The MIAA and NAIA3 mess

Last Tuesday , I had a frank talk with Alfonso G. Cusi, general manager of the MIAA to ‘get his side of the story’. He felt besieged by bad publicity because of the ‘postponement’ of the opening of the NAIA3 airport. With, Florencio Montalbo Jr., assistant general manager, and Tirso G. Serrano his senior consultant in tow, they were well prepared to explain how well they are doing their work.

They were armed with a point by point presentation of preparations for the opening of NAIA3. It may not happen on June 21 as promised but they had done their part on their level promising three B’s – bigger facilities, better management and better showcase. Unfortunately, all the three B’s, no matter the effort by MIAA management are simply meaningless.

There was no opening of NAIA3 and MIAA is not to blame. That is pretty clear. Indeed, I felt sorry for GM Cusi because he was wasting his breath trying to persuade me that the airport authorities have done their job. They may have but as far as the public is concerned we still do not have a new airport while the multimillion dollar NAIA3 stands gleaming idle. That was the tragedy. I was not surprised that Mr. Cusi was careful not to say anything offensive against anyone, whether against those above him or his adversaries. Instead he asked me what the public thought of the airport and the improvements they were making – cleaner toilets, better traffic flow, and more conveniences for OFWs. Frankly, I was confused. I did not know whether we were talking about why NAIA3 did not open as promised or the improvements that have been made in NAIA2. I had to be rude at one point and tell him that ‘improvements’ in NAIA2 only reinforce the suspicion that NAIA3 will not open anytime soon. Could he please be more straightforward so the public can be informed? On the other hand, I thought, why force him. He would not, or more appropriately could not talk frankly if his job depended on his silence. I guessed that even as he and his subordinates rattled off the power points on improvements in NAIA1.

When I was finally able to veer him away from his presentation on improvements in NAIA1, I asked him when is the new date of opening which newspapers said would be sometime in October. How? In fairness, he said he did not set the new date, it was IATA which did and it means only the time needed to build the required physical infrastructure for the airlines to transfer. MIAA would still have to satisfy the legal guarantees needed by the airlines if they were to shell out millions for the transfer. Cusi did not make much of this difficulty which I thought absolutely fundamental. If he could get Takenaka on board, he says it would be all systems go.

What about PIATCO-FRAPORT? He said it was only a question of the amount of compensation that was contentious. The Supreme Court had already declared the government contract with them null and void. It may be true that the Supreme Court’s decision would be the last word in the Philippines but there is still the Court of Arbitration and Settlement in Singapore. It is expected in November.

It would be embarrassing for the country if the Singapore court ruled against the government. That brings us back to square 1 and worse with a larger audience among the world’s investment community. A reliable source says, the problem ‘boils down to good faith.’ The government, they claim, want to get it free. Unfortunately, Fraport because it holds the software on the systems of the new terminal is the key to NAIA3’s operation. Takenaka has since rejected overtures of settlement with the government, even if it wanted to because its contract is with PIATCO-FRAPORT.

If the court rules that the government should pay compensation and it is not able to pay, then Philippine government properties abroad can be attached. For the moment, both sides are locked in the legal proceedings and their lawyers are following the timetable of submissions required by the court. According to one source, the government has already spent some $4million in legal fees as of December 2004. The Washington law firm allegedly charges by the hour. Corporate funds of MIAA are being used for the legal expenses.

An aide memoire from the government said that the case against PIATCO-FRAPORT is about the law. Since Fraport violated the anti-graft and corrupt practices Act, it is outside the purview of ‘investments made in accordance with law’. Meanwhile airline sources are watching and waiting on future moves by the contending parties. If, as it is rumored, NAIA3 should go to another private group, sources from these airlines said they would be ‘living under the gun.’ On the other hand, PIATCO sources said they did not think this would happen. This would be too blatant and an issue well-known to the public. Worse, it could open a can of worms.

* * *

MISCELLANY: It isn’t just this column that has come out with the story on the climbing oil prices. It is the cover story of current issue of London-based and sober ‘Economist’ which says much the same thing. It is not the question of the high prices of oil (even if it fuels inflation) that we should look at but the more ominous angle of supply and demand. When the demand outstrips supply, we will face graver problems that can reap the world apart. We may not be ready for that eventuality if we feign ignorance. Matthew Lynn of Bloomberg says ‘the club of people who say that oil is headed for $100 a barrel is growing steadily.’ It is tempting to say that this is just another outlandish prediction we have heard before. Similar predictions were made in the oil crisis of the early ’70s. Unlike the situation today these predictions were politically inspired and came to be known as the oil weapon. According to the Bloomberg article analysts, "the market is taking a short pause for breath in what may be a bull run lasting a decade or more." It says that ‘at the bar of the $100 Oil Club, there is respectable company.’ So far my sources have been the Guardian, the Economist and Bloomberg. They are not rumormongers. Why are we not taking their warnings seriously? Do we think ourselves impervious to such a catastrophe? I am only asking.

The Drilon deadline for VAT has moved again. In fairness, the Senate has passed its version. But the squabbling continues in the bicameral committee. I sometimes think, I may be making a mountain out of a molehill but isn’t it pretty clear that our problem is having a structure that ends in gridlock. That gridlock can only be removed if government is restructured. It proves yet again that we have put the cart before the horse. We would have avoided all this grief if we had structured government and held parliamentary elections in 2004. We would have been ready for the urgency of the legislation needed for the fiscal crisis. A parliamentary system simply means that the legislative and executive functions are reposed in one body – the Parliament. It would not have had to go through the legislative mill from the House, to the Senate, the bicameral (where it is now stuck) only to be returned to the Palace for decision. See what I mean?

* * *

E-mail: [email protected]