'Government's best option is to honor port deal with French firm'

MANILA, Philippines - A ranking official of the Department of Transportation and Communications (DOTC) has warned of dire consequences for the country’s reputation if a multi-billion-peso ports development project signed by the previous Arroyo administration with the French government is cancelled.

Ruben Reinoso Jr., DOTC undersecretary for Planning and Project Management, told reporters last week that DOTC has already submitted a report to Malacañang on the P11.8-billion modular roll-on, roll-off (RORO) ports project and that there are no signs that the project is overpriced as claimed by critics, including the Philippine Ports Authority (PPA).

“If we don’t do that, who will trust us?” Reinoso asked.

Reinoso noted that even the first Aquino administration honored contractual obligations forged by the Marcos regime with foreign governments and institutions.

“Even after the Marcos regime, the Cory government honored government contracts, otherwise, it is the face of the government that will be ruined, not anybody else’s,” Reinoso said.

“We have obligations under the contract and we have obligations under the law. So two separate documents. We would also advise the President that in whatever decision we take, these are the consequences,” Reinoso said.

Reinoso noted that the project had already begun when then Transportation Secretary Jose de Jesus ordered that it be reviewed

“The contract has been signed. They have delivered steel pipes (for the ports), and there have been some manufactured already,” Reinoso said.

“We cannot say we cannot accept it, we have a contractual obligation. We will look for the possible uses of components that we are obligated to pay,” Reinoso said.

He said it was only “an opinion of the new PPA administration” that 72 ports to be delivered under the contract were unnecessary. “They have different perspectives. And we can’t second guess that,” Reinoso said.

Reinoso, as a former deputy director general of the National Economic and Development Authority (NEDA), had played a role in the approval of the contract with French consortium Eiffel-Matiere SAS during the Arroyo administration.

“It’s expensive, the technology’s expensive, but it is not overpriced,” he said, referring to the project. “That’s in the sense when we have to compare it apple to apple.”

“For example, you cannot compare a fix ramp to a movable ramp. Definitely, the movable ramp is much more expensive. A fix ramp will cost you P8-10 million and the movable ramp will cost you P50-55 million,” Reinoso said.

“When it was signed, when it was submitted to NEDA by DOTC and PPA, we knew all the components, we knew all the properties, and we read the numbers,” Reinoso said.

“They said in the past, they need a RORO system. PPA as a corporation can’t finance it, so DOTC intervened because it is a national assistance to local transportation,” Reinoso recalled.

“So we asked money from DBM, which appropriated funds because we need to install it. It’s how it works even in airways and railways,” Reinoso said.

Dr. Patrick Azanza, senior adviser of French government-owned Eiffel and its joint venture partner Matiere SAS, earlier expressed concern over the delay in the implementation of the project.

“Unofficial lowest estimate of possible interest charges and damages is P500,000 per day or P15 million per month of delay,” Azanza told The STAR.

“This (interest charge) does not include the cost of international arbitration and the possible forfeiture of the P1.5-billion downpayment that the Philippines made,” Azanza said.

If the Philippines loses in arbitration, it would have to pay the P11.8-billion loan, and have its P1.5-billion downpayment forfeited, Azanza said.

Moreover, he added, the Philippines would have to shoulder the cost of legal services and international arbitration and expect a severe blow to its reputation in the international business community.