There is no other way of putting the implications of this problem in a more delicate manner because the stakes are too high for this administration’s PPP initiatives. We have to put it as plainly as this: Screwing MVP’s First Pacific Group on the SCTEX deal will screw P-Noy’s PPP hopes and dreams.
MVP revealed in an interview with PhilStar’s Mary Ann Reyes early this week that they were surprised to receive a letter that the contract to run SCTEX will be terminated. The previous BCDA management cited certain “money points” in the letter sent to MVP just before they retired and the new one led by chairman Felicito Payumo took over. The new management of BCDA on the other hand, confirmed it will review the Subic-Clark-Tarlac (SCTEX) concession agreement to ensure that the contract jibes with the principles of President Aquino’s Public-Private Partnership (PPP) program.
Even now, key personalities in the foreign business community are shaking their heads in mock disbelief. One of them commented to me that it is about time government equalize misery between foreign and local investors. Citing NAIA 3 and the Belgians working on the Laguna Lake project, he said foreign business ventures have long been habitually screwed by our government and it is about time the local investors get screwed as well.
MVP is right. If there is already a perfected contract between BCDA and MNTC, it should be implemented. It was signed in November 2010 and approved by the Toll Regulatory Board (TRB) and the Office of the Government Corporate Counsel (OGCC), and they have received certificates confirming the conclusion of negotiations between Metro Pacific and BCDA.
“So it is a perfected contract as of November last year,” MVP said. “We were just waiting for the project to be turned over to us. They cannot terminate it just like that.” What’s there to review?
MVP told Mary Ann “We can understand if these are new points. These are points that were already discussed, negotiated and agreed… Contracts are sacrosanct especially if the fulcrum of your economic program is PPP. You have to honor the contracts that are perfected.”
Government should seriously take the implied threat in MVP’s warning that “here in Hong Kong where First Pacific is based and listed, we will be asked what happened to our SCTEX contract and we have no choice but to tell them the truth… that these guys are reneging on the contract. I don’t think the country will look good nor will the PPP.”
BCDA should do better than issue statements that they and MNTC are willing to open discussions. I am getting the impression from MVP’s statements that he is not a willing party to open discussions as BCDA is suggesting. MVP is being dragged screaming back to the negotiating table.
When recently appointed BCDA president and CEO Arnel Casanova says the new BCDA board is studying the contract with MNTC and has authorized the management to explore important issues that would respond to the concerns of both parties, that sounds ominous. As my colleague Jarius Bondoc observed last Wednesday, “rightly or not, delays can incite fears of project grabbing from old winners to new cronies, or fresh rounds of shakedowns.”
It is too late in the day for BCDA to say that they are further reviewing the agreement to come up with a PPP that would serve as a model for other PPPs. If it had signed a commitment already, the only thing left to do is to deliver. If there are still conditions precedent to make the contract effective that have not been fully delivered by both parties, the thing to say is they are waiting for these conditions to be met but the contract is as good as sealed... a done deal.
What concerns private sector observers in this case is that the negotiations between BCDA and MNTC had apparently gone smoothly in a public bidding. There have been no accusations of anomalies similar to the DOTC deals of the past administration (e.g. ZTE broadband) that failed because of the lack of transparency and onerous modifications tainted by corruption which proved to be grossly disadvantageous to the government.
I e-mailed Tong Payumo to ask him about this deal. He e-mailed back from abroad that they “have agreed to extend the long stop date so that both parties can continue to talk and resolve some issues… realize that it would not be good to either side and the country if we are not able to resolve the issues. Hence I am quite hopeful.” That doesn’t sound good enough, Tong, without a stronger sense of urgency.
It would help the image of government if BCDA immediately releases publicly the contentious issues they want to review… all in the interest of transparency. With the issues hidden in a cloud of secrecy, the grapevine is free to speculate that a possible attempted shakedown of a respectable private sector entity is taking place. They cannot, as the BCDA head is now saying, have full transparency by eventually disclosing the records pertaining to SCTEX concession. They have to do it now.
Renewable energy
Here is something to think about for us electricity consumers, already burdened by one of the highest electricity rates in the world. We are being asked to subsidize the cost of electricity produced by solar, wind and other so-called renewables through the mechanism of the so-called feed in tariff or FIT.
Unless we speak up, we will be forced to shell out some P9 billion every year for FIT for 20 long years… even after technology has made those renewables economically competitive. Of that amount, 50 percent goes to solar and wind, even if they will only account for 20 percent of the RE generated power under the FIT program.
There are those who say we have such a small carbon footprint and because we use significant amounts of geothermal and hydro, our electricity generation mix is already at least 32 percent renewable compared to the US which is under 10 percent. That means the Philippines is already contributing three times as much RE as the US on a country basis.
So why subsidize these fashionable RE technologies now? Why can’t we just wait for the more technologically advanced and financially capable developed countries to shepherd these technologies along until no subsidy will be required? Ironically, these developed countries are cutting back on their RE subsidies lately, notably in Europe.
I understand that even the National Grid will have to shell out substantial capex. It has to cope with all these small power sources going on and off the grid all the time without destabilizing the system. Guess who pays for the National Grid investments?
Hopefully our policy makers will put our interests, the already heavily burdened Filipino electricity consumers, ahead of the salesmen trying to make a fast buck by selling these technologies to us at this time. The ERC should carefully crunch the numbers and carefully explain everything before forcing us to pay up for something we don’t really need now.
It was good PR for the legislators who probably succumbed to lobbying by RE manufacturers when they passed our RE law. I doubt if they understood the consequences that we consumers must now bear.
Car salesmen
This came from Atty. Sonny Pulgar.
Two car salesmen were sitting at the bar. One complained to the other, “Boy, ang hina ng benta, business sucks. If I don’t sell more cars this month, I’m going to lose my #&^?* ass.” Too late, he noticed a charming and sexy lady sitting two stools away. Immediately, he apologized for his bad language.
“Okay lang” the lady replied, “Ako rin naman. If I don’t sell more ass this month, I’m going to lose my #&^?* car.”
Boo Chanco’s e-mail address is bchanco@gmail.com. He is also on Twitter @boochanco