The government-controlled Philippine National Construction Corp. (PNCC) has long been in a sad financial state. What it urgently needs is a savior to stop its fall.
PNCC almost got a corporate messiah when the government held a public bidding for its majority ownership in the company. It declared the bidding a failure because none of the three qualified bidders even came close to the government’s indicative price of P7 billion.
Dong-A consortium of Strategic Alliance and Development Corp. (Stradec) offered the highest bid of P1.229 billion; Pacific Infrastructure Development International, P536.889 million; and Philippine Exporters Confederation, P420 million.
When the government declared the bidding a failure, Stradec sued to force the turnover to it of PNCC and won the first round at a regional trial court. The government appealed to the Court of Appeals; it lost.
Then it went to the Supreme Court, which ruled against Stradec because its offer, though the highest, did not meet the government’s indicative price of P7 billion.
After the failed bidding, where is PNCC headed? In case any interested private group would express interest in it, what awaits it are frightening numbers culled from the audit reports of the Commission on Audit (COA).
COA, the government’s financial watchdog, now headed by lawyer Grace Pulido Tan, said that PNCC’s deficit had, in fact, ballooned from P4.958 billion on December 31, 2009, and P7.096 billion on December 31, 2010, to P9.700 billion on December 31, 2012, slightly worse than the previous year’s P9.617 billion.
Despite these losses, PNCC is still operating. So far, it has not “defaulted” in paying the salaries of its workers. As of December 31, 2010, it had 47 rank-and-file employees; 31 supervisors, 37 managers, nine executives for a total of 124.
Of the company’s 46 managers and executives, PNCC paid 31 of them a total of P126.920 million in 2010, according to PNCC’s list of highest-paid executives.
In its 2010 audit report, COA said that PNCC’s key management personnel were paid P58.984 million, a lot of cash if given to a few. The number of recipients was not disclosed.
Incidentally, the P126.920-million compensation of PNCC’s 31 officers, or P4.094 million each, represents 42.977 percent of P295.321 million general and administrative overhead. It does not mean though that these executives should have waived their salaries to reduce by 41.396 percent the year’s net loss of P306.597 million.
Whether or not PNCC has been overpaying its top managers, the COA report showed that the company has succeeded in reducing its executive compensation to P23.146 million for 17 executives in 2011. This translates to an average of P1.362 million each, way, way below the more than P4 million it paid each of the 31 executives in 2010.
Getting the average pay may be misleading because there are those at the top who get more than those below them in rank. For instance, PNCC paid Luis Sison P6.313 million as president and P606,000 as vice chairman of the board in 2012, and P5.981 million and P582,500 in 2011.
The question that has not been raised and which PNCC would probably answer is: Why has it been losing?
PNCC’s reported construction revenue of P197.332 million in 2010, which was five times the amount of P33.631 million in 2009. Then, it stopped its construction business in 2012, drastically reducing its revenue by 27.587 percent to P116.170 million from P160.427 million in 2011.
As a result, PNCC still lost P211.245 million in 2011, a big improvement from a net loss of P461.303 million in 2011, the year it last reported construction income of P60.092 million. The following year, it only had its share from revenues of joint venture companies and rental income to keep it going.
Prior to its partnership with other companies in operating the expressways, PNCC used to own the entire toll collections. An old filing showed it collected P1.023 billion in 2007, which dropped 14.370 percent to P876.354 million in 2008. The tolls in these two years resulted in net profit which more than tripled to P546.977 million from P157.681 million.
But those were the years when PNCC had already piled up huge losses that as of December 31, 2007, totaled P13.314 billion, up from the previous year’s P12.301 billion. But its stockholders’ equity remained positive at P1.903 billion as of December 31, 2008, that worsened to negative of P1.525 billion four years after or as of December 31, 2012.