ROUGH CUTS| Sasa port project: why the opposition?

NOW WE ARE certain that our hunch as to the reason why some sectors in Davao City are raising hell against the Department of Transportation and Communication’s (DOTC’s) planned Sasa Port Modernization Project is correct. That is, it has something to do with the apparent intention of the government agency to compete with privately built and operated sea ports. One is the already operational San Vicente Terminal and Brokerage Services, Inc. in Panabo City which is a partnership between the Floirendo Group and the multi-national Dole-Stanfilco, two of the country’s biggest exporters of Cavendish bananas and fresh pineapples. The other is the seaport project undergoing development in Madaum, Tagum City, reportedly a partnership between the landed Tuazon family in Negros Occidental and global port developer International Container Terminal Services, Inc. (ICTSI) of Hispanic billionaire Enrique Razon’s family.

     Initially, a port modernization plan was started as early as 2008 and was scheduled to be completed late in early 2010. According to our sources closed to the DOTC, the improvement on the Sasa port facilities covered under the initial project, was intended to entice Razon’s ICTSI to bid for the operation of the Sasa port and from there spun the project into a large expansion to be funded by ICTSI.

     But for whatever mysterious reason the Razon port developing firm backed out. Instead, ICTSI agreed to a partnership with the Tuazons for the Hijo port project.

     Meanwhile, both the Panabo port project and the ICTSI-Tuazon port development in Madaum, Tagum City were granted permits to proceed. In the case of the Panabo City port, it is now operational and is already serving the vessels loading banana exports from member plantations of the Pilipino Banana Growers and Exporters Association (PGBEA). Unfortunately, the private ports are given only four (4) years to operate, not enough time to recover what the project developers would have spent to complete the projects.

     But in the case of the winning developer and operator of the Sasa Port Modernization Project, the government is set to give 35 to 40 years to operate the new port. Well, how many long years are between four and 35 or 40 years? That’s close to four decades.

     And where lie the private port owners and operators’ worst apprehension? It is in the fact that the DOTC and the Philippine Port Authority (PPA) are the main regulators of sea port operations both public and private. Both regulators, the private port owners believe, may not hesitate to exercise their authority if only to ensure the recovery of the huge financial investments of the winning bidder of the Sasa Port Modernization Project.

     Maybe, if only to give the public an idea how much is the supposedly indicative cost of the Sasa port modernization project, the more known reason of the opposition from several sectors, the total estimated budget is P18.99 billion. The breakdown is as follows:

     Civil work (including detailed engineering design) – P7.29 billion; Equipment cost   -   P4.74 billion; Contingency estimated at 20% of civil work and 5% of equipment – P1.67 billion; Right of Way (ROW) acquisition and resettlement – P1.52; Development cost and other consultancies   – P0.46 billion; and Interest payment during construction   – P3.31 billion, or a total of P18.99 billion. Indeed the investment is too huge and yet, the project is targeting to increase the Sasa port capacity to one million twenty equivalent units (TEUs), the same capacity that is also targeted by the ICTSI-Tuazon partnership project at Madaum with an estimated cost of only P4.5 billion. Of course we have to understand that there are certain cost components that are present in the Sasa port project that are not found in both the Panabo and Madaum port development. And we are referring to Right of Way acquisitions and relocation. We are certain, that unlike the Sasa port, Panabo and Madaum areas are privately-owned. Therefore, there could hardly be any informal settlers to relocate.

   But we strongly believe that the DOTC and the PPA, or the government for that matter, should not have considered going into a project that will eventually compete with sea ports put up by private corporations that have responded to its call for investment on sea port facilities.

     If the two government agencies were already decided to modernize the Sasa Port in Davao City, then they should not have issued permits to the private companies to build new ports.

     For how can the DOTC and the PPA be objective and fair regulators to their own competitors?

     Thus, for us at this point in time, the recommendation of those who opposed the Sasa port project as planned, to focus instead on making the port function more efficiently, deserves the government’s serious consideration.

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