Payumo was reacting to the allegations of Tourism Secretary Richard Gordon whom he described as the man who halted the port modernization that would transform Subic Freeport into a major international port and transshipment hub in Asia Pacific region.
"Mr. Gordon is wrong on two counts," Payumo said as he clarified in a press statement that the government welcomes both investments and ODA, especially the soft and concessional loans and Hutchison’s commitment.
Payumo said we should welcome the official development assistance (ODA) not only for the Subic Port project but also for Iloilo Airport and Cagayan de Oro Port which also received assistance under the Special Yen Loan facility for the 24th Yen Loan Package.
"As part of the seaport master plan, the SBMA however, will privatize the operations of the two berths," Payumo said.
Payumo noted that even International Container Terminal Services Inc. (ICTSI) president Enrique Razon, one of the three bidders for the port project during the term of Gordon, would confirm that Hutchison did not offer outright investments of $60 million to fund the project as alleged by Gordon. The bidding was held before the Asian crisis.
"That is not true. Hutchison offered a volume-triggered‚ investment proposal which means that it would only construct when certain volume levels have been reached," Payumo quoted Razon as saying.
Under Annex H of the invitation to tender, the business plan required a staffing and capital investment plan showing how individual investments will be triggered at specific levels of throughput.
Razon added that Gordon has bungled the bidding and awarded the project to Hutchison despite ICTSI’s "advantageous offer" to the government in terms of highest uniform royalty per TEU (equivalent to 20-footer container).
"Sec. Gordon has no moral authority to criticize our port development program because during his term as the chairman of the SBMA, he delayed the port development when he bungled the bidding which will be remembered as "one of the biggest fiascos in the history of Philippine public biddings," Payumo said.
The SBMA under Payumo has pursued privatization in a joint venture with ICTSI and RPSI which brought in a gantry crane.
The joint venture where SBMA has minority interest also spent for the civil works construction for the renovation of the Sattler Pier. It was only an interim agreement to build up the volume until the first berth of the proposed new container port is completed.
"We encouraged the private investors that put up the Bulk-Grains and Bulk Fertilizer Terminals, but would Hutchison or anybody else be willing to spend $215 million or even $60 million under the present economic conditions," Payumo asked. "In fact, Hutchison has not been heard from for the last five years".
Payumo said, "it would be unrealistic for a company to spend that much for the construction of the port under the build-operate-transfer scheme and hope to make the project competitive and financially viable, using high-cost money. This is also the reason why the Subic-Clark-Tarlac road would not be viable under the BOT scheme and had to secure long-term concessional funding from the Obuchi fund."
He explained that what saved the project was the concessional loan or the ODA of Japan which granted the SBMA a special economic loan package, payable in 40 years including a 10 year grace period at less than one percent interest.
The comprehensive study conducted by Japan International Cooperation Agency (JICA) showed that the former Naval Supply Depot, the area suggested by Gordon to transfer the port project, has a shallow water of only 12 meter depth with "limited maneuverability" and more importantly, has inadequate area for future expansion to accommodate huge modern vessels which is future trend.
The Redondo Beach across the bay, on the other hand, is not accessible by road and if one is built it would have to pass-through the traffic clogged Subic town and the City of Olongapo.
"Besides, Mr. Gordon has had his turn at the bat but muffed it. He should let the present SBMA administration have its turn at the bat," Payumo said.
Payumo likewise said it would be embarrassing for the Arroyo administration if, "after four years of completing the feasibility study, securing the NEDA - CC approval, queuing for the financing of the project, completing the design and engineering plans, finalizing the tender documents and receiving the bids, we now tell the Japanese we are sorry we made a mistake. We want to change the site of the project." He added that "our country would be the laughing stock of the international financial business community."