Nuisance complaints

Just recently, the public bidding held by the Department of Public Works and Highways (DPWH) for the five-year rehabilitation and maintenance of the 123.5-kilometer Surigao-Davao-Surigao (Lipata)-Agusan del Norte road project came under attack from some quarters.

A former DPWH contractor and now Butuan City councilor Sergio Pascual denounced the bidding which was won by the joint venture of Equi-Parco Construction Co. and Hebei Road and Bridge Group Co., Ltd., claiming it was rigged.

But Public Works assistant secretary Gilberto Reyes dismissed the complaint and described it as baseless and incorrect.

 In a memorandum sent to DPWH Secretary Rogelio Singson last Oct. 5, Reyes emphasized the bid documents evaluation conducted by the DPWH’s Bids and Awards Committee (BAC) strictly followed the guidelines set by the Japan International Cooperation Agency (JICA) for Official Development Assistance or ODA loan-funded projects.

Only Equi-Parco/Hebei was found to have complied with the evaluation, while the two disqualified bidders namely China Wuyi Co. Ltd. and Wijaya Karya (Persero) Tbk, were found to either lack documents or have discrepancies in what they submitted.

DPWH said they did not have adequate experience in constructing similar road projects of at least 35 km. It is also required that the bidders have experience in two projects similar to the proposed road with a value of at least P1.2 billion each. The two bidders failed in this respect as well.

According to the DPWH official, the deficiencies in the prequalifying documents of the pre-disqualified bidders are substantial and clear grounds for disqualification based on JICA guidelines.

 Reyes stressed the result of the bid evaluation as well as the contract agreement entered into by DPWH with the winning bidder was concurred in by JICA in separate letters dated April 16 and Sept. 21, respectively.

 Reyes, who chairs the DPWH BAC, also explained the approved budget for the contract is P3.42 billion from the original P3.54 million, and not P2.5 billion as claimed by detractors. Of the P3.42 billion, around 76 percent or P2.36 billion is JICA’s share and the remainder is our government’s counterpart. Thus, the P3.32 million bid of Equi-Parco/Hebei is 2.95 percent below the total corrected budget.

The detractors have alleged the winning bid is 20% above budget. They may have been referring to JICA’s share only and not the total.

Located in the provinces of Surigao del Norte and Surigao del Sur in the CARAGA region, which is considered among the poorest in the country, the road project is expected to help accelerate socio-economic development in the area. Unreasonable and unfounded allegations impose unnecessary delays to such crucial projects, prolonging the hardship of our poor brothers and sisters in this part of the nation.

Gov’t lacks business sense

Our government’s bid to attract foreign investments and to make our country look good in the eyes of the international business community has suffered another black eye following reports the Metro Pacific group may seek the arbitration route to force the government to act on its much-delayed petitions for toll fee adjustments.

Just recently, Metro Pacific Investments Corp. (MPIC) president and CEO Jose Ma. Lim said they may initiate arbitration proceedings against the government as a last resort for inaction over the long-delayed toll rate petitions filed by the Manila North Tollways Corp. (MNTC) involving North Luzon Expressway (NLEX) and the Cavitex Infrastructure Corp. (CIC) for the Cavite Expressway (CAVITEX).

Lim said their failure to implement the toll rate increases is affecting the financial viability of its infrastructure projects. MNTC has four years’ worth of inflation adjustments pending for NLEX, while CIC has six years for Cavitex, equivalent to 19 percent and 23 percent, respectively.

He pointed out these inflation adjustments are embedded in the concession agreements, but getting the regulator to act on their applications has been a futile exercise.

Lim revealed that in order to enforce their rights, they have issued a formal demand that may end up in an arbitration with the Toll Regulatory Board (TRB).

According to MNTC president Rodrigo Franco, the TRB has rejected its petition to claim from the government about P2.4 billion in foregone revenues. He explained they have a provision in their concession agreement that the government would adjust the toll rates in accordance with the contract, so that pursuant to the provisions of the contract, they are just claiming from government lost revenues.

Its concession agreement with government provides that MNTC has to adjust toll fees every two years in order for it to recoup its multibillion-peso investments and generate enough cash for its road expansion, improvement and maintenance projects. CIC, in turn, has to adjust its fees once every three years.

MNTC’s rate adjustments for NLEX were due in January 2013 and again in January 2015. Such cumulative adjustments due MNTC for NLEX total 15%, comprising the 12% raise it asked from TRB in its first petition in 2012 and the 3% adjustment it sought in its second petition last year. On the other hand, CIC sought the adjustment earlier in September 2011.

 In certificates attached to their respective firms’ petitions, MNTC’s Franco and CIC president and CEO Luigi Bautista both explained their companies’ failure to collect the higher rates would result to outright delay or stoppage of needed improvements, expansions or repairs of the toll facilities.

 They have also cited a ruling by the Supreme Court that Section 2 of the Build-Operate-Transfer (BOT) law provides for a reasonable rate of return on investments and operating and maintenance cost.

 According to the SC, the viability of any infrastructure project depends on the returns, which should be reasonable, of the investment coming from the private sector, adding “while the interests of the public are ideally to be accorded primacy in considering government contracts, the reality on the ground is that the tollway projects may not at all be possible or would be difficult to realize without the involvement of the investing private sector, which expects its usual share of profit.”

Our government should also be reminded that if it cannot respect the contracts it has entered into, then it should not have entered into these partnerships in the first place, nor should it say it welcomes foreign investments, but fails or refuses to provide an environment conducive for business to thrive.

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