Tuesday, 19 April 2011

DoTC clears GMA project

Manila Bulletin

MANILA, Philippines – The proposed state-of-the-art modular roll-on, roll-off (RORO) ports that the past administration initiated through the assistance of the French government is not overpriced as claimed by critics of the project.

This was revealed by the Department of Transportation and Communications (DoTC) as it readied a report of its findings to the House of Representatives which has set a congressional inquiry into allegations that the project could be disadvantageous to the government.

Undersecretary Ruben Reinoso, who is in charge of the DoTC’s planning and projects, revealed that based on a committee report prepared by two of its attached agencies, the modular RORO ports that would further bolster the country’s already improving local shipping transport industry was “not overpriced”, adding that the cost is reasonable if compared to other proposals of similar components.

A copy of the report prepared by a joint committee composed of the Philippine Ports Authority (PPA) and Maritime Industry Authority (MARINA) will be sent to the House of Representatives, which has been asked to look into news reports that the project is “grossly overpriced.”

Eastern Samar Rep. Ben Evardone sought the congressional inquiry based on the claims of newspaper articles. The House Committee on Transportation has been tasked to conduct the inquiry.

Reinoso said the issue that should be looked into is the site selection. The issue on the reasonableness of the price may not be questioned unless the cost of the project is compared to projects that are similar in components and specifications.

He pointed out that the French modular RORO port project cannot be evaluated as overpriced without comparing the cost of all the components of building a RORO port, as well as the lifespan, operation and maintenance of the project.

The DoTC official stressed that the French modular model will use movable ramps. It includes the building of a terminal and has a guaranteed lifespan of 80 years, which is almost double the 30-to-40-year lifespan of traditional RORO ports made by the PPA.

“We haven’t come up with the site selection. We first have to establish that the price is reasonable and the reasonability of the cost will be done by comparing apples to apples, not apples to oranges,” Reinoso said.

The project, a component of the Strong Republic Nautical Highway program of the Arroyo government, originally proposed the establishment of 100 ports nationwide, but it was cut down to 72 ports because the donor agency cannot fund it all.

Earlier, Eiffel, a firm owned by the French government and Matiere SAS, said they were surprised by news reports alleging that the French modular port is overpriced. They said the report contained sweeping conclusions about the project being overpriced yet no bases were presented to support this claim.

Dr. Patrick Azanza, senior adviser to the French consortium, said the DoTC study showed that the contents of the news reports were disowned by Philippine officials in a letter addressed to the resident manager of the French project consortium.

He said the modular RORO ports project was analyzed and evaluated based on the unbundled unit costs of the project compared with the standard reinforced concrete RORO port on steel pipe piles (SPP) and the Spanish modular RORO ports project previously offered to the Philippine government, which did not materialize.

The financing terms and conditions of the French government COFACE loan for the RORO project were likewise considered, he said.

Azanza said the French Modular RORO Port technology had been proven to offer the least cost to the government with a present value (PV) of P148,452,847 rate per one unit of RORO port.

This claim can be gleaned on the basis of the computed acquisition and follow-on costs derived for each of the RORO technology, and using the life cycle cost method of analysis to determine the most cost effective and economical model.

Unlike the French model, the RC Concrete Port with SPP generated a computed PV of P152,966,320 while the Spanish Modular RoRo port generated the highest PV at P195,322,133. All PVs reflect a discount at 15 percent interest.

Azanza said the financing package should also be compared pointing out that the French port was derived based on the cash outflows under the terms and conditions of the French government COFACE loan provided for the project.

The locally funded cost items such as project administration and the taxes and duties (12 percent value-added tax and three percent import duties) which have been distributed over the three-year project implementation period were likewise included in the evaluation.

With financing, as indicated in the results of the study, the French Modular RORO Port is considered more cost effective and advantageous to the Philippine government.

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