EDITORIAL – P900 million for consultancy

How much are consultancy services? For the Department of Transportation and Communications, it’s a whopping P900 million to set up a new communications, navigation, surveillance and air traffic management system. This is just the consultancy fee. How much for the actual project? Another $329 million?

Transport and Communications Secretary Leandro Mendoza reportedly signed the consultancy deal last Nov. 27 together with Eiichi Chaki, president of the Japanese company Aviation Systems Consultants Co., Ltd. Funding for the project will be sourced from the Japan Bank for International Cooperation as part of Tokyo’s 25th Yen Loan Package. Does this sound painfully familiar?

Even in foreign aid, there is rarely such a thing as a completely free lunch. The recipient of the aid must put up counterpart funds, and that money will come from taxpayers. Loans, no matter how preferential the terms, must be repaid, again by taxpayers. Donor countries can demand that their companies be awarded the projects, and this is not always in the best interest of the aid recipient.

The DOTC should have already learned some lessons. Earlier this year in China, Mendoza, in the presence of President Arroyo, signed a contract — or whatever it was that was signed, since the original document purportedly disappeared and the details were never bared to the public — for a $329-million government broadband network to be installed by Chinese firm ZTE Corp. Funding for the project would have been sourced from a soft loan from the Chinese government. Amid a corruption scandal that led to the resignation of Benjamin Abalos as chairman of the Commission on Elections, the ZTE deal has been scrapped.

At the height of the ZTE scandal, lawmakers made noises about reviewing other foreign-funded projects and tightening rules governing the approval of such deals.  The lawmakers’ zeal appears to have diminished together with TV coverage of the controversy. Now here’s another deal, entered into by the same department and the same Cabinet member, which could merit closer scrutiny.