Payumo says BCDA won't screw MVP

Tong Payumo, the new Chairman of the Bases Conversion and Development Authority (BCDA), was abroad when Manny Pangilinan reacted rather forcefully to a threat of BCDA to terminate the concession agreement of MNTC and BCDA for SCTEX or the Subic Clark Tarlac Expressway. Actually, it was an inherited problem from the past administration. The threat was made by former BCDA president, Gen. Narciso Abaya in a letter to MNTC with the provocative title: Notice of Intent to Terminate the Concession Agreement.

The letter was written in legalese claiming that MVP’s Manila North Tollways Corporation (MNTC) has failed to comply with certain conditions precedent to making the contract binding. As such, Abaya’s BCDA was saying they have the right to terminate the contract and renegotiate better financial terms. Apparently the new team at BCDA had taken Abaya’s position and of course this irked MVP enough to publicly complain. MVP believes, and rightly so, that they have an agreement and government can back out of it only at great peril to its reputation and the credibility of P-Noy’s PPP program.

Over lunch last Thursday, Tong Payumo told me that BCDA will definitely not screw MVP on SCTEX. Payumo agrees that there is a done deal and if there are conditions MNTC still has to meet, that does not invalidate the contract. Tong said the unpleasant situation was  basically brought about by a late realization of Abaya’s BCDA of a cash flow problem arising from the deal they agreed with MNTC. But, Payumo said, this problem is absolutely negotiable and not a deal breaker of the magnitude implied by the harsh headline in the Abaya letter.

It would be a bitter irony, Payumo observed, if the SCTEX deal broke down in his watch given that he is the father of the B-O-T law. In fact, he observed, this deal is even better than most B-O-T deals in that it enabled a project to get cheap ODA financing but will be managed by the private sector where the capability to manage it resides. The expressway couldn’t have been built with commercial financing as was the case with NLEX and SLEX due to low traffic volume. Tong agreed with MVP that terminating the deal will bring serious damage to government’s credibility to work in partnership with the private sector as contemplated in P-Noy’s PPP program.

Without going into the details, Payumo said they are now in discussion with MNTC on how they can all work together to avert the cash flow problem that may cause BCDA to default in paying its obligations to JICA. He said that MVP had a very positive attitude and Payumo expressed confidence that in the end, all’s well that ends well. 

Payumo told me he is of the belief that government must not discourage local investors like MVP and San Miguel’s Ramon Ang because there are many urgent infrastructure projects where the resources of these two are most needed. A good example he cited is the development of Clark as the country’s new international gateway. Both MVP and Ang expressed interest in building the new terminal building and the connecting fast train to Metro Manila’s business district. In fact, both MVP and Ang did not rule out the possibility of working together on such a big and significant project.

Now that the BCDA has just about sold out most of its major assets, Payumo thinks that a new thrust is needed that would enhance the development portion of its mandate. BCDA cannot just sit back and collect rent or whatever financial resources due from past deals. Payumo thinks BCDA must serve as a catalyst to encourage the private sector to take on the task of putting up whatever infrastructure is needed to further enhance the value of such properties as Fort Bonifacio and Clark. 

Payumo is thinking of getting the big investors in Fort Bonifacio in partnership with Taguig’s local government, for instance, to put up a monorail system that will make public transportation in the area more efficient. He is looking for such a system to connect to the NAIA terminals in time for the opening of the big hotels in the Bonifacio area. A similar system, he said, can be put up in Makati and these two loops can be interconnected to facilitate movement in the two business districts.

Tong also has ideas for Subic, and he said he intends to exercise BCDA’s visitorial powers over the former US naval base. A former administrator of SBMA, Tong thinks Subic can do better and must also do something to clean up its less than savory reputation these days as a smugglers haven.

As for Clark, Tong thinks it is time to stop talking and start acting on plans to make it our international airport sooner rather than later. He is also confident about other development plans including making it a logistic hub for the region and tourism development.

I noticed that Tong has not lost his ability to dream big. He said that as a politician who understands business because he was in the private sector business first, he is in the best position to get things moving. The last thing he wants is to run BCDA like a government bureaucracy. I found that totally refreshing to hear from a government official.

Camp John Hay

But on Camp John Hay, Tong was in a fighting mood. He was pissed with reports that the Sobrepena-owned Camp John Hay Development Corporation was insinuating in press statements that they are being screwed by BCDA like MVP’s MNTC. If anybody is getting screwed, Payumo said, it is BCDA, citing the failure of the Sobrepena company to pay their obligations that are now in the range of P2.4 billion. 

Tong disputed the claim that the Sobrepena company was paying its obligation through an “escrow account.” He said that “if indeed they really opened an escrow account as they claimed to have done, BCDA is not a party to it. BCDA does not know what it is for and how much is the actual amount in their alleged ‘escrow account.’” A Security Agreement it signed with BCDA requires the Sobrepena company to open such an escrow account to serve as security for the full and timely paying of the principal and interst of their past and current rental obligations to BCDA.

Tong also said the One Stop Action Center that will process permits for John Hay development had been fully functional since 2005. The Sobrepena company had been claiming that the One Stop Action Center’s non operation as reason for not paying its rent. 

Tong also alleged that the Sobrepena company has failed to remit BCDA’s share from the dacion en pago properties it is managing. Apparently, the Sobrepena company gave some Manor Suite units to partially cover some of its debts. The properties were entrusted back to Sobrepena to manage. Payumo said the remittance for 2008 was P1.63 billion but only half was received for 2009 at P1.49billion. None was received for 2010 and BCDA was not allowed to check the books despite follow up letters.

Oh well... Tong need now worry about losing any public contest for credibility with the Sobrepena group in running businesses. They still have to explain College Assurance Plan and Fil-Estate, which was recently rescued by Megaworld. But Tong is right in fighting for the interests of BCDA.

Broker

JJ So sent in this contemporary take on a broker.

Boss to secretary: Please call my broker

Secretary: Pawn or stock?

Boo Chanco’s e-mail address is [email protected]. He is also on Twitter @boochanco