Shafting the Italians

The seven-man team of Italian grid operator Terna SPA, partners of Citadel Holdings, left sorely disappointed, taking a KLM flight to Europe the other night. They were here to bid for the National Transmission Corp. (TransCo) privatization project, which government decided to re-bid — a process that could move back privatization efforts by another year.

The Terna-Citadel consortium was the only party that showed up at the Feb. 5 bidding scheduled by the Power Sector Assets and Liabilities Management Corp. (PSALM) — making the entire bidding process a failure once again. Finance Secretary Gary Teves, who sits as PSALM chair, had announced that this time, they will first seek a franchise from Congress to operate TransCo before re-bidding the power transmission firm.

This project has been a long time coming, and one would naturally expect that all the kinks have been ironed out, as PSALM so confidently led bidders to believe when it claimed there will be no more hitches in the previously scheduled Feb. 5 bidding. True to form, the bidding was botched once again.

The Italian group — the second largest grid operator in Europe — has been diligently working on the TransCo privatization project for the past six years, and was excited at the prospect of sharing the company’s expertise in the power industry. When the Feb. 5 bidding failed — the fourth declared failure since 2001 — the Italian-led consortium said it was ready to go into direct negotiations with government.

Under existing laws, government can go ahead and negotiate after two declared bidding failures. Aside from appearing to be the only serious bidder, Terna was also the most qualified technically since it is a private entity, not state-owned like the two other bidders. In fact, Terna was even willing to raise its offer to $4 billion for the TransCo concession, an amount that is definitely a lot more than the expected $2 to $3 billion that government will generate from the privatization effort. It was confident that its technical expertise in the industry as well as its substantial investment would be advantageous to the country’s need for a reliable and efficient electricity transmission.

Despite the explanations given to justify the re-bid, this decision to go into another protracted process will again send unflattering signals to the international business community that this country cannot be relied on when it comes to sticking to the rules of the game. This TransCo privatization project has dragged on for six long years, and the recent setback is another lost opportunity to make up for the embarrassment we have been suffering, especially in European countries because of the Fraport-Piatco fiasco which has given us such a bad image.

Italians are like Filipinos — they are a passionate and emotional people. The Terna team was so disappointed with the TransCo failure, almost to the point of being angry. The sad part is, the Italians can just go home and forget about the whole thing — while we Filipinos will just have to suffer and continue getting shafted because a deal that could have given the government another $4 billion just went down the drain.

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Learning from Singapore

A state dinner was hosted by GMA the other night for Singaporean president S.R. Nathan, who is here on a four-day state visit upon the invitation of the president. Singapore is a country that plays by the rules, and has consistently been voted as the top country when it comes to bureaucratic efficiency. It is a great example of a country that started with nothing and now has become one of the most prosperous places in the world because it is virtually corruption free. That’s because the city state has a strict civil service system and a strong anti-corruption policy. More importantly, civil servants receive high salaries comparable to those employed in the private sector. All these have done wonders in discouraging graft and corruption in government.

Singapore posted remarkable growth especially in the last quarter of 2006, and more households have elevated their income brackets a notch higher than in 2005. Add to this the fact that Singapore has a very small population, an issue noted by economists who said the shrinking household size, coupled with the growing economy, has led to more job opportunities. As a matter of fact, security guards can earn as much as $1,000 a month. I am told that Singaporean diplomats are one of the highest paid in the world. Our friend Singaporean Ambassador Lim Kheng Hua is the highest paid diplomat in the country — probably even higher than the US Ambassador.

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