Mar to review RORO project

MANILA, Philippines - Incoming Transportation and Communications Secretary Manuel Roxas II will have the P11.8-billion ports development project with the French government reviewed amid allegations of overpricing and despite warnings of dire consequences to the country’s reputation if the project is shelved.

“There have been many questions raised about the RORO (roll on-roll off) ports project of the previous administration. These are being studied and the proper decision will be announced in due time. The incoming Secretary Mar Roxas has already announced that he is undertaking a review of the RORO program,” presidential spokesman Edwin Lacierda said.

Last week, outgoing DOTC Undersecretary for Planning and Project Management Ruben Reinoso Jr. said the country’s credibility in the international business community would suffer if the port project is cancelled.

Reinoso said the DOTC had already submitted a report to Malacañang on the RORO ports project and that there were no signs that the project was overpriced as claimed by critics, including the Philippine Ports Authority (PPA).

The previous Arroyo administration signed the project with French consortium Eiffel-Matiere SAS.

Malacañang said Reynoso’s warning was “merely the opinion of an official who is departing the scene.”

“It is a disservice both to outgoing Secretary (Jose) Ping de Jesus and incoming Secretary Mar Roxas, and also a crude attempt to unilaterally dictate policy,” Lacierda said in a statement.

In defending the port project, Reinoso had argued that even the first Aquino administration honored contractual obligations forged by the Marcos regime with foreign governments and institutions.

Clarification

Reinoso, meanwhile, clarified that he was only trying to emphasize that although the contract is valid, it’s still an option for the government to have it revoked.

“We have to honor the contract because it is valid. But we also have the option of termination, but we have to assess the cost,” Reinoso said.

“Definitely, as a government, we have to honor our obligations under a legal and valid contract. The credibility of the government is at stake here,” Reinoso said.

“How can you entice the private sector to come in to invest? When you embark on a PPP (private-public partnership) project, investments have to be made. These people will be spending billions, or at the least hundreds of millions,” he said.

He said thee DOTC would definitely not push for the project especially in view of the PPA’s position that there was no need for 72 ports.

“That’s the big problem,” Reinoso said.

He said President Aquino would have to ultimately decide on the matter, and he may have to seek direction from a May 2 memorandum from de Jesus presenting all options and consequences.

“In view of the foregoing, the Review Committee came up with the conclusion that out of the 72 ports, only 2 are likely to qualify for the project, and it becomes impractical to proceed with the project. The Committee, therefore, recommends the cancellation of the contract,” the May 2 memo read.

“The termination of the contract will entail some costs, particularly payment of penalties due to contract cancellation; potential impact on our diplomatic relationship with the French government; as well as effects on the Philippine government,” De Jesus said in his memo.

“However, faced with this very difficult situation, it is believed that it may still be the best course of action to take,” De Jesus said.

Reinoso said that he had chaired the project review committee that had presented all the options and made recommendations to the President.

He stressed that when the National Economic and Development Authority (NEDA) conducted a review on the project in 2008, the PPA then insisted on the need for more RORO ports in the country.

He also said he was a member of the NEDA when the project was endorsed in 2008.

Reinoso explained that the NEDA only made recommendations and the approving body was the Inter-Agency Economic Cluster.

The Office of the Solicitor General, he said, had also been invited to ascertain the costs of a contract termination.

“We have invited them. We requested them to look into the contract,” Reinoso said.

Earlier, Patrick Azanza, senior adviser of French government-owned Eiffel and its joint venture partner Matiere SAS, expressed concern over the delay in the implementation of the project.

“Unofficial lowest estimate of possible interest charges and damages is P500,000 per day or P15 million per month of delay,” Azanza told The STAR.

“This (interest charge) does not include the cost of international arbitration and the possible forfeiture of the P1.5-billion downpayment that the Philippines made,” Azanza said.

If the Philippines loses in arbitration, it would have to pay the P11.8-billion loan, and have its P1.5-billion downpayment forfeited, Azanza said. – With Aurea Calica