Is DOTC finally moving?

Finally, a bit of good news! I texted DOTC Sec Jun Abaya to ask him the status of the work Japanese contractor Takenaka was supposed to do in NAIA 3. It took a while to convince the Japanese company to agree to the terms of a contract offered by DOTC for the completion of Terminal 3.

Well, Sec Jun texted back from Tokyo to say all is well. They started working last month and Takenaka gave July 31, 2014 as completion date. I asked and Sec Jun confirmed that some portions of T3 would be ready for the World Economic Forum in May 21-23, 2014.

Said Sec Jun: “The bigger airlines will transfer from T1 to T3 by May 2014 so that some delegates to the WEF will be using T3.”  That’s good news indeed if that happens. That will reduce the national embarrassment T1 foists on all of us.

Speaking of T1, SecJun also said he hopes DOTC will be able to award the contract to renovate T1 by Dec 20 or Friday this week. He said he has already secured the necessary approvals.

Movement of high profile transport infra projects at DOTC had been unduly delayed by what Budget Secretary Butch Abad called a technical deficit at the agency. It took too long for the lawyers brought in by then Sec Mar Roxas to get familiar with the nature of DOTC’s mandate.

Because DOTC was responsible for a majority of the high profile projects identified in the flagship PPP program of the Aquino administration, the program over promised but under delivered. The inability to quickly deliver the infra projects clouded the sustainability of the country’s promising economic growth.

Failed biddings for such mundane things as car plates and the long expected centralized computer system for car and driver registrations among others became the norm at DOTC. After the bidding for the expansion of the LRT 1 failed, the department now under a new secretary, Jun Abaya, changed tactics.

They postponed the bidding for the Mactan International Airport and instead, sat down with each of the prospective bidders. It was a good learning experience for the DOTC executives and the bidders were happy to share their expectations.

Last week, a bidding was held and when the technical and financial offers were opened, a consortium composed of Megawide, a local construction firm and GMR Infrastructure, which operates airports in India, Turkey and formerly at Maldives, submitted the highest bid of P14.40 billion.

While bidding officials made it clear that the process is not yet over, it is refreshing that DOTC got this far.

It is also noteworthy that last week, DOTC managed what looks like a successful bidding for a P1.72 billion contract to operate a smart-card system for the elevated rail network in Manila. This time a consortium of conglomerates Ayala Corp and Metro Pacific Corp gave the best bid.

Megawide Construction has apparently won its third bidding, assuming DOTC upholds their best bid for Mactan and no one questions the award. The aggressive bid of Megawide surprised the more established conglomerates that competed for the right to build and manage a rejuvenated Mactan International Airport.

Megawide had earlier won PPP awards for the school building project and was the lone bidder for the privatization of the National Orthopedic Hospital. Megawide is a young company that gained momentum because of their association with the SM Group. Megawide was SMDC’s construction company of choice for its many condominium projects. It also had a successful IPO in the Philippine Stock Exchange two years ago.

A Megawide official said they plan to build an airport terminal that can accommodate 25 million passengers a year, more than three times the government requirement. Cosette Canilao of the PPP Center told the ABS-CBN News Channel that “in the technical proposals, the passenger traffic forecasts were reflected and Megawide gave one of the higher passenger traffic forecasts.”

While Megawide’s local track record provides confidence in its capability to carry out the project, not too many people here have heard of their partner. The Indian company is supposed to provide the technical expertise in the design and management of the airport. The winning bidder will start to manage the airport by the middle of next year. 

Even now, I have heard murmurs of doubt on what exactly Megawide’s Indian partner can deliver. Compared to rivals like Singapore’s Changi and South Korea’s Incheon among other big hitters who joined the bidding, it is the first time most Filipinos have heard of GMR.

Canilao however assures that “GMR is actually an experienced airport operator. It is listed in India and is the operator of the Delhi, Turkey and Maldives airport. They’ve never lost in any PPP bids for airports.”

I was curious enough to google GMR and this is what I found in a Wikipedia article about the Maldives airport:

“There has been many criticism of the GMR managing the airport in Male. Many protests and polls show that GMR is very unpopular among the Maldivians…

“On 27 November, the government of Maldives announced that, the cabinet has decided to terminate the contract with GMR-MAHB (Malaysian Airports), saying that the agreement was void ab initio and gave GMR a deadline of 7 days to evict the airport. The Government also noted that after the termination of contract with GMR, the government owned Maldives Airports Company Limited will run the airport. On the midnight of 7 December, GMR handed over the airport to the government of the Maldives…”

I googled some more and found more information both good and bad for GMR. Suffice it to say that GMR is mired in a controversial airport project that reminded me of Fraport and Terminal 3. The GMR-Maldives case is now in arbitration, an expensive process we also went through with Fraport over Terminal 3.

GMR has sought a compensation of $1.4 billion from Maldives for the “wrongful termination” of its $500 million contract to modernize and operate the Ibrahim Nasir International Airport (INIA), signed in 2010 for a period of 25 years. GMR’s first international project was in Turkey where it modernized Istanbul’s Sabiha Gocken airport.

Hindu Business Line reports that GMR “has built the Hyderabad airport but is perhaps best known for modernizing the Delhi airport’s Terminal 3 in record time. However, each of these projects has not been without controversy. For instance, in Delhi the project ran afoul of the Comptroller and Auditor General, who pointed out that the consortium of Delhi International Airport Ltd (DIAL) was given land at a highly concessional lease rental.”

I have no space for the details but this is the link to an interesting article in the Hindu Business Line:  http://www.thehindubusinessline.com/companies/why-gmr-had-to-bail-out-of-maldives/article4256278.ece

And here is the link to the article in The Hindu on the arbitration case with Maldives: http://www.thehindu.com/business/Industry/gmr-seeks-14-billion-in-damages-from-maldives/article4837131.ece

The next few weeks should be interesting. Will DOTC hesitate to award to a consortium whose technical partner has a controversial track record like GMR? But they prequalified GMR so that theoretically, it is as qualified as Changi or Incheon. DOTC could be sued if they denied the Megawide/GMR consortium the award for no good reason and that would put the project in limbo for a long time, as usual.

Still, DOTC will have to carefully check the track record of GMR in the airports they claim to manage. As Hindu Business Line noted with reference to GMR’s airport projects: “each of these projects has not been without controversy…” I wonder if DOTC even googled GMR before they approved its participation.

I would like to assume they have also checked the financial record because that is important to determine its capability to carry out the project. The problem with giving the go signal to a consortium with GMR in it is that if things go wrong in the future, DOTC officials won’t even be able to say they were banking on the positive reputation of a Changi or an Incheon.

It is tough. I can understand if DOTC delays an award but that would be unfortunate too because we need an expanded and modernized Mactan International Airport… like yesterday.

Biology class

 Picked this up from one of my e-groups.

In Biology class the teacher asks, “Can anyone tell me why a flounder is flat?”

Little Johnny raises his hand.

“Go ahead, Little Johnny.”

“My uncle told me it’s because a whale raped the flounder.”

“That’s terrible, Little Johnny. I’ll have to speak to your parents about this. Let’s try another one. Why do a lobster’s eyes protrude from its head?”

Again, Little Johnny raises his hand.

“I’ll give you another chance.”

“My uncle said when the whale raped the flounder, the lobster saw it, and his eyes popped out in shock.”

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