NEDA at loggerheads with PPA over liberalization of port facilities

The National Economic and Development Authority (NEDA) is at loggerheads with the Philippine Ports Authority (PPA) over the liberalization of the country’s ports facilities, calling for Congress to overhaul the port agency’s mandate.

In yesterday’s joint session of the economic affairs committees of the Senate and the House of Representatives, NEDA chief Romulo Neri said the PPA’s commercial and regulatory functions should be separated to pave the way for liberalizing port facilities in the country.

According to Neri, the conflicting mandate of the PPA has created a block in the effort to liberalize port facilities and allow other players to come in without being stopped by existing players.

"We need competition in ports development and operations because that is the only thing that will bring down costs," Neri told the joint economic affairs committee. "Right now, it is considered one of the most expensive ports in the region."

According to Neri, a serious initiative has to be taken to separate PPA’s commercial operations from its regulatory functions.

This, however, would require a radical change in the agency’s core mandate, requiring legislative action to amend Presidential Decrees No. 505 and 857 which created the PPA.

According to Neri, PPA general manager Oscar Sevilla was adamantly against allowing other port operators to operate particularly at the Port of Manila where the International Container Terminal Inc. (ICTSI) holds an exclusive contract.

Neri told the committee that another company, Harbor Center Port Terminal Inc., has been trying to get a permit to handle containers at the port but the PPA was against the entry of another player.

According to Sevilla, on the other hand, the PPA had no objections against legislative action that would rationalize the agency’s functions, including the separation of its commercial and regulatory functions.

"There is nothing we can do if Congress changes our mandate," Sevilla said. "But while our mandate is as it is, then we would have to operate accordingly."

Sevilla explained that Harbor Center already has an existing permit to handle the containers of its locators. If the company wanted full container operations, he said it could file an application with the PPA board of directors.

"I advised them that they can’t because they might end up losing their existing permits," Sevilla said.

According to the Philippine Institute for Development Studies, (PIDS), limited competition started at the port of Manila when HCPT was issued the permit by PPA in 2003 to handle foreign break-bulk cargoes.

As a result, PIDS said HCPTI reported handing 80 percent of the foreign breakbulk traffic normally handled at the South Harbor because the facility claimed to provide better service and lower cost with HCPT charges about 50 percent lower than PPA rates.

North Harbor, South Harbor and HCPT all compete for domestic cargoes, whether breakbulk or containerized. South Harbor and HCPT compete for foreign break-bulk cargoes.

PIDS said ICTSI has the permit but was not actively competing in this market. Instead, ICTSI is concentrated on the foreign containerized cargo market.

Only MICT and South Harbor compete for foreign containerized cargoes despite the capacity of HCPT to compete in this market.

"PPA has not issued HCPT the permit to handle foreign containerized cargoes to date in spite of HCPT’s satisfaction of PPA’s requirements for the issuance of the permit," PIDS said.