Narrative Report about Sasa Port Issue in davao

Narrative Report about Sasa Port Issue in davao

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  Republic of thePhilippines CONGRESS OF THE PHILIPPINES Senate Pasay City FOR : THE HONORABLE SENATE PRESIDENT THRU : THE SENATE SECRETARY THE DEPUTY SECRETARY FOR LEGISLATION THE EXECUTIVE DIRECTOR FOR LEGISLATION THE DIRECTOR, COMMITTEE AFFAIRS BUREAU THE DIRECTOR, LCSS “C” FROM : JAYSON V. EGANA DAHLIA CAPILITAN REYNAN T. OLA SUBJECT : JOURNAL ON THE PUBLIC HEARING OF THE COMMITTEE ON PUBLIC SERVICES ON DECEMBER 9, 2015 AT 10:00 AM, PECSON ROOM, SENATE OF THE PHILIPPINES, GSIS BLDG FINANCIAL CENTER, PASAY CITY PSR NO. 1625 - INQUIRY, ON THE DAVAO SASA PORT MODERNIZATION PROJECT UNDER THE GOVERNMENT’S PUBLIC-PRIVATE PARTNERSHIP (PPP) PROGRAM” (Senator Sergio Osmeña III) CALL TO ORDER: Sen. Sergio Osmeňa III, Chairman of the Committee on Public Services, called the hearing to order at 10:40 a.m. SENATOR PRESENT: Senator Sergio Osmeňa III RESOURCE/GUEST PERSONS: NAME POSITION/AGENCY Hon. Joseph Emilio A. Abaya Secretary, Department of Transportation and Communication (DOTC) Hon. Rene K. Limcaoco Undersecretary, DOTC Hon. Julianito G. Bucayan Undersecretary, DOTC Mr. Jaime Fortunato Caringal Assistant Secretary, DOTC Mr. Miguel Enrico Paala Project Officer, DOTC Mr. Ruben S. Reinoso Jr. Assistant Director General, National Economic and Development Authority (NEDA) Ms. Cosette V. Canilao Executive Director, Public-Private Partnership (PPP) Mr. Juan Alberto Mercado Assistant Director, PPP Ms. Kristina Azela B. Diza Project Manager, PPP Mr. Jose A. Nuňez Jr. Chairman, Development Bank of the Philippines (DBP)
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  Ms. Susan Z.Prado Head, Financial Resources Sector, DBP Mr. Francis Nicolas Chua VP, Investment Banking, DBP Ms. Maria Eliza Galvan Manager, Investment Banking, DBP Mr. Leonilo E. Miole Manager, Port Management Office (PMO) Davao Mr. Peter Tiu Laviña Director, Asian Naturenergy Corporation (ANC) Mr. John Y. Gaisano Chairman of the Board/Former President, Davao City Chamber of commerce and Industry (DCCCI) Mr. Antonio T. Dela Cruz President, DCCCI Mr. Bonifacio Tan VP for Trade and Commerce, DCCCI Mr. Bonifacio Licayan DCCCI Mr. Giovanni Pimentel DCCCI Mr. Jesse Chiongson DCCCI Mr. Jose Manuel M. De Jesus International Container Services Inc. (ICTSI) Mr. Henry Lopez Chua President, Filipinas Port Services (FPS) Mr. Harry Lopez Chua Executive Vice President, FPS Mr. Alexander N. Valoria President, Anflo Management and Invesment Corporation (AMIC) Mr. Raul Santos Assistant General Manager Philippines Port Authority (PPA) HIGHLIGHTS: The following matters were raised and/or taken up during the hearing: 1. The hearing was conducted because the committee received several complaints received over the past few months from the business sector of Davao Region that the new proposed expansion of the Sasa port which was almost done for bidding and would cause an inordinate jump in the cost to shippers, both importers and exporters of goods because of the cost of the port itself. 2.Discussion on PSR. No. 1625- INQUIRY ON THE DAVAO SASA PORT MODERNIZATION PROJECT UNDER THE GOVERNMENT’S PUBLIC-PRIVATE PARTNERSHIP (PPP) PROGRAM. a. The Chairman inquired about the expansion of the Port which was costed at about PHP 4 billion sometime in 2010 & 2011. b. Ms. Canilao stated that the Davao Sasa Port Modernization Project was made a priority PPP project of the Department of Transportation and Communications in 2012. The DOTC engaged in the government owned Development Bank of the Philippines. Then the PPP engaged sub- consultants including the International Finance Corporation for the finance aspect of the project. c. According to Ms. Canilao, the government’s cost estimate was mot mandatory upon any bidder. The project was necessary because of the growing economy and container traffic in Mindanao. The project would transform the existing part into a modern international standard container terminal that would significantly increase the operational performance, reduce vessel waiting times and it would also attract large foreign container vessels. d. Mr. Limcaoco stated that the foremost benefit of the project was that the lower the net cost for exporters and importers the more efficient the port operations. e. The Hamburg Port Consultants (HPC) assumed in their study that container volume in Davao Region would grow at an average rate of 6.1 percent per year up to 2040 that contains an incredibly high growth rate of more than 20 percent a year. f. According to Mr. Valoria, the government should not be looking to compete with the existing private sector interests, because it would not only be a redundant waste of valuable resources but it would seriously discourage future private sector investment in the Philippines. Thus it would be counterproductive to economic development.
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  g. Mr. Pimentelstated that there were about 48 percent of foreign containers that went out of DICT, another 27 percent went out from the other ports which were Tefasco, Dole, Unifrutti and Sumifru. h. Mr. Valoria described that upon arrival in Japan, there are actually brought all banana imports to fumigated against pests but the Japanese process is very hard to get them to change their ways since 50’s or 60’s. He also added that because of the winter in Japan or what they call it demographic winter, their market are down. The aging population of Japan eating less. He also stated that China has bottomed out because of a lot of production also from their local producers. i. Mr. Abaya discussed that 4B was commissioned by PPA. He also said that the PPP, the way they structure it, the market risks will be borne by the bidders and the concessionaires. That ICTSI is an active bidder right now. j. According to Mr. Tan, any imported foreign container that arrives in Manila when it is emptied, it cannot be loaded on a foreign vessel because it is classified as a domestic empty cargo. k. Mr. De Jesus a President of DCCCI explained that the shipping lines save money on the economies of scale because they are supposedly building a facility that can accommodate a larger vessel. l. Mr. Chua reported that they have several private ports, private commercial ports and also private ports and Sasa is the only public port. When PPA raised their tariff, all the private ports follow. m. Also according to Mr. Limcaoco, If they’re going to do smaller port for 700,000 TEU’s, it will cost about P4 billion only. It’s better because their propensity or their ability to charge a price that is higher will be tempered by the competition from the other port. n. Mr. Henry Lopez Chua stated that they would be forced to pay that cost and in addition they should develop it in such a manner that it was affordable, I think PPA can manage to develop the port. o. According to Mr. Laviña, under Section 2 of the local Government Code and Section 27, it is very clear there stated, the national government project shall have prior consultation with the local governments and the local government should be consulted would be the City Counsel of Davao not the CDC or the City Development council, there is no resolution or ordinance of the City Council of Davao that endorsing the project. p. Mr. De Jesus said that they were all struggling as it is to make a viable offer. And because they had the advantage of being there on the ground already and knowing the reality is that the other bidder already had it. They were also concerned about this white elephant possibility that if they had this very Roll-Royce type facility wherein they also have to charge the Roll-Royce rates. q. Mr. Tan thought that it does not necessarily kill the competitor because the existing operators have to improve once a competitor comes in. 3. Decision and/or comments of regulators: a. Osmeña asked the DOTC to make sure that all concerned parties in Davao are consulted because they are the ones affected by the project. b. He also directed the DOTC to submit to the committee a simplified economic justification for the P19- billion project cost and also look for means to lower the rate increase from 80 percent to 20 percent. c. The Local Government Code of the Philippines requires the local council’s approval for government projects that falls within its jurisdiction. 4. SUSPENSION: The hearing was suspended AT 1:25 PM.