects would be roughly equivalent to an estimated annual throughput of five million passengers.

“One contract will be the development and O&M of Laguindingan, Bohol and Davao, while a second contract will be for Puerto Princesa, Iloilo and Bacolod,” he explained.

“This is to make it more strategic to investors. Some investors asked before why not bundle it according to throughput of passengers.”

Saying the grouping was still “preliminary”, Mr. Lotilla said “this will depend largely on the inputs of interested groups during the process prior to bidding itself.”

The notice said interested parties may acquire invitation documents consisting of the invitation to pre-qualify and bid, project information memorandum (PIM) and instructions to prospective bidders (ITPB) after paying a non-refundable fee of P1 million. The PIM will be available by Dec. 23 while the ITPB will be made available some time in February next year.

“Only bidders who have purchased the invitation documents... shall be allowed to participate in the pre-qualification and bidding process,” the notice read.

PPP Center Executive Director Cosette V. Canilao had bared as early as December last year “initial” plans to bundle the six airport development and O&M deals for auction, citing the need to make sure the small projects would attract enough investors.

INTEREST
Officials of companies that had bid for other PPP deals had earlier expressed interest in these bundled airport deals.

Manuel Louie B. Ferrer, president of GMR-Megawide Cebu Airport Corp. (GMCAC) that Megawide Construction Corp. and Bangalore-based GMR Infrastructure after bagging the P17.5-billion Mactan-Cebu International Airport PPP project last April, said in an interview on the sidelines of the launch of the new airport’s brand in October that “it makes sense” for the partnership to bid for the other airport deals.

Metro Pacific Investments Corp. (MPIC) Chief Financial Officer David J. Nicol said at the sidelines of a press briefing in Tokyo, Japan last month: “We’ll look into the bundled airports.”

“We’ll wait for the release of the terms of the projects and see if they are strategic to us.”

Ayala Corp. Managing Director John Eric T. Francia told reporters at the sidelines of an event in Makati City early this month: “We’ll look at it. To be honest, we need to study first what the package consists of. Once that is launched by the government, we’ll see.”

The Transportation department now also aims to roll out the P18.99-billion Davao Sasa Port Modernization PPP project within the month.

Eight PPP projects have been awarded so far by the Aquino government since the late-2010 launch of this flagship infrastructure program: the P64.9-billion Light Rail Transit Line 1 (LRT-1) Cavite Extension; the P1.72-billion Automatic Fare Collection System; the P17.52-billion Mactan-Cebu International Airport Passenger Terminal Building; the P2.01-billion Daang Hari-South Luzon Expressway Link Road; the P15.52-billion Ninoy Aquino International Airport Expressway; the P16.28-billion first phase of the PPP for School Infrastructure Project (PSIP); the PSIP’s P3.86-billion second phase; and the P5.69-billion Philippine Orthopedic Center modernization. -- Chrisee Jalyssa V. Dela Paz
source:  Businessoworld

Tuesday, December 9, 2014

The MRT mess and the mentality behind it

Part Two
TO SOLVE this impasse, there were plans during the final days of the GMA term to buy out the MRTC so as to end the multi-billion-peso lease due to it. The current administration is still mulling on proceeding with this plan.

Bigger problems then ensued in the recent few years. There was this impression in the new DoTC leadership that the MRT deal was grossly unfavorable to the government because of the “high” lease payment.

What they failed to see is that this “high” lease payment was because the low fares couldn’t even support operations. Politically, these low fares were a government subsidy of something like P50 per riding commuter. That’s P50 paid for by the rest of the country -- Mindanaoans, Visayans and other Luzonians ­-- who do not benefit from the MRT. 

With an anti-MRTC mind-set of a poorly executed deal, the DoTC decided to reinvent the wheel; the short-term maintenance contract, ignorant of technical details, was awarded to a new entity. Priced nearly like the Sumitomo contract but allegedly without the supply of imported spare parts for the trains, which was 60% of the cost of the Sumitomo contract. DoTC denies that the terms of reference of its new bid contract for the MRT O&M excludes parts. So why did the interim O&M contractor run low on parts? Ironically, it was the DoTC’s failure to permit Customs to release the spare parts for the MRT that became the cause of the “failure” of Sumitomo to fulfill their contract obligations. We won’t horrify you further by recapping the unprecedented accidents and breakdowns that has continued to bedevil the MRT ever since the DoTC has been reneging and endlessly tinkering with the operations contracts of the railway. Naturally, in the ensuing blame game, the government side demonizes the “greedy, selfish” motives of private sector businessmen. In the meantime, the latest DoTC bidding for the MRT-3’s P2.2-billion new three-year extended O&M contract attracted no bidders.

As we find Robert John Sobrepeña’s explanations rational and revelatory, clearly the muddle that the government has made of the MRT doesn’t necessarily point to Secretary Abaya. He is only as good as the advice that he gets from those underlings tasked to unravel the MRT mess who, by lack of understanding and/or in pursuit of some agenda against any deal that was constructed under the Ramos or GMA administration, aggravated the situation. Meantime, the Palace is still stuck with the impression that the MRT was a poorly negotiated contract during the Ramos years, a lopsided deal that puts the government at a gross disadvantage. A deeper look into the events and changes in policies over the past years will show that the Palace’s pronouncements as to the causes and effects of the MRT mess are in grave error.

In the end, the victims are us, the commuters, who will have to deal with congestion daily. We suffer the mistakes and erroneous perceptions of the government in the problems from the unnecessary conflicts it ignites. But the DoTC can take heart as it is not the only guilty agency.

Look at the missteps of DoE in the power sector. Power output shortage? Propose emergency powers to legislate even the setting of thermostats in air-conditioners. Never mind how one is to police that. In all truth, the solution lies in implementing the EPIRA law in its entirety. Not having done this, the government effectively disincentivized the building of additional power plants. Bowing to popular pressure not to fulfill contracted power price increase further discourages private sector investment in power generation.

Returning to the government agency that causes most of the problems we suffer, we can only mark this descent into administrative hell when DoTC Secretary Ping de Jesus resigned. We’ve mentioned LTFRB’s reckless franchising of buses during GMA’s tenure, aggravated recently by an opinion of an LTFRB officer that private cars should be banned from EDSA during the morning rush hour, apparently unaware that the original intent of the EDSA LRT or MRT was to ban the buses and not vice versa. 

In its desperate efforts to sidetrack Stradcom and other current LTO suppliers, LTO ended up with inferior registration sticker tags that fell off in weeks and drivers’ licenses that faded in three months’ time. LTO had an opportunity to improve our license plates with its new Dutch supplier. 

But now that the 7-alpha-digit plates are out -- after a year’s delay -- where is the improvement in the plate number size? Instead of elongating it, the new plates use nearly the same dimensions as the old plates, the only difference being the fonts, which are now condensed to fit tighter kerning. They are like the duplicate-replacement plates of the old system even as the new plates use a new color scheme with European zeroes and fours. 

This dumbing down in making regulations forces the public to bear the brunt and suffer more in the cause of expediency, supposedly for the greater good. This psyche is an unfortunate result of a worldwide backlash from the security lapses that didn’t anticipate the 9-11 tragedy.

If you recall, the military-industrial complex and Cheney-Rumsfeld indoctrinated, knee-jerked by creating the TSA (Transport Safety Agency), which in turn spawned the mentality where everyone, even the law abiding, are suspects whose civil liberties can be disregarded for the sake of the greater public good. Let the public suffer for so long as government is seen to be doing something, anything.

So now you have the police saying that mall robberies can be prevented by banning the wearing of baseball caps indoors. Local governments are requiring all business owners to have CCTV surveillance cameras. The spate of crimes committed by men tandem-riding motorcycles spawned oppressive regulations on motorcycle riders, like the “plaka” or license plate high-visibility vests, the ban on tandem pillion passengers and the ban on wearing of safety helmets. If only one can ban sloppy thinking. 

It’s as if cops, with their nice new pistols and nice new private cars cannot commit crime. Whatever happened to their motto “to serve and protect”?

The problems above, just like the MRT mess, are the result of decision makers making decisions and law makers making laws, without understanding what are the causes that deliver such dire effects that they want to correct. Quick to action without knowing the cause and effect does more harm than good. In the name of justice, do we deserve such degradation of our civil rights?

tfhermoso@gmail.com

source:  Businessworld

Wednesday, December 3, 2014

Corruption image still ‘poor’ but better

THE PHILIPPINES further improved its ranking and score in the latest Corruption Perceptions Index (CPI) of global nonprofit watchdog Transparency International, but its continued “poor” rating reflects a “a general weak or ineffective leadership” in the fight against this problem, according to the report released yesterday.

The country placed 85th out of 175 countries and territories covered by the Corruption Perceptions Index 2014, titled: “Clean growth at risk” -- the report’s 20th edition -- up from 94th out of 177 last year and 105th out of 176 in 2012.

On a scale of zero (highly corrupt) to 100 (very clean), the Philippines scored 38 -- reflecting steady improvement from last year’s 36 and 2012’s 34 -- though still below the 43% global and Asia Pacific average.

“Although the Philippines still belongs to two-thirds of the 175 countries ranked who scored below 50, this is a marked improvement from the 2012 CPI score,” Transparency International-Philippines, local affiliate of Transparency International, said in a separate statement.

Despite such improvement, Transparency International noted that the Philippines’ “poor” score -- together with those of India (38), China (36) and other emerging markets in Asia and the Pacific -- Malaysia (52), Thailand (38) and Indonesia (34) -- “indicate a general weak or ineffective leadership to counter corruption, posing threats for both sustainability of their economies and somewhat fragile democracies.” The Philippines had the same score and place as Burkina Faso, India, Jamaica, Peru, Sri Lanka, Thailand, Trinidad and Tobago and Zambia.

Still, both government and business leaders welcomed the country’s continued improvement in the annual index.

The CPI ranks countries and territories according to how corrupt their governments are perceived to be. It is a composite index that uses corruption-related data from surveys carried out by institutions like the World Bank and the World Economic Forum.

“Focusing on the score rather than the rank, the Philippines showed a significant improvement in the CPI if we compare our score in 2012 and 2014,” Transparency International-Philippines said in its statement.

It quoted Cleo Anne A. Calimbahin, executive director of Transparency International-Philippines, as saying that the civil society group considers “a score of + 4 to represent change in the perceived level of corruption”, adding that the “CPI captures the perception of corruption in the public sector by business people and country experts outside of the Philippines.”

“The international community is looking favorably at the reform initiatives of the country and the Philippine score,” Ms. Calimbahin said.

“While it remains below 50/100, this should encourage our public and private sector leaders to continue to push for good governance and inclusive growth, prosecution and sanctions against the corrupt, and effective delivery of public services.”

In a television interview, she said approving the Freedom of Information bill -- championed by both chambers of Congress and which Malacañang said should be enacted before President Benigno S. C. Aquino III steps down in mid-2016 -- and prosecuting those involved in corruption would help the country further improve its score and ranking.

Denmark topped this year’s roster with a score of 92, followed by New Zealand (91), Finland (89), Sweden (87), Norway and Switzerland both with a score of 86, Singapore (84), the Netherlands (83), Luxembourg (82) and Canada (81) to constitute the top 10. Sharing 174th place at the bottom of this year’s list with a score of 8 each were North Korea and Somalia.

Singapore topped its Southeast Asian peers, followed by Malaysia which ranked 50th, while the Philippines and Thailand outperformed Indonesia (107th), Vietnam (119th), Laos (145th), as well as Cambodia and Myanmar (tied at 156th place).

Transparency International said “poor score is a sign of prevalent bribery, lack of punishment for corruption and public institutions that don’t respond to citizens’ needs”.

Out of the 28 Asia-Pacific economies on the index which account for nearly 61% of the world’s population, “the majority lag behind in their efforts in fighting corruption in the public sector, with 18 scoring less than 40 out of 100.”

The country’s latest showing in the index was welcomed both by government and businessmen.

Communications Secretary Herminio B. Coloma Jr., in a text message said: “We are gratified that through the government’s determined efforts, the country’s transparency profile has improved significantly. Despite this improvement, we will continue and persevere such that our public institutions become exemplars of transparency and public servants.”

The government’s Investor Relations Office (IRO) said in a statement that “this development recognizes the achievements of the Philippines in the area of governance,” adding that the improvement in the country’s ranking “came with the Aquino administration’s sustained reform agenda, which includes transparency in the budget process and efforts to cleanse government agencies perceived to suffer from corruption.”

“The BSP is one with the government in promoting transparency and accountability, taking these guiding principles strictly in the conduct of its regulatory role over the financial sector,” the IRO statement quoted Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. as saying.

While also welcoming the country’s continued improvement, business groups said more needs to be done to eradicate corruption.

Makati Business Club Executive Director Peter Angelo V. Perfecto noted that “the combined efforts of government, private sector and civil society organizations to stop corruption and promote good governance and integrity are being given due recognition by the independent and credible Transparency International.”

“This is testament to the gains and momentum achieved on the ground and this must push us to strive harder and aim higher as indeed, much more needs to be done. Key to our continuing success is an effective justice system that will finally punish those that steal from public coffers,” Mr. Perfecto said via text.

John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines in a text message said: “We hope this ranking continues to go up each year.”

“Even more actions to reduce any resurgence of corruption are needed. Enacting proposed amendments to strengthen Ombudsman Act, Sandiganbayan and other judicial reforms are important to this goal,” he added.

Sought for comment, European Chamber of Commerce of the Philippines Vice-President Henry J. Schumacher, said via text: “We are glad that all our efforts in addressing corruption (national government, business, civil society, including the church, and local governments) are recognized.”

“We still have lots of work to do, but moving to 85 is a good step forward.”

Overall, Transparency International Chairman José Ugaz said in a statement that the 2014 CPI shows that “economic growth is undermined and efforts to stop corruption fade when leaders and high-level officials abuse power to appropriate public funds for personal gain.”

“Countries at the bottom need to adopt radical anti-corruption measures in favor of their people. Countries at the top... should make sure they don’t export corrupt practices to underdeveloped countries.”



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source:  Businessworld