If NAIA-3 is B-O-T, why did gov’t spend?

The idea to pass the Build-Operate-Transfer Law in 1994 was smart. Government had the duty, but no cash, to build ports, reclaim soil from the sea, raise new cities, pave more highways. So Congress cobbled a law that would let local or foreign investors do the bankrolling and constructing. In exchange, government would lend its lands and give operating franchises to enable them to recover investments over a period of time. After which, the investors would return - transfer - ownership to the government.

Neat, huh? Not so with the Piatco concession to erect and run a third NAIA terminal. A close look at the contract shows that, while it’s B-O-T, government is obliged to spend P10.5 billion for civil works, roads and infrastructures. This, in addition to the 65 hectares of prime land it gave to Piatco and the franchise to carry on a monopoly of international passenger and cargo operations. The discovery of Presidential adviser Gloria Tan Climaco belies claims of Piatco spokesmen that government will get oodles of pesos from the deal without paying anything.

Piatco’s offer way back in 1996 was to spend $350 million to build a world-class international airport. In exchange, it would charge fees for at least 16 public utilities like aircraft parking and tacking, porterage, cargo handling, passenger services and terminal use. Government would get part of the fees - P17.75 billion over the 25-year concession.

As with any Philippine law, the devil is in the implementing. From the day the bid was won in 1996 to the contract signing in April 1997, the terms were changed. Piatco got full discretion over the rates for 12 of the public utilities and left government with power to regulate only four. From the 1997 signing to the entry of a new president in 1998, new clauses were sneaked into an Amended and Restated Concession Agreement (ARCA).

Government, contrary to provisions of the B-O-T Law, would guarantee all of Piatco’s loans. From the ARCA arose three supplemental agreements compelling government to pave roads and flyovers leading to Terminal-3 at a cost of P10.5 billion to taxpayers. Only then did Piatco commence construction in June 2000.

Of the P10.5 billion, government already has spent P801,083,485.86 for five items:

* P120,364,002.64 for subterranean works,

* P186,119,483.22 as its share of hiring a construction quality-assurance inspector, Japan Airport Consultancy Inc.,

* P50,000,000 initially to tear down portions of Nayong Pilipino recreation park adjacent to Terminal-3,

* P344,600,000 to upgrade roads leading to Terminal-3, and

* P100,000,000 so far for the EDSA-Tramo interchange.

All this, even if the NEDA’s investment coordinating council has yet to approve the three supplemental agreements.

The contract compels government to spend P9.7 billion more, to wit:

* P1 million to clear the Nayong Pilipino of debris,

* P450 million to pave a side road between the existing (Centennial) Terminal-2 to Terminal-3, since Piatco was able to delete the clause for it to dig an underground tunnel,

* P97 million to finish the EDSA-Tramo flyover,

* P9 billion to build an elevated highway to the NAIA complex, and

* P150 million to fix the storm drainage system that Piatco messed up and now causes floods at tarmacs and runways of Terminals-1 and -2.

If government will earn P17.75 billion against its expense of P10.5 billion, it will net P7.25 billion on a flat scale. But not if interest and inflation over 25 years are factored in. The P17.75 billion in future revenues, Climaco computes, has a value of P4.79 billion in today’s money.

The P10.5 billion in past and forthcoming expenses similarly amounts to P7.87 billion. Government thus ends up the loser of –P3.08 billion.

Neat, huh, but only for Piatco.

* * *

And, oh, Piatco spokesmen claim the proposed terminal fee at NAIA-3 rose from P500 to $20 (P1,034) because government suddenly asked for a bigger share of $7.84 per departing passenger.

That is not what the documents show.

When Piatco made a bid in 1996, it pegged the passenger terminal fee at P500, lower than the P550 presently collected at Terminals-1 and -2. Government was to get 36 percent, or P180, while Piatco would retain P320.

Those figures mercifully were left intact in the 1997 contract, though several other terms of reference were changed.

In the ARCA of November 1998, the fee suddenly changed to $20, with provision even back then for increases after the first three years of operating Terminal-3. The highest in Southeast Asia today, four years since the ARCA, is $11.50 in Vietnam; the lowest is $7.20 in Indonesia. Truly modern airports charge $8.60 in Taiwan, $9 in Singapore, $10.30 in Hong Kong.

But this takes the cake: of the $20 or P1,034 stated in the ARCA, government would still get P180; Piatco would retain P854. It’s all there in the documents.

Only in the first of three supplemental agreements was the sharing altered: of the $20 (P1,034), government would now retain $7.84 (P405.33). Piatco would still retain a higher $12.16 (P628.67) from its original share of P320 in the 1996 bid and the 1997 contract. That Piatco share of $12.16 is more than the highest terminal fee today in Southeast Asia.

And what entitles Piatco to such an increase? Dunno, Climaco looks upward as she points to Piatco’s runaway expenses from $350 million in the 1996 offer to $657 million that the spokesmen now claim.

In return for the rise in government’s share in the first supplemental agreement, however, it was to turn over 8.6 hectares of Nayong Pilipino to Piatco. Plus, of course, it was to pave the access road from Terminals-2 to -3 on its own. And it was to not question the deletion of the earlier clause for Piatco to link the terminals with an underground tunnel.

Government has fulfilled all this, to the point of firing the Nayong Pilipino staff. Yet, as stated earlier, the NEDA’s investment coordinating council has not approved any of the supplements.

* * *

You can e-mail comments to [email protected].