Piatco contract must be renegotiated

There is absolutely no choice. Now that Malacañang has clearly spelled out why the Piatco contract is disadvantageous to the government and the public, it has to be renegotiated. If the contract is as bad as Malacañang says it is, it may be an impeachable offense to implement it as is. Also, failure to renegotiate will invite tongues to wag accusing Mike Arroyo, who has emerged, possibly unfairly as the country's favorite suspect, of fixing the deal.

In any case, the strategy of Piatco to smear Presidential Adviser Gloria Tan Climaco, instead of responding to her legitimate concerns, indicates to me that something is indeed rotten with the deal. I do not believe foreign investors will lose interest in the country because we renegotiated a rotten deal. On the contrary, if we allowed what Malacañang itself calls a rotten deal to go through, Fraport, a foreign investor would have been screwed and that would drive other potential foreign investors away.

It is also wrong to say, why only now when the facility is 97 percent complete? I'd say, better now, before it formally opens, than later. In fact, the delay in the investigation was caused by Piatco itself. It has reportedly refused to cooperate with the investigation ordered by President Arroyo. It also erroneously pointed out that because it is a private entity and private funds were used, they are not subject to government audit or review. The public after all, that's you and me, will have to pay higher service fees to cover the overprice.

My publisher, Max Soliven, has exposed the payment by Piatco of large sums of money as retainers to a mysterious person, a certain Liongson who has as far as I know, refused to surface to explain where those sums of money went and for what purpose. Since we, the public, will end up paying for those costs, we have the right to know. Piatco must explain rumors of some $23 million in disbursements that coincided with several significant changes in the agreements.

I have gone through the list of problems pointed out by Ms. Climaco, and I think the concerns are valid. It is bad enough that Piatco got the original award on the basis of a flawed bidding. The taipans charge that Piatco's proposal was not comparable to their original proposal and therefore smacks of unfairness. Apples to oranges daw. Worse, they got more concessions in a revised contract that removes business risk from them and lays everything on the government. Yung orange naging strawberry na.

Due to space limitations, I will take up only a few of the obviously onerous provisions of the Piatco contract that must be renegotiated. In fact, whoever signed the renegotiated contract that allowed these onerous provisions in should be charged before the Ombudsman.

Very basic to a build-operate-transfer (BOT) project is a ceiling on costs, so government regulators can compute the return-on-rate base. In this case, this refers to what Piatco can reasonably charge for cargo handling, passenger terminal fees, aircraft parking and the like. Strangely enough, Piatco’s contract provided only for a floor price. Thus, its claimed expense of $350 million in 1996 has reached $675 million so far. Yet Terminal-3 is still unfinished. That’s about double and in dollars! If you were constructing your house and your contractor doubled your cost, you’d ask to renegotiate too.

Then, how could government surrender the right to regulate fees in a public facility? But that’s exactly what’s in the current Piatco contract. It gives Piatco sole right to impose whatever fees it desires in Terminal-3, except for four regulated public-utility fees, i.e., aircraft parking and tacking, check-in counter and passenger terminal fees. The sky is the limit for other fees if Piatco decides to slap them in the name of return on capital.

Our fears of unreasonable fees are not without basis. The contract allows Piatco to stick up outbound international passengers with an initial terminal fee of $20, with provisions for future increases. This could drive away tourists and balikbayans. Equally modern airports charge $7.20 in Indonesia, $8.60 in Taiwan, $9 in Singapore, $10.30 in Hong Kong, $11 in Malaysia and Thailand, and $11.50 in Vietnam. Terminal2-1 and -2 presently charge $10 or P500. We must stick to $10-11 maximum, including government’s share.

The Amended and Restated Concession Agreement (ARCA) was granted by the Estrada administration months after it took office in Nov. 1998 also removed the government’s right to intervene in case Piatco charges exorbitant fees for non-public utilities. These include subleases for diners and passenger services, VIP lounges, airport taxis, porterage, parking fees, areas for well-wishers and greeters, and advertising displays.

The Estrada ARCA restricted government’s right to develop adjacent lots. It may not set up duty-free shops or entice investors to build hotels or malls nearby. It also belatedly required government to pay for loans or issue guarantees in case Piatco defaults on payments to lending banks. This is banned under the BOT Law’s provision on unsolicited proposals, which is what the Piatco 1996 offer was. Kung ganyan lang pala, sana gobyerno na sa simula pa.

It is obvious that Piatco has oiled the government machinery well. The chorus of support from some congressmen shows how well Piatco moved, to turn early opposition to its side. That is not surprising and it probably gives us a clue on why they need this onerous contract badly to cover their very much increased costs. Buti na lang none of the more respectable members of Congress have spoken for Piatco.

But the clincher to me that Piatco is hiding something rotten is when its spokesman started attacking the person of Ms. Climaco. Ad hominem attacks are resorted to when real valid issues cannot be responded to. Hopefully, Ate Glo will stand fast and insist on a renegotiation to clear out the doubts. In any case, NEDA reportedly did not validate the ARCA, so there is a ground to invalidate it, if Piatco refuses to be reasonable.

What gives?

A favorite subject of speculation these days is the Monetary Board. More specifically, who will Ate Glo appoint to fill in two vacancies. The President has indicated that she will re-appoint her former professor, Vicente Valdepeñas. But as of last week, the appointment papers have not reached the Bangko Sentral. Strangely, the President told Mr. Valdepeñas she signed his reappointment papers over two weeks ago. The former Ateneo professor reportedly gave Ate Glo an "A" as a student.

The President is said to be considering either Trade Undersecretary Nelly Villafuerte or former Finance Secretary Edgardo Espiritu for the seat vacated by ex-Citibanker Teddy Montecillo. Montecillo was recommended by BSP Chief Paeng Buenaventura for re-appointment but Bulletin Publisher Emilio Yap didn’t like Teddy’s brother, so there goes Teddy. Whatta country, huh?

Ms. Villafuerte is wife of Camarines Sur Governor Luis Villafuerte. Ate Glo needs him to neutralize Bicolano rival Raul Roco. She also writes a column for the Bulletin and presumably not objectionable to Mr. Yap.

Mr. Espiritu, on the other hand, reportedly helped in snaring Sen. Jaworski for the administration to break the Senate impasse. Ed helped supposedly at the request of Mike Arroyo. A membership at the Monetary Board will make the Governorship a shoo-in when Tio Paeng’s term expires in 2005, or if Tio Paeng resigns for whatever reason.

With two strong contenders for just one vacancy, people are wondering if that’s the reason why the formal papers re-appointing Mr. Valdepeñas are delayed. He may be needed to create a second vacancy. It is doubtful if Ate Glo’s old mentor can be of any help in 2004. Or is Ate Glo’s insistence on her old professor why Mike Arroyo supposedly left the country in a huff?

A station

Ever wonder why papers pile up in a bureaucratic environment?

Well, a bus station is where a bus stops. A train station is where a train stops. Now that they call their desk a work station...wonder no more.

(Boo Chanco’s e-mail address is [email protected])