Why Europeans will not rush into Aquino’s PPP

12

With the President speaking before European companies and financial institutions, I am optimistic that the conference will help bolster interest on PPP [public-private partnership] projects … we will be able to relay to potential European foreign investors that the country enables business that cultivates fair and transparent dealings.

Advertisements

— Trade & Industry Secretary Gregorio Domingo in Belgium, September 16, 2014

One of the plans I inherited was for a body of water south of Metro Manila called Laguna Lake. … what they wanted to do was move the mud from one section of the lake to another section of the lake, and that was supposed to enhance its water holding capacity. … that’s what they wanted to do for flood mitigation, and obviously it’s a joke.

President Benigno Aquino 3rd in 2011 on why he scrapped a Belgian project

If one goes knocking on a company’s doors to get big money, it doesn’t help to call its executives jokers and crooks. Which is what President Benigno Aquino 3rd pretty much did in cancelling the P18.7-billion Laguna Lake dredging project of Baggerwerken Decloedt en Zoon (BDZ or Belgian Dredging Company) and the P11.8-billion undertaking of France’s Eiffel Matiere to build 72 roll-on roll-off ports.

Aquino claimed the contracts were anomalous, though no official communications ever formally canceled them or detailed exactly where there were irregularities. In fact, both projects underwent rigorous review by the National Economic and Development Authority, the Bangko Sentral, and the Department of Justice for financial viability, economic benefit, technical feasibility, and legal soundness.

Those two meticulously vetted yet arbitrarily cancelled contracts with European infrastructure giants would make President Aquino’s investment-seeking roadshow in Europe a very hard sell.

Sure, there would be photo-ops and positive pronouncements during his swing through the continent. But unless the government resolves several contractual disputes involving giants of European business in a manner seen as fair, reasonable, transparent and lawful, we should not hold our breath for the continent’s investors to take up big chunks of Aquino’s $20 billion in infrastructure public-private partnership projects.

If we want deals, we should honor them
Besides the cancelled Belgian and French deals, also riling Europeans is the 12-year-old gripe over the Ninoy Aquino International Airport Terminal 3, built by a joint venture of the local Philippine International Airport Terminal Co. (Piatco) and Frankfurt Airport Services (Fraport), controlled by a leading German political party.

After a thorough review, the Arroyo government found the NAIA 3 deal disadvantageous and took over the terminal in 2001. The following year the Supreme Court agreed that the deal was not in the government’s interest, due to radical revisions during the Estrada administration. Fraport sued for $425 million compensation with the International Center for the Settlement of Investment Disputes (ICSID) in Washington DC.

Then there’s last year’s scandal over an alleged $30-million bribe demanded from the Czech company Inekon for its bid to supply rail cars to the Metro Rail Transit to win. No less than Czech Ambassador Josef Rychtar backed the accusation, even as he wrote Aquino absolving his sister Ballsy and her husband Eldon Cruz of complicity.

The matter remains unresolved, even though MRT General Manager Al Vitangcol 3rd was ousted—a scapegoat for higher-ups, say Aquino critics.

The wrong and right ways to cancel contracts
What aggravates Aquino’s contract cancellations is its utter lack of due process and transparency. Take the BDZ dredging deal. As reported previously by fellow columnist Rigoberto Tiglao, Justice Secretary Leila de Lima back in 2010 pronounced the Laguna Lake project above board. So did the House Committee on Ecology, which evaluated environmental, legal and financial aspects of the project.

No dice: Aquino still told Finance Secretary Cesar Purisima to deny the Belgian firm the go-ahead to proceed. A 150-year-old company renowned for dredging worldwide, including a P5-billion ahead-of-schedule Pasig River project, BDZ sued the government in ICSID.

Potential cost to taxpayers: P1 billion in legal fees and P6 billion in claims, if the company wins. But the bigger loss is the flood relief denied the lake region and Metro Manila, which the dredging would have provided, according to extensive government and expert studies.

Also dubious was the scrapping of the Eiffel Matiere ports construction contract. Aquino claimed that the country did not need 72 more RO-RO docks, so only six would be built. Then-Department of Transportation and Communication Secretary Mar Roxas said the French builder would be paid for steel pipes and other materials already delivered, which could be used for public works construction or sold.

Former senator Aquilino Pimentel Jr., a staunch advocate of local government and development, disputed the DOTC report. “It is sheer folly to base decisions on such disinformation,” Pimentel argued, citing past assessments by the government, the Japan International Cooperation Agency, and the Asian Development Bank that the country needed as many as 243 RO-RO ports.

In contrast to the BDZ and Eiffel Matiere deal breaking, the NAIA 3 contract voiding went through careful study and full due process. A Cabinet-level committee with expert advice from leading accountant Gloria Tan Climaco, pored over project parameters and investigated Piatco’s multilayered ownership structure.

Among disadvantageous provisions reported to then-President Gloria Arroyo and her Cabinet was the shifting to the government of the consortium’s commitment to build the rail line linking NAIA 3 and other terminals. Climaco also detailed how Piatco’s corporate structure masked the controlling interest held by Fraport, in violation of the Constitution’s 60-40 ownership rule for public utilities. And the contract scrapping was upheld not only by the Supreme Court, but also by ICSID, which ruled that Piatco and Fraport violated the Anti-Dummy Law.

So will European investors snub Aquino’s PPP? There would be some takers. And in 22 months, the next leader will hopefully have the good sense to right his predecessor’s wrongs. Then European companies can finally do PPP deals with the confidence that they won’t be scrapped without due process, just because the new regime doesn’t like the old one.

Share.
loading...
Loading...

Please follow our commenting guidelines.

12 Comments

  1. Jmt from NorthEast Mindanao on

    Factual ‘iyan ung sinulat ni Mr. Saludo. Mga taong bayan ang kawawa sa ginawa ng ulol na Presidente ninyo ngayon!

  2. Rosauro Feliciano on

    Our National mentality is extremely dangerous; it is our silent enemy, which is worst than grafts and corruptions. Such mentality is enviousness that we don’t appreciate our fellowmen to be more resourceful than we are. We are destroying ourselves instead of supporting those whose ideas are in the best interest of our community that even other people from other countries are admiring the tasks of those among us who are doing their best to uplift the living condition of the poorest of the poor in our country. In short this kind of national mentality we have is worst than grafts and corruption because it is destroying the very aspiration of those who want to prosper in life and share their new found wealth with others so all will work in just one direction for the prosperity of all.

  3. rustiko sandoval on

    there is problem now that pinot need to clear the way. so that these investor that he is trying to convince to invest again in ph. do you think they can . for me nagsayang lang ng pera si pinoy 32 milliom sna ginamit na lang un pera sa yolanda victims at least may makikita pa tayo e iyan wala talagang coupal si pinoy.

  4. It is absolutely imperative for the people of the Philippines to receive urgently needed infrastructure build out. I love the Philippines and the Filipino people and believe the nations is posed with its population, a blessing from God, to become the greatest Asian tiger economy. The growth potential based upon solid demographics, education, location, English speaking, beauty and diversity is beyond tremendous. But the nation will only begin to realize this growth and an ‘inclusive’ expansion for wealth that can lift people out of poverty if and only if infrastructure is created. Roads, ports, rail, utilities, water and sanitation. Everyone knows this. Many want to sincerely help. Foreigners like me pray for all Filipinos to see that this happens.

    It is the patriotic duty of every Filipino and all sincere foreigners to see to the task. I pray for God to see that it happens. Dream big, act big and become big. Dredge Laguna nd the Pasig and build a new, man-made airport in Manila Bay. Build highways in and around Metro Mania. Build a lite and freight rail system throughout Luzan.

    Do these things now because the Filipino deserves them! It will greatly reduce poverty all over the nation. Have wisdom and faith in yourselves! As Ricky Razon said at the World Economic Summit, “We can do it!”

    God bless.

  5. Mr.Pedro Penduko, pls stop reading Manila Times. This newspaper is not for people like you and a lot others. Just read a tabloid. I am sure you will feel at home and you will understand what you will be reading.

  6. If the president is to be faulted, more so with dti who, i understand, is supposedly on top of this european itinerary. Sabi ng source ko sa dti, c greg domingo at pons manalo, pareho daw mindless, so long as they get to travel abroad and collect their per diems and representation allowances n other perks.

  7. I posted a comment earlier to your colleague’s column, the gist of which is that dti led by sariling bilib domingo n manalo are the masterminds of this european itinerary, to collect participation fees from philippine businessmen that are never accounted for by their trusted lieutenant at ITG. Never mind the silliness of the schedule or the fact that the wounds of our european friends are aggravated by the salt thrown their way, as long as these incompetent officials of dti get a cut to be used to buy belgian chocolates and french pastries!

  8. If we lose to BDZ, PNoy should pay for the fees and claims, all in all, P7B, from his own pocket.

  9. Hey! Mr. Saludo, it looks like everything to you that’s happening in the phil is negative. Why are you fond of criticizing others’ work and what have you done positive to the country. Wala ka nang ginawa kundi dumakdak ng dumakdak e wala ka naming ginagawa na dapat malaman ng readers ng Manila Times. Halimbawa, bakit tahimik ka pagdating sa mga leftist at mga Binays. Magkano ba ang ibinayad sa iyo.

    • Dear Mr. Penduko, you have personal issues with the author but none about the points he raised in this article. Case closed.

    • Give us one good things this President has done since he assumed that post? Then devide it with the bad thing your president has done starting with the payment of Hacienda Luisita.