Gov't sets P15B min cap for North Harbor bidders

Government is setting a P15 billion capital requirement for any group or entity that intends to bid for the contract to manage, develop, operate and maintain North Harbor when it is privatized through a public bidding this year.

This requirement is contained in the draft terms of reference (TOR) prepared by the Philippine Ports Authority (PPA) which set the mechanics of privatization, the coverage of the development contract and the qualifications for interested bidders.

The TOR will operationalize the decision of the Economic Coordinating Council (ECC) to award the North Harbor contract to a single operator through a public bidding instead of the multiple-operator scheme proposed by the private sector and some government agencies.

According to the draft TOR, the Manila North Harbor will be publicly bid under the single terminal operators (STO) concept where the winning bid will be awarded a 25-year contract to operate and develop the port for domestic use.

Per the draft TOR, private groups interested in the North Harbor contract should have an authorized capital of at least P15 billion, a paid-up capital of at least P1 billion with cash deposits for working capital of at least P125 million.

The bid, according to the PPA, will be open to qualified domestic corporations or groups. Foreign groups and companies will be allowed to bid but only in partnership with 60 percent Filipino-owned companies or groups.

The TOR also set a five-year management experience and a minimum of ten years relevant expertise in terminal management/operations, cargo handling operations and other port related activities.

The TOR likewise made a provision for the workforce and squatters that would be displayed by the privatization, requiring the bidding parties to set aside at least P200 million for separation benefits to workers who would be laid off and at least P650 million for squatter relocation.

The PPA said these provisions for labor and squatters could be in the form of bank guarantee or stand by letter of credit that would be acceptable to the agency.

The leading group that is expected to win the bidding, however, had a lukewarm reaction to the draft TOR which would effectively require it to start from scratch since it had expressed interest in the project when government was planning to award the facility through negotiated sale.

International Container Services Inc. (ICTSI) which leads the consortium said it would have to make a thorough review of the TOR, especially the pre-qualification requirements.

ICTSI spokesperson Nana Soriano said ICTSI remains interested enough to study the TOR but it will have to go back to its original partners in the consortium in order to decide whether it could afford to meet the requirements detailed in the TOR.

"We have to start from scratch precisely because this is a new TOR and the previous assumptions have changed," Soriano said. "Then we have to see if the original consortium is still interested as a whole."