French firm asserts Ro-Ro ports deal not overpriced

MANILA, Philippines—The French industrial company contracted to construct 72 roll-on, roll-off (Ro-Ro) ports in the country asserted Thursday that the project was not overpriced and that the technology to be used in the construction was the “most cost-effective and advantageous” to the country.

Eiffel Matiere said the French modular Ro-Ro ports were analyzed, evaluated and compared with the other technologies offered to the Philippine government for building the project. The financing terms and conditions of the French government for the loan were also considered.

Dr. Patrick Azanza, senior adviser to the French consortium and former international consultant for Asian Development Bank, maintained that the P11.783-billion project was aboveboard. Azanza was reacting to a series of Inquirer stories that alleged that the 72 Ro-Ro ports were overpriced by 138 percent.

The Ro-Ro ports were among the landmark infrastructure projects of the previous Arroyo administration aimed to serve as the nautical highway link between islands in the country.
Citing documents from the Department of Transportation and Communications (DoTC), the reports showed that under the project’s terms, each of the 72 ports would cost P143.5 million to build. However, the DOTC said that based on its studies, if built locally, each port with the same quality would cost the government only P60 million.

“We were surprised by an earlier news article alleging that the French modular port is overpriced without showing any basis except a sweeping conclusion from an alleged study, which was disowned by the DOTC itself in a formal communication addressed to the Resident Manager of the French Project Consortium,” Azanza said in a statement.

He said the DOTC acknowledged that the study cited in the reports did not show “apples to apples” comparison and that the project was still being reviewed and re-evaluated.

Azanza said they could prove to the government that the French modular Ro-Ro project was “cost-effective and advantageous to the country.”

The modular Ro-Ro was the most economical compared with the standard reinforced concrete Ro-Ro port on steel pipe piles (SPP) and the Spanish modular RoRo ports, he said.

“On the basis of the computed acquisition and follow-on costs derived in the foregoing for each of the Ro-Ro port technology under consideration, and using the life cycle cost method of analysis, the French Modular RoRo Port technology proves to offer the least cost to the government with a computed present value (PV) of P148,452,847 rate per one unit of RoRo port,” he said.

The reinforced concrete Port with SPP generated a computed PV of P 152,966,320 while the Spanish Modular RoRo port generated the highest PV at P 195,322,132.00. All PVs reflect a discount at 15-percent interest, Azanza said.

He explained that the acquisition cost for the French modular Ro-Ro 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 VAT and 3 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 Ro-Ro port is considered more cost-effective and advantageous to the Philippine government,” Azanza said.

“Under this analysis, it shows that the French modular Ro-Ro port would have a PV of P82,319,134. On the other hand, the RC concrete port with SPP has a PV of P152,966,320 while the Spanish modular port generated a PV of P195,322,132. The grant element of the French modular port loan project was at 38.9% which makes it concessionally in favor of the Philippines,” he added.

“In layman’s term it means that the Philippine government will in effect only pay some P62 pesos for every 100 pesos that it borrowed under the loan agreement,” he explained.

Azanza also asserted that the modular Ro-Ro ports are more durable and can better stand the normal wear and tear.

As for the number of ports needed in the country, he said 72 ports under the project were even short of the 234 Ro-Ro ports the country needs based on the study of the Philippine Port System Strategy, he said.