Biz Buzz: Customs versus PPA

With less than a week before they are replaced by new appointees of the Duterte administration, it looks like the heads of the Bureau of Customs and the Philippine Ports Authority are on a collision course.

At stake is the lucrative business of a local port handling international cargo and, by extension, whether consumers will eventually enjoy the benefits of cheaper goods and services or not.

Of course, the third player that’s threatening to disrupt the status quo at the port area is none other than Manila North Harbor Port Inc., a joint venture between San Miguel Corp. and businessman Michael Romero.

Previously allowed to handle only domestic cargo, Manila North Harbor is taking advantage of a year-old law allowing foreign vessels to transport and co-load foreign cargo for domestic transshipment. Officially known as Republic Act 10668, this law signed by President Aquino, lifted cabotage restrictions and allowed foreign-flagged vessels to sail internal Philippine waters and dock at any local port, with the approval of the head of the Bureau of Customs.

And Customs Commissioner Bert Lina has given the green light for Manila North Harbor to handle foreign cargo in accordance with the law.

Lina’s ambitious goal is to break the stranglehold of International Container Terminal Services Inc. and Asian Terminals Inc. on the Philippine ports system, by allowing more players to come in. According to Lina, new players will result in faster cargo handling services, lower shipping costs and, eventually, cheaper goods and services for Filipino consumers.

But not so fast, says Philippine Ports Authority head Raul Santos, who clearly doesn’t like the idea of a third player disrupting the modus vivendi at the ports.

Thursday, the agency announced that it had “disallowed” Manila North Harbor from operating as an international port operator, citing the firm’s “exclusive domestic port contract with the PPA.”

In a memorandum order, Raul Santos—PPA’s officer in charge and assistant general manager for operations—reiterated the restrictions on the handling of foreign vessels and cargo at the Manila North Harbor terminal. And it was addressed to the Manila North port manager, harbor pilots, and all shipping lines and shipping agents.

“In view of this contractual limitation, MNHPI is prohibited from providing terminal services to foreign vessels at Manila North Harbor. Accordingly, foreign vessels cannot proceed to Manila North Harbor for purposes of anchorage and/or docking at its berth and unloading of their cargoes, among others,” it added.

As a result, at least one Manila North Harbor client—Uni-Ship Inc.—that was supposed to enjoy the benefits of faster cargo handling and lower costs, pulled out at the last moment and directed its ships to dock at the pier of the “big boys.” With PPA scaring off Manila North Harbor’s prospective clients, it’s business as usual for the incumbents.

But isn’t Santos, standing as PPA’s OIC, supposed to consult the rest of the agency’s board (composed of representatives from DOTC, Neda, DPWH, DOF, DENR, DTI, Marina and the private sector) on what is good for the country before issuing such an order?

And more importantly, does PPA’s Santos have the authority to prohibit Manila north Harbor from providing terminal services to foreign vessels, as expressly allowed by law signed by no less than President Aquino?

Maybe that’s why the PPA—just like the National Telecommunications Commission—has always been the subject of criticism as being the subject of  “regulatory capture” huh? Daxim L. Lucas

Tender offer kinks

FROM all indications, PLDT Inc. and Globe Telecom (a.k.a “the Philippine telecom duopoly”) will conduct a tender offer to minority shareholders of publicly-listed Liberty Telecom Holdings after jointly buying out the telecom assets of conglomerate San Miguel Corp. under Vega Holdings, the parent firm of Liberty.

The question now among market participants eagerly anticipating the tender offer—a mechanism which gives minority shareholders the opportunity to exit when there’s a change in shareholder control—is whether this will be voluntary or mandatory.

There’s a big difference if the tender offer to Liberty shareholders will be voluntary or not.

From the telecom firm’s perspective, the indication is that this will be voluntary, contending that the transaction was not covered by the mandatory tender offer rule.  Under such a scenario, the offeror—PLDT and Globe—can set their own price.

But if the corporate regulators deem that the transaction is subject to the tender offer rule, the price will be based on the value at which the duopoly had bought the majority stake. It may be very low or very high but minority shareholders will get the equivalent value for their shares in Liberty. Market players will need to know the value attributed to Liberty, which owns majority of the coveted 700 megahertz broadband spectrum.

Since it’s the regulators who have a say on this matter, market players are awaiting guidance from the Securities and Exchange Commission, which has so far remained silent on this issue. Doris Dumlao-Abadilla

Consunjis recognized

THE ATMOSPHERE in the Consunji home is electric these days.

And no, not because of fears that the hardline anti-mining stance of incoming Environment Secretary Gina Lopez will have a negative impact on its operations that include coal mining at Semirara.

Rather, it is because the large family is excited over the Most Distinguished Alumnus award that will be given to patriarch David M. Consunji on June 25, during the 2016 General Alumni Homecoming of the University of the Philippines.

The 94-year-old Consunji, founder of DMCI Holdings Inc., graduated from UP in 1946 with a degree in Civil Engineering. He is known for many things in the world of construction. But for the UP community, he is perhaps best known for constructing the domed UP Chapel.

Named Most Distinguished Alumna, on the other hand, is Amina Rasul-Bernardo, who was nominated by former Prime Minister Cesar Virata, who knows her work as a fellow trustee of Magbasa Kita, a non-government organization involved in adult literacy education, especially in the Autonomous Region of Muslim Mindanao. Tina-Arceo Dumlao

Shell goes green

GREEN is in nowadays. As such, Pilipinas Shell Petroleum Corp. recently unveiled the successful upgrade of its oil refining facility in Tabangao, Batangas, through the STAR-TREC (Shell Tabangao Asset Renewal–Tabangao Refinery Euro-IV Compliance) project.

Shell upgraded its Tabangao refinery as the company’s direct response to the national government’s directive that mandates energy companies to produce or introduce Euro-IV compliant fuels to the Philippine market.

Euro-IV is part of the emission standards set by the European Union meant to significantly reduce the sulphur content of fuels. In the Philippines, Euro-IV compliant fuels means lowered sulphur content from 500 ppm (parts per million) to 50 ppm.

Project STAR-TREC entailed the installation of a new hydro-desulfurization reactor, a new pressure swing adsorption unit, and additions to the existing sour water stripper in the refinery. Using differentiating technology, all these upgrading activities took place while the facility continued to deliver “operational and safety excellence,” the company said.

Behind the project are over 600 staff and workers from Shell, Chiyoda Philippines Corp. as main contractor and EEI Corp. as implementation contractor.

This project allows the refinery to produce 110,000 barrels per day of Euro-IV Philippine compliant fuels.

“This is a very complex project and one which is very important for Shell and for the country,” the company’s country chair Edgar Chua said. “It is also a testament to the strength of Shell operations in the Philippines, and to the faith of the company in the country and its people.”

At the same time, through Pilipinas Shell Foundation Inc., the STAR-TREC project has also helped over 5,000 residents of the community around the refinery. Capacity building programs were provided to out-of-school youths and employment opportunities were given to local residents. Livelihood programs were also launched for the women of the area, and safety awareness of residents from fence-line communities were also enhanced.

Good job, Shell. Daxim L. Lucas

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