DOTC unaware of NEDA review of RORO deal

MANILA, Philippines - The Department of Transportation and Communications was not informed of the National Economic and Development Authority (NEDA)’s review of its report on the P11.8-billion modular roll-on/roll-off (RORO) ports project, which found the report “suspect” and deficient, a DOTC official said yesterday.

Ruben Reinoso Jr., outgoing transportation and communications undersecretary for planning and project management, who chaired the DOTC Project Review Committee that conducted a study on the contract between French government-owned firm Eiffel and its joint venture partner Matiere SAS, said that they were not given a copy of the NEDA review report.

“DOTC have not been provided a copy so I can’t comment until I have evaluated it,” Reinoso told the STAR in a text message yesterday.

The NEDA report, dated May 16, found the DOTC’s report on the P11.8-billion RORO ports project as suspect and deficient in its comparative analysis of the modular ports that will be built under the contract with Eiffel and Matiere, funded by a concessional overseas development assistance (ODA) loan from the French government.

In a memorandum, NEDA director general and Socio-economic Planning Secretary Cayetano Paderangaraised the need for a more “in-depth analysis” to be undertaken by the DOTC and Philippine Ports Authority (PPA) to come up with a better comparison on the cost efficiency of the modular RORO ports to be built under the contract as against the traditional ports that are now being built and used in the country.

In its review, NEDA aired doubts on the credibility of the positions made in the DOTC report.

“Based on our review, we find that a more in-depth analysis would be required to undertake a meaningful comparison,” Paderanga said in his memorandum to the Presidential Management Staff (PMS), headed by Secretary Julia Abad.

“We have outlined some steps that the proponents (DOTC and PPA) need to undertake to have such comparison in place.”

The NEDA review of the DOTC report was undertaken at the request of the PMS for “a precise comparison of project cost versus similar alternatives, i.e. apple-to-apple comparison.”

In the May 2 memorandum of outgoing Transportation Secretary Jose de Jesus to President Aquino, a cancellation of the contract was recommended.

The recommendation for cancellation was mainly premised on the finding that only two ports are needed in the country.

“The Project Review Committee recommends cancellation of the Contract for the following reasons: costly technology, (and) superfluity of investments.”

“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,” read the memorandum.

The DOTC is already assessing the costs of terminating the contract so as to guide the President in weighing the options to take on whether to push through with the project in view of all the issues raised for and against it, said undersecretary Reinoso.

Patrick Azanza, senior adviser of French government-owned Eiffel and its joint venture partner Matiere SAS, had earlier warned of the dire financial and diplomatic consequences to the Philippines if it cancels the contract, which he stressed was a valid and perfected contract.

Azanza said that their start of actual port construction works has been delayed for almost a year since the project was halted by the Aquino administration last year to give way to a review of the contract signed during the previous administration by the DOTC and the PPA.

Despite working for the foreign firm, Azanza said that he saw the terrible implications to the Filipino people of an ill-advised or careless move by the DOTC to cancel the contract because of misguided notions of the project being overpriced.

“If the Philippines loses in the arbitration, we pay for the entire cost of the P11.8-billion loan, lose our P1.5-billion down payment, pay the cost of legal services and international arbitration plus we damage our reputation in the international business and investment community,” he said.

Azanza reiterated the French firm’s denial of an overprice in the modular ports which, from the project costing, will cost P83 million each.