It’s the long wait that’s killing us

So the Court of Appeals has issued a TRO on the implementation of a lower court decision to pay Piatco P3 billion to enable the government to take possession of the facility. That’s probably the right thing to do. I can’t justify paying Piatco anything more than the real cost of building that facility as it stands now. My only problem is, the TRO doesn’t mean the Court of Appeals will quickly resolve the question before it.

A TRO has become the dilatory tactic of choice. Development projects have been placed in legal limbo for long periods of time because some disgruntled losing bidder was able to get his revenge by securing a TRO. I am not saying TROs are by themselves bad for the country, but the abuse in their issuance has given our legal system a bad reputation among investors, local and foreign.

I do not understand the legal complications that have plagued the NAIA-3 project. But it seems to me that when the Supreme Court declared the contract null and void, doesn’t that means it is as if there was no existing valid contract at all? That should mean the contract should be given to the other bidder for the project, the Emerging Dragons group. And because there is a building already erected, Piatco must be given just compensation. What that is should be based on what experts would say is the reasonable cost of the building, less extraneous amounts paid to whoever.

Then there is this nursing examination. Why is the PRC, the government regulatory agency responsible for it, unable to make a decision stick, one way or the other? The waiting is killing the hopes and dreams of those affected. And because in this country the courts eventually get into the picture, again… a TRO puts everyone in limbo until the court makes up its mind. When? Who really knows!

Just to illustrate the devastating impact of this inability to decide, here is a portion of a letter I received from a relative of two of the nursing examinees.

"By now you must know that our local PRC license is not necessary to practice nursing in several US states. Many graduates of this year’s batch flew straight to the US after graduation to pursue this. The only reason my husband and sister took the local board is so that after a long career of nursing in the US and Canada, they hope to return to the Philippines to become clinical instructors and share the wealth of knowledge that they would have acquired.

"It was a mistake for them to take the local board exam (who knew this would happen?) but since they have done that, this issue must be resolved and their names cleared so they can move on with their lives. Everyday that this drags on, 17,821 new nurses lose out on the many opportunities once open to them.

"My husband, for one, has missed the October board exam in Canada. If he will be forced to retake the local board in December, he will also miss the next Canadian board exam in February (deadline for application is November). The next available exam for him would be in June 2007. And since it takes two months before Canadian Board Exam results come out, it will be one WHOLE YEAR before my husband can practice in this profession. So what happens to our family in the meantime?"

It is time that the President exercise her powers by doing what is necessary to get the relevant agencies to more quickly resolve these pending issues. While it is true that there is separation of powers, it is also true that the President can exercise moral suasion on the judiciary to act more expeditiously on cases of utmost national importance. She gave an order to the PRC, but that doesn’t mean something will happen quickly.

Hopefully, people concerned would gather the guts, the professionalism to do their duty and expeditiously.

Tanker modernization

I got an e-mailed response from Hermie Esguerra, the former Petron salesman I wrote about but did not identify in my column last Monday, who became stupendously rich when he decided to be an entrepreneur… running domestic inter-island tankers. Here’s his e-mail.

Read your article at The Philippine Star today — Aug. 28.

Be assured that Herma Shipping and Transport Corp. (HSTC) has always pushed for adopting internationally accepted standards for the domestic tanker industry. We pursued this even if the oil companies did not ask for it. Maybe, this is HSTC’s inherent advantage in the industry.

HSTC too, as our reputation will show, has always been at the forefront in investing for the modernization of the industry. In fact, to comply with the IMO regulation to be enforced in 2008, HSTC is now building a 22 mb double bottom, double hull tanker in our Herma Shipyard. All our tanker proposals to our clients already specify the double bottom, double hull configuration.

In other words, Hermie is saying that he is all for upgrading the standards for domestic inter-island shipping. Bobby Kanapi of Shell wrote me that as far as Shell is concerned, they are also all for modernization… double hulled, double bottom tankers. I asked Mark Quebral of Chevron-Texaco or Caltex if they support modernization and here is his reply:

Yes we do, but we are sometimes not successful imposing it.

All our vessels that dock at our Batangas terminal from international destinations are already double-hulled. All of our inter-island vessels are double-bottomed but not yet double hulled. There are still no double-hulled vessels of local registry.

In June of this year we, did attempt to bring in a double-hulled vessel of international registry for our inter-island shipping but the MARINA declined this, as the deadline for conversion to double-hulled ship is still several years off (2008 for tankers carrying heavy grade oils and 2010 for the rest of the tankers). We are currently working to bring another double—hulled tanker in the first quarter of 2007.

As for Petron, according to a release I got, it promised that under its "Vessel Contracting Policy – Moving Forward", "all vessels to be chartered through Petron’s Shipping Alliance will have a maximum age of 10 years… All new buildings will be double-hull and double-bottom, complying with International Maritime Organization (IMO) standards ahead of the 2008 requirement for international oil tankers, and way ahead of the planned 2015 requirement for local vessels. Petron has awarded contracts for seven new buildings (double-hull, double-bottom), with one of these scheduled to be delivered before the end of August this year."

It seems that at least for the Big 3 oil companies, they are unanimous in their desire for modernization even before the 2008 deadline. The problem seems to be MARINA, which is easily swayed by political pressure from the domestic tanker industry. But there is no way government can do otherwise.

Following major oil spill incidents like the Exxon Valdez in 1989, the Erika in 1999, and the Prestige in 2002, Marine Pollution (MARPOL) regulations were amended. Marpol 13G (Accelerated phase-out of single hull tankers) and 13H (Carriage of Heavy Grade Oils, HGO in double hull tankers) were introduced to help prevent similar incidents from occurring in the future.

Several oil spill incidents involving single hull vessels have caused significant damage to the marine environment. Likewise, billions of dollars have been spent for clean-up and remediation. E.g. the Exxon Valdez response alone reportedly cost upwards of $2 billion. Oil spills of similar nature could be prevented with the exclusive use of double hulled tankers.

Locally, the archipelagic geography of the Philippines presents a unique operational challenge because of the frequency of waterborne movements of petroleum products. In addition, our exposure to tropical storms of about four to six months in a year increases the risks of these waterborne movements, i.e. Semirara grounding incident in December 2005.

The next move is definitely, MARINA’s.

Investment plan

Here’s something from Robin Tong.

If you had purchased $1,000 of Nortel stock one year ago, it would now be worth $49. With Enron, you would have had $16.50 left of your original $1,000. With WorldCom, you’d have had less than $5 left. But, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the cans for the aluminum recycling REFUND, you would have $214.

Based on the above, the best current investment advice is to drink heavily and recycle. It’s called the 401-Keg Plan.

Boo Chanco ‘s e-mail address is [email protected]