The Department of Transportation (DOTr) may cancel an ongoing public-private partnership (PPP) bidding to modernize and expand Davao’s Sasa Port due to its “unjustified” cost, replacing it with a scaled-down proposal.
Felipe Judan, transport undersecretary for maritime, said the agency was reviewing the Davao Sasa project, among the PPP deals left hanging by the previous administration.
He said the review centered on the ballooning of cost assumptions from the original P4 billion to P19 billion.
“There’s really no justification,” Judan said, adding that the study would be done in the early part of 2017. Until then, bidders which included local conglomerates and their international port partners, would need to wait it out.
The previous administration had said the larger sum considered a more aggressive expansion approach and aimed at transforming Davao Sasa into the Davao region’s premier seaport. This would allow it to cater to increased demand for crucial agricultural exports, like bananas. The project had a 30-year concession period.
“It (the project) was still on the table. There’s an existing port. It will just be made more efficient in so far as the additional P4 billion [spending]. There will be some expansion,” Judan said.
Davao businessmen, including those who operate nearby private ports, criticized the Davao Sasa PPP.
Davao Sasa had a “considerable advantage” over at least two other private ports given its location in Davao City, an information memorandum distributed to interested bidders showed.
Competing private ports included tycoon Enrique Razon Jr.’s Davao International Container Terminal, located 60-kilometers from the center of Davao City, and the planned Hijo Container Terminal, located farther away at 80-km.
Ramping up port operations here was meant to ensure the country’s competitiveness in the export of agricultural products. The Philippines is the second-biggest banana exporter globally after Ecuador. Davao accounted for 57 percent of the country’s banana production in 2013.
Despite issues raised against it, the P19-billion Davao Sasa PPP lured five potential bidders.
These were San Miguel Holdings Corp.- APM Terminals Management (Singapore) Pte. Ltd. Consortium, Razon’s International Container Terminal Services Inc., Asian Terminals Inc.- DP World FZE Consortium, Portek International Pte. Ltd.-National Marine Corp. Consortium and Bollore Africa Logistics.
Judan said the DOTr was closely coordinating with the National Economic and Development Authority on how to proceed.
A scaled down cost, such as the P4 billion cited earlier, meant the project would no longer need to pass the scrutiny of the Neda Investment Coordination Committee. Projects costing under P5 billion can be approved by their respective implementing agencies, the Neda board said last month.