DOTC reiterates no NBN overprice; PNR says Lozada unfamiliar with Southrail

MANILA, Philippines – The $262-million bid of a firm represented by a son of former Speaker Jose de Venecia Jr. to build a national broadband network was rejected after it was found to be limited in coverage and not financially viable, the government said yesterday.

Speaking to reporters yesterday, Transportation and Communications Secretary Leandro Mendoza said the proposal of Amsterdam Holdings Inc., represented by Jose de Venecia III,  should not be used to measure the cost efficiency of the $329-million NBN contract signed by the government with Chinese telecommunications firm ZTE Corp.

“They are talking about a proposal that was not considered by the government,” he said.

Senate star witness Rodolfo Noel Lozada Jr. told the Senate last Friday the ZTE contract was overpriced, compared to the AHI bid, which was lower.

At same forum,  Assistant Secretary Lorenzo Formoso III, who headed the DOTC technical working group that rejected the AHI proposal, said that the higher ZTE price could be justified by the nationwide coverage of the network it would build to connect fourth, fifth and sixth class municipalities.

“Let us just do the math,” he said. “Just calculate, don’t speculate.”

Formoso said the NBN project that ZTE would have built would have set up 300 base stations that was enough to cover the whole country.

The AHI proposal would have built 40 base stations, he added.

Formoso said the target connections of the ZTE project would go up to 25,844, while the AHI proposal would number to only 320 connections.

“From a 40-base station, it became 300,” he said.

“That’s necessary to cover the whole country. From 320 connections, it became 25,844. The proposed network coverage (of AHI) is not national in scope. They are limited to major urban areas. The nation’s requirements are more towards the less developed areas: the fourth, fifth, and sixth class municipalities.”

Formoso said the DOTC technical working group also considered AHI’s lack of financial capability and some other deficiencies in rejecting its proposal.

“There’s a slight problem with the unsolicited proposal of Mr. De Venecia,” he said.

“One, under the BOT Law, an unsolicited proposal is not allowed for priority projects under the Medium Term Philippine Development Plan. That’s in the law.

“But just to complete our due diligence, we reviewed their proposal. First, it’s a holding company with a paid-up capital of P625,000 reportedly increased to P11 million. They’re proposing to do almost a P12-billion project yet they only have P11 million.

“That would not be a problem if they have equity or debt investors. But they have no firm commitment from either equity or debt investors.

“As a holding company, they have no telecoms experience. So how can they operate a broadband network. They don’t have technology partners. So how can they get into building the system?”

PNR doubts Lozada

Meanwhile, Jose Ma. Sarasola II,  Philippine National Railways (PNR) general manager, doubts that Lozada was familiar with the South Luzon Railway (Southrail) project, the government’s effort to rehabilitate the railway from Calamba, Laguna to Sorsogon in Bicol.

“His statement during the hearing boggles the imagination,” he said.

“The project has gone through proper diligence, its implementation has not been started as the funding arrangements have not yet even been finalized, and here he is implying that there is something anomalous in the project.”

According to Sarasola, Lozada was “way off track in his mention of the South Railway project considering that Mr. Lozada is not knowledgeable as he attended only one meeting.”

Sarasola said  Lozada’s “lack of familiarity” with the project was betrayed during his testimony at the Senate last week when he gave “incomplete facts” regarding the status of the project.

The government has yet to finalize the funding arrangements for Southrail, which has prevented the PNR from implementing the rehabilitating the railway from Calamba, Laguna to Sorsogon, he added.

Sarasola said the PNR had not submitted their feasibility study on the Southrail project to the National Economic and Development Authority (NEDA).     

What NEDA had reviewed and approved was the first phase of the Southrail project, the 77-kilometer route from Calamba to Lucena City, he added.

Sarasola said the Southrail’s first phase has not been started because it has yet to get funding.