BCDA should save John Hay project

Many quarters are hoping for a quick settlement of the dispute between the Bases Conversion Development Authority (BCDA) and its private sector partner, the Camp John Hay Development Corp. (CJHDevco) at the Camp John Hay Special Economic Zone for the sake of the host city, Baguio City, and President Aquino’s pet project Public-Private Sector Partnership (PPP).

It is rather unfortunate because CJHDevco had actually saved BCDA from a major boo-boo in the 1990s when it agreed to take over this project at the John Hay Special Economic Zone after the winning bidder had failed to comply with the terms of the awarded contract or lease agreement.

Had CJHDevco opted not to salvage the project – and not risk time, money and effort in the project – BCDA’s reputation would have been severely tarnished at an early stage in its existence.

There is consensus that BCDA should amicably settle its row with CJHDevco, considering that this partnership is one barometer for prospective foreign investors of the Aquino administration’s success – or failure – in giving adequate or reasonable support to its private partners in accordance with their respective lease agreements.

It is, thus, imperative for BCDA to amicably settle its feud with CJHDevco at the soonest – to ensure the completion of this private partnership with reasonable success, so as not to disrupt the business operations of the project’s locators and tourism services, and to make sure this ongoing PPP is not compromised.

The only positive note of late in this decades-old dispute was the move by the House of Representatives, prior to the congressional break, to rescue the project. Its Special Committee on Bases Conversion, chaired by Kalinga Rep. Manuel Agyao, decided to create a technical working group that would resolve the two parties’ disagreements and look for possible new sources of funding to augment the money and facilities that CJHDevco has been pouring into the Camp John Hay project.

Local executives are on the side of CJHDevco and have submitted a position paper to the special committee urging BCDA to sit down with CJHDevco to resolve the matter, given the private partner’s willingness to do so despite, they said, BCDA’s repeated breach of the thrice-revised memoranda of agreement (RMOAs). It is natural for local officialdom to support the private partner’s desire to settle the issue and complete the project because Baguio City is at the losing end of this row – it is entitled to a share of the rental fees that CJHDevco pays to BCDA.

Before forming the TWG, another lawmaker, Baguio Rep. Bernardo Vergara, attempted to mediate in the dispute. But he learned that the BCDA just wants to be paid P3 billion without any conditions.

BCDA wants CJHDevco to pay P3 billion in alleged arrears but according to CJHDevco, it is up to date on its payments and has in fact paid P1.4 billion in rentals and invested over P5 billion thus far in its leased property at the special economic zone – despite BCDA’s RMOA violations.

This is unfortunate because the project is envisioned to convert the erstwhile military camp into the country’s premier eco-tourist destination and generate investments and jobs for the people of Baguio City.

The BCDA should be doing what it can to save the project. Alfredo Yñiguez, CJHDevco executive vice president and chief operating officer, in a recent interview with reporters, pointed out that CJHDevco has infused “a little over P5 billion in investments and put up added infrastructure inside John Hay over the past 16 years.” It also paid P1.44 billion to the BCDA representing partial payments of its lease rentals prescribed in the original and revised lease agreements.

CJHDevco, he revealed, lost P11.6 billion in potential revenues between 2007 and 2011. The company should have earned P12.1 billion from development projects it could have started early had it not been delayed by changing administrations modifying the rules at every turn, as well as the global recession of 2007 and 2008, Yniguez noted.

Instead of earning billions, CJHDevco only got P489 million from 2007 to 2011, he said.

BCDA has demanded payment of P3.2 billion in back rental fees from CJHDevco, despite BCDA’s alleged breach of an agreement in the 3rd RMOA that CJHDevco would honor all its financial obligations on condition that the government put up a One Stop Action Center (OSAC) to expedite within 30 days the processing of all business permits needed by the private developer and its sub-locators.

There has never been a fully operational OSAC as envisioned in the 3rd RMOA, according to CJHDevco. In fact the OSAC has only exacerbated the situation, because in failing to do its job of speeding up the processing of business permits, it has only added one more bureaucratic layer between the applicant and the permit giver.

In the public hearing conducted by the House on the issue, CJHDevco also enumerated several instances when the BCDA failed to honor its commitments, including failure to deliver “clean possession” of 32 hectares of the leased property most suitable for development but which remained occupied by community residents and other entities; failure to immediately demolish structures that would have enabled the CJHDevco to take effective control and possession of critical parts of the leased property; delay in the issuance of the implementing rules and regulations covering the leased party and failure to enter into a MOA with the Bureau of Customs on the implementation of duty incentives at Camp John Hay; and failure, through BCDA’s then-subsidiary John Hay Poro Point Development Corp. (JHPDC), to assist CJHDevco in obtaining an environmental compliance certificate from the Department of the Environment and Natural Resources (DENR). The ECC was issued two years later on Jan. 26, 1998.

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