Feeder ports needed, says Pimentel

MANILA, Philippines - Former Senate President Aquilino “Nene” Q. Pimentel Jr. recently addressed the Department of Transportation and Communication’s (DOTC) plan to prioritize the development of fewer, but larger ports saying that while having large ports would allow the movement of greater volume, neglecting the development of smaller “feeder” ports would stifle the flow of goods from a significant part of the country, and possibly lead to “inefficiencies across the whole ports system strategy.”

Pimentel said that while developing feeder ports would indeed entail increased operating and maintenance costs, the same would contribute two major benefits that may help offset this increase in expense. “Primarily, these feeder ports would give more rural businesses across the country access to shipping, therefore lowering their land transportation costs. Secondly more feeder ports would generate jobs in and around their immediate area,” added Pimentel. “This may offset increased costs or even generate more income in terms of government revenues.”

Pimentel added that localizing port services to a few, large ports in select areas promotes a “monopolistic structure” in terms of moving cargo. “Without feeder ports, the small and medium businessmen are prone to higher expenses in terms of increased fuel costs and controlled shipping prices,” he said.

 “The hub is only as good as the spokes that support it,” said Pimentel. “Transporting goods through land based spokes cost nearly three times as much as shipping from feeder ports. These increased cost will contribute to increased prices to the consumer, or worse, lead to less volume being sent to primary ports.”

 The former senator from Mindanao earlier questioned the P400 million allocation of the PPA for the upgrade of the Cagayan de Oro port, saying that this would have been better spent in developing more feeder ports. Pimentel further added that it is a misconception that fewer, bigger, “and certainly more expensive” ports would require less government resources.

“Overseas development assistance (ODA) funded ports cost up to three times less in present value terms than ports that require immediate payment with local funding,” said Pimentel. He identified that the Development Bank of the Philippines has a P11-billion Japanese ODA fund available for projects such as ports development, but added that this is deliberately underutilized because the DBP makes a spread by lending this at four times the interest rate and at about one-fourth to one half of the term.

“The Philippine Ports Authority also has on record very expensive port improvement projects, such as the P715 million Pulupandan Port.” He said that subjecting that price to the same term that governs the ODA funds, namely a 15- year term at the present government cost of borrowing of 7.82 percent would mean that the Philippine government would have shouldered almost P2.2 billion for the project, spread over 15 years.