Go port and mystify

OH NO. There goes the DOTC again. Embattled for the “laglag bala” scam at the Manila airport and still beleaguered by the recent slew of controversies like the wreck called Edsa MRT, the Department of Transportation and Communications (DOTC) is also under fire for the Sasa Port project in Davao. This port modernization happened to be the first ever project in Mindanao under the sluggish PPP program of the Aquino (Part II) administration, branded by our leader Benigno Simeon, a.k.a. BS, as the mother of all infrastructure programs in all of Asia.

Anyway, various sectors using the Davao port thrashed the DOTC for, one, the high cost of the port project at an astounding P19 billion and, two, the unfair conditions by DOTC affecting the local bidders. Yes, and do not even bother to wonder why, the DOTC obviously favored foreign groups. To justify the enormous cost of P19 billion, the DOTC thus must invent some mystifying projections on the volume of port business over the next 30 years of the concession up for bidding. Thus, the concessionaire would likely fail to realize the rosy projections by the DOTC. It would therefore lose tons of money. Eventually it would turn its wrath toward the port users by imposing murderous fees for its services.

That the government will also have to try to eliminate competition to the Sasa Port, coming from the two other privately owned ports in the area, well, might also be part of the grand scheme by the DOTC. Quite clearly, the DOTC used projections on the P19-billion Sasa Port project that were faulty. In port operations, as in shipping, volume is measured by TEUs, or “twenty-foot equivalent units,” equal to the world standard 20-foot container. The bright lawyers in the DOTC, without much ado, projected that the container traffic in this Davao Bay port would increase from 633,000 TEUs in 2012 to an incredible 3.1 million in 2040. There were several mysteries in the DOTC projections. For 2020 alone, for instance, the DOTC assumed an increase in the volume of traffic at the port equivalent to more than 27 percent—or about 300,000 TEUs in just a year.

Really now, such a miraculous increase in traffic in any port in the entire archipelago never happened before throughout the whole history of shipping here. The volume of bananas going through Davao Bay already accounted for some 70 percent of the total containerized cargo at the Davao ports so that the projected increase of 300,000 TEUs would mean that the banana export volume should increase by 210,000 TEUs. Such a fantastic increase in banana exports, targeted for 2020, or only four years from today, would mean that banana growers should expand their plantations by more than 20,000 hectares—and all in just a year. Imagine this: the far-reaching, overnight expansion of banana plantations would be equivalent to the size of the plantations of the three biggest banana companies in the whole of Mindanao, which actually took several decades to reach their sizes.

Now—and this was known to the DOTC—private groups already put up their own ports in Davao, owing precisely to the absence of government infrastructure projects in there. The biggest private port was the Davao International Container Terminal (DICT) in nearby Panabo City in Davao del Norte. Built in the same province was the Hijo International Port Services (HIPSI), owned mainly by the publicly listed International Container Terminal Services (ICTSI)—the brainchild of Enrique “Ricky” Razon, who has been a perennial dweller in the Forbes billionaires list. Both port operators—the DICT and HIPSI—already questioned the frightening P19-billion cost of the DOTC’s Sasa Port project, noting that it would be higher than their own costs by an intriguing amount of P11 billion. Look at that: An P11-billion difference. How on earth would the concessionaire ever recover it?

Let us even try to ignore the fact that the DOTC’s Sasa port project would be smaller than the two other private ports in the area. The Razon-backed HIPSI, for instance, occupied all of 54 hectares with an initial capacity of 450,000 TEUs. In comparison, the existing Sasa Port had only 18 hectares, including the four hectares devoted to its container yard. And it would cost some P19 billion, which would be more than double the cost of the other private ports in the area?

Finally, the DOTC indeed invited local and international companies to bid for the project. Three groups already bought bid documents, namely, San Miguel, DICT and the foreign group Portek International Ltd. The DOTC criteria, contained in the “instruction to prospective bidders (ITPB),” which would serve as the prequalification stage, were heavily loaded against local groups. For instance, the venerable DOTC required bidders to be operating “at least two international container terminals with a combined annual throughput of at least 500,000 TEUs for all terminals, one of which has an annual throughput of at least 300,000 TEUs.” Translation: No local group would ever qualify. It so happened that one of the private port operators in the Davao area had no prior experience whatsoever in any other international port. Surprise! It has already cornered a huge business in the international container shipments. This, again, was just a homegrown local port operator. Yet the DOTC would manipulate its rules so that only multinationals could participate in the project, the first ever PPP project in Mindanao under our leader BS who has only eight months left in his term.