Arroyo favors integration, not government takeover of Piatco

President Arroyo threw her full support yesterday behind a proposal of Secretary Gloria Tan-Climaco for the "integration" of the operations of Terminal 3 of the Ninoy Aquino International Airport (NAIA) from the Philippine International Air Terminals Co. (Piatco).

Climaco, the presidential adviser on strategic projects, said she had faithfully complied with Mrs. Arroyo’s order to negotiate with the German firm Fraport AG in the "best interests of the Filipino people." Fraport AG owns 30 percent of the Piatco shares in the project.

However, Piatco vice president for public affairs Moises Tolentino warned that a government takeover would send a "bad signal" to investors, notably foreign, that the country does not respect the terms of a contract and that the business climate in the Philippines is unstable.

Meanwhile, Sen. Edgardo Angara asked the government to explain its position on the NAIA’s Terminal 3 controversy, while Sen. Joker Arroyo said the availability of German expertise would help in making the technical aspect of operating the Terminal 3 more favorable.

The latest twist in the NAIA’s Terminal 3 controversy started Thursday when the government cited as valid a proposal for its takeover of the NAIA Terminal 3 operations from Piatco.

Climaco told the Senate Blue Ribbon Committee chaired by Senator Arroyo that Fraport AG had agreed to be reimbursed only $400 million of its $509-million equity and advances if the government would take over the Terminal 3 project.

Fraport AG was willing to surrender to the government Terminal 3 and the franchise awarded to it pursuant to the Build-Operate-Transfer Law upon full payment of $400 million, Climaco told the committee.

Yesterday, in a press conference at Malacañang, Climaco said, "We never wanted the impression that this is a government take-over."

"My facial reaction, I wish you could have caught it, was something of shock," she said.

Climaco tried to clarify reports of her testimony before the Senate Blue Ribbon Committee.

But Climaco admitted that the proposed government "takeover" was made in July by the German firm itself.

"We don’t want the international community to think that we are taking this airport to the detriment of international investors coming in and more so, when diplomatic relations are involved," she said.

"And it is very irresponsible to say that the government is taking over the airport because that really connotes de-privatization," she said.

The Fraport AG proposal came after the President ordered Climaco to review and study the amended Piatco deal for a possible re-negotiation because of the alleged "onerous provisions" entered into the original contract on Nov. 26, 1998 during administration of then President Joseph Estrada and secured by Filipino-Chinese businessman Cheng Yong, the chairman of Piatco.

Climaco said the original Piatco contract was a result of an "unsolicited" bid for a project under the Build-Operate-Transfer (BOT) project which was precisely undertaken because of the government’s thrust on privatization.

She said that she had already recommended two "options" on how to settle the issues leveled against the amended Piatco contract, namely takeover or to declare the contract null and void.

"The solution to the problem now is to accept the German option," she said. "This is a contract that is very difficult to negotiate because it involves diplomatic relations."

Climaco said that Fraport AG was majority owned by the state of Hesse, the largest in Germany.

She said that no less than Fraport AG chairman Roland Koch, who is also the Hesse State Prime Minister, was satisfied and happy with the outcome of the renegotiated contract.

In a letter sent to Mrs. Arroyo dated Aug. 23, Koch expressed his gratitude to the "amicable solution" between the parties concerned. Copies of the letter were released to the media by Climaco.

"This solution will lead to the eventual turnover of the terminal to the Government of the Philippines for a discounted remuneration of $400 million, covering only partly the exposure of Fraport," Koch said in the letter.

Bad signal to investors

Piatco spokesman Tolentino said a government takeover of the Terminal 3 "will create an impression that after you infused capital and went through rigorous processes, the government will only take over your business."

"Who will invest in the Philippines with this scenario?," Tolentino asked.

He said Climaco’s position that "there are strong compelling reasons why the government should take over" was "unfair and done in bad faith." Climaco went "beyond her mandate under Executive Order 79, which created her office. She is supposed to help us expedite the implementation of the project," he added.

Tolentino denounced Climaco for what he claimed to be her "secret" talks with Fraport AG on the possible government takeover.

"Fraport AG was lured by Climaco to sell to government at a discounted rate... Her job is to help in the implementation of the project and not to block our way. Piatco is a partner of the government in this project, not its enemy," he said.

Tolentino said the Piatco contract successfully passed strict economic and legal scrutiny, including reviews by the National Economic Development Authority.

On the other hand, the Manila International Airport-NAIA Airport Service Operators (MASO) rallied behind Climaco, and demanded that the government rescind the Piatco contract.

MASO spokesman Perfecto Yasay Jr. said Climaco was "correct" in interpreting the contract and that her proposal was "consistent" with their long-standing position.

"The Piatco contract must be declared null and void. There is a need to renegotiate," Yasay said.

He said Piatco’s Amended and Restated Concession Agreement was "against the principle" of the Build-Transfer-Operate system.

In an interview in Clark Field in Pampanga, Angara said that when they were hearing the Piatco contract, the government said that it was "aboveboard" but now it has made a turnaround.

"They (government officials) have to make up their minds," Angara said.

Makati Rep. Agapito Aquino said Climaco’s pronouncements "conflict" with the Arroyo administration’s policy of privatization.

"If there had been onerous provisions in the contract over the new terminal, what the government should have done was to renegotiate and come out with some kind of agreement or compromise," Aquino said.

Aquino asked where will the government get the $400 million or about P20 billion. He said he preferred that the Germans run the airport for several years and turn it over eventually.

Arroyo clarified that the government was not forcing a takeover of the project. "The government is not forcing a takeover. It is merely considering a takeover as an option."

"A takeover is premised on the agreement of all Piatco shareholders," he said. — With Ding Cervantes, Efren Danao