Gov’t extends $167-M airport dev’t project for one year

The government has extended the $167-million Third Airport Development Project for one more year, in the hope of clearing up the anomaly in the pre-qualification of private contractors that would undertake the project.

Finance sources told reporters that the government asked for a one-year extension from creditors while the Department of Transportation and Communications (DOTC) sorts out the controversy over the bidding of the project.

The project was supposed to be funded jointly by a $93-million loan from the Asian Development Bank (ADB) and another loan from the European Investment Bank (EIB) amounting to $29 million. Government counterpart-funding would amount to $45 million and the project was supposed to have been completed in November last year.

According to finance sources, EIB’s part of the project has already been cancelled, but the government has asked for a one-year extension from the ADB.

When the controversy broke out earlier this year, both financing institutions had threatened to cancel funding for the project altogether.

Documents obtained by reporters revealed that both the ADB and EIB had repeatedly expressed concern over the pre-qualification of the joint venture led by Sum Cheong Construction Pte. Ltd and its local partner, Sunwest Construction Development Corp which made the lowest bid for the project.

Speaking on condition of anonymity, sources privy to ongoing negotiations between the DOTC and the EIB revealed that the European bank has sent a mission to the country that ultimately recommended the outright cancellation of the loan.

The source said that Malacanang had already stepped into the mess in an attempt to sort out the controversy but the intervention might have come too late because EIB had lost interest in funding the project.

The ADB portion, on the other hand, carried an interest rate based on the bank’s pool-based variable lending rate system for US dollar loans. It also carried a charge of 0.75 percent annual commitment fee.

The project would have covered the upgrading of five key domestic airports in Cotabato City, Butuan City, Dipolog City, Pagadian City and Sanga-Sanga in Palawan.

The government decided to cancel the project but sources said the DOTC wanted a one-year extension to be able to decide whether it would re-bid the project.

The DOTC has already pre-qualified the Sum Cheong group in the bidding for all five airport projects but it came under fire for not disqualifying several prospective bidders with questionable financial backgrounds.

Aside from Sum Cheong, the DOTC also pre-qualified Italian-Thai Development Corp which had recently encountered financial problems that led to its disqualification from several projects funded by multi-lateral funding agencies.

In his letter, ADB director Patrick Giraud questioned the pre-qualification of the Sum Cheong/Sunwest venture which had already submitted the lowest bid and was likely to win the project.