GMA urged to renegotiate PIATCO deal

Service operators at the Ninoy Aquino International Airport (NAIA) urged President Arroyo yesterday to renegotiate the government-Philippine International Air Terminals Co. (PIATCO) contract for the construction of the Terminal 3 while it is still not too late.

In a press conference at the Century Park Hotel, former Securities and Exchange Commission Chairman Perfecto Yasay, chairman of the MIA-NAIA Service Operators (MASO), said President Arroyo should cancel the contract now and renegotiate for terms that would protect the interests of the country and the people.

Yasay said the Amended and Restated Concession Agreement (ARCA), which was signed on Nov. 12, 1998 without prior review and approval by the board of the National Economic and Development Authority (NEDA) contained several onerous provisions.

"President Arroyo should act now, lest it will be too late. The government should negotiate on a level where it will be protected," he stressed.

He said the Philippine government still makes the termination payments even if PIATCO is the one in breach of the contract.

However, if the government is the one in breach, it will have to pay PIATCO all of the following:

• All unpaid obligations, or the appraised value of Terminal 3, whichever is higher;

• P180 million in liquidated damages;

• Total of all annual guaranteed payments made at the time of breach;

• PIATCO’s capital amounting to $189 million, and

•The projected rate of return of PIATCO.

"The government ends up paying for all of PIATCO obligations, including questionable consultancy fees, padded costs and overpricing in the project, now amounting to $650 million," Yasay said.

He added that despite the lopsided terms, ARCA was further amended by four supplements which increased the burden on the government, the public and the airlines. What was worse, he said, is that no NEDA approval has been obtained for any of the four supplements as required by the Build-Operate-Transfer (BOT) law.

Citing an example, Yasay said Supplement 2 signed in September 2000 allows PIATCO to dispose, demolish and remove waste materials from project site and charge the Philippine government for the costs. "This resulted in the government paying for padded costs and overpricing in construction work."