DOTC: Delaying antics

Now it hits the fan, this P17.5-billion project of the Aquino (Part II) administration to build and operate a badly needed new passenger terminal at the Mactan Cebu International Airport.

At the moment the airport has a capacity for only 4.5 million passengers a year, although it is already estimated to be serving more than 7 million passengers a year. Really, for those millions of passengers, the new terminal must be a rush project.

Now the Cebu airport was supposedly the poster project of our leader Benigno Simeon (aka BS) in his PPP (public-private partnership) program that has yet to show any single big-ticket undertaking after almost four years of the administration.

Delays have been hounding the Cebu airport project, mainly because the DOTC, or our beloved Department of Transportation and Communications, seemed to have been bungling the process every step of the way with its delaying antics.

Well, the DOTC was supposed to conduct a bidding for the project early last year, but certain DOTC officials tried to manipulate the bidding rules, apparently to favor some groups by disqualifying others—specifically the San Miguel group.

The DOTC finally conducted the bidding last December, and it even announced that it expected to award the contract by last January. This has yet to happen until today, in the midst of the media war between two opposing bidders for the critical Cebu project.

Actually, second-highest bidder Filinvest-Changi (Singapore) consortium asked the DOTC to disqualify the highest bidder, which was the consortium of Megawide-GMR (India), allegedly for violating the bidding rules.

From what I gathered, the Megawide-GMR recently hired a PR group to campaign for it to get the DOTC award, even blasting text messages to media outfits that attacked the lawmakers who criticized the DOTC and Megawide-GMR.

At the same time, the DOTC officials boldly announced that they would be awarding the Cebu airport contract anytime soon. As if on cue, Megawide-GMR released a statement that the group was confident in getting the DOTC award.

Just last week members of both chambers of Congress conducted hearings on the Cebu airport project, noting the haphazard preparation by the DOTC for the project, and questioning the financial capability of Megawide-GMR.

Thus the PR campaign of the consortium seemed to be designed to turn the table against those lawmakers who hailed from Cebu, accusing them of causing further delay in the already much-delayed project, echoing the DOTC propaganda line.

The DOTC has been blaming the delay on the “complaint” filed by the Filinvest-Changi consortium, saying that it could not gather evidence to prove the allegation, adding that, in this case, with the lack of proof, the DOTC must “exercise prudence.”

Hmmm. The thing is that the DOTC now talks about “prudence,” when the DOTC itself did not seem to have applied even just an ounce of prudence in handling the project, in the first place. Really, the lawmakers had valid concerns.

One Cebuano solon, Sen. Sergio Osmeña III, insisted that the DOTC did not do its job properly, noting that the bidding committee for the Cebu project produced all of two pages of report on the background of the seven groups that submitted bids for the P30-billion project.

You see, boss, to the lawmakers who come from Cebu, the real issue in the airport project should be the financial capability of the winning bidding. To them, the supposedly highest bidder Megawide-GMR had questionable financial capacity.

Involved in the project would be some P32 billion in all, or about P17.5 billion for the project cost, plus the P14.4 billion highest bid of Megawide-GMR as “payment” to the government.

Question: What would be the cost of money for financing the P32-billion project? Well, it would be high! Moreover, Megawide-GMR would have to recover the high funding cost from the users of Cebu Airport. Another question: How much would Megawide-GMR charge the Cebuanos for using their own airport?

According to Rep. Rodrigo Abellanosa (2nd District Cebu), Megawide had a net worth of P8 billion, versus the P32-billion exposure in the Cebu airport project, plus more than P21 billion in exposure to other PPP projects, for a total of P53 billion.

In comparison, by submitting an extremely high bid, the Megawide-GMR beat quite loaded groups such as Metro Pacific, San Miguel, Ayala group, Lopez group and of course Filinvest.

When in December the DOTC announced the results of the bidding, the first question that could be heard in the banking sector was this: Mega who? Indeed, all the other bidders had a whole array of financial back-ups, including their own banks and big businesses.

Actually, our contacts in the banking sector doubted that big banks would put risks behind Megawide-GMR, which could perhaps borrow from a couple of banks with no links to the other bidders, since these groups were reserving funds for other big projects in the PPP program.

Already, Megawide won in three out of the four biddings in which it took part for PPP projects, and those three were the two classroom projects worth more than P15 billion, and the orthopedic hospital project worth almost P6 billion.

Based on a report from the Department of Education, which was quoted extensively in the congressional hearings, Megawide must build some 7,146 classrooms for completion last month.

It turned out that the company already asked the government for an extension of the deadline, which the Aquino (Part II) administration already granted. It also turned out that the company wants another extension up to the end of 2014.

How hard is it to build classrooms compared to a hi-tech international airport terminal project? Well, the Naia Terminal 3 project is already more than 15 years delayed—that kind of hi-tech.

To think, the government started the feasibility study for the Cebu airport in 2010, expecting to have a new terminal by 2015. Uh-oh, the way things are going, the target date does not seem to be achievable. Thanks to the bungling DOTC.