POSTSCRIPT / October 2, 2001 / Tuesday


Philippine STAR Columnist

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$6-B time bomb ticking over the head of Alcordo

DILATORY ANTICS: Former President Erap Estrada did the right thing showing up at the start of the hearing of plunder charges against him before the Sandiganbayan.

While Mr. Estrada has waived his right to appear and is not legally bound to be present on all hearing days, the psychological moment required him to walk into the court and demonstrate his desire for a speedy trial.

His lawyer’s dilatory antics do not serve his interest. They do not bolster his plea of innocence. If he were innocent, he would instruct his lawyers to take all steps possible to speed up the process so he can walk out an innocent man soonest.

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NAPOCOR IN TROUBLE: Since yesterday, President Jesus Alcordo of the National Power Corp. has been walking with a time bomb ticking over his head.

The insurance of the $6-billion assets of the Napocor lapsed after Sept. 30 and, with Alcordo embroiled in a protracted quarrel with its insurer the Government Service Insurance System, all that property under his care is now exposed without insurance.

With the volatile situation resulting from heightened terrorist depredations worldwide, the risk that Napocor faces every second is incalculable.

Worse, the creditors of Napocor are likely to declare the power firm in default for its failure to insure its assets as required by their loan contracts.

In the heat of his discussions with GSIS officials, Alcordo reportedly had blurted out that he would resign if he is unable to insure Napocor’s assets. But we doubt if his handlers in the Palace would allow him to run away.

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THAT’S SOLOMONIC?: Under the law, Napocor is mandated to insure its assets only with the GSIS. But with Alcordo’s refusal to allow GSIS to handle, as usual, the reinsurance of Napocor assets, the basic insurance got mired in the high-stakes bureaucratic quarrel.

President Gloria Macapagal Arroyo, who has appeared to be on the side of Napocor since she flashed the green light for its privatization, formed a special committee to take the place of the GSIS in bidding out the reinsurance.

That was supposed to be a Solomonic, albeit possibly illegal, solution to the impasse. Now the bad news is that when the President’s committee convened and called for bids last Sept. 27, nobody submitted a bid.

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KING-SIZED HEADACHE: This is surprising considering the tempting business awaiting the winning bidder. Premiums under Napocor’s past policy amounted to $13.874 million. With the world scare bloating the rates some 50-100 percent, the premiums would now amount to $20-$27 million.

Even the lucky insurance brokers that Alcordo was openly pushing in his discussions with GSIS president and general manager Winston Garcia did not submit bids. Their failure is intriguing.

We can imagine Alcordo’s king-sized headache as he hears the clock ticking on while the $6-billion property under his care remains uninsured in violation of the law, sound business practice, and the strict conditions of Napocor creditors.

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THEN THERE WERE NONE: Taking over the insurance job of the GSIS and boasting it would conduct a model bidding, Napocor prequalified six brokers — Heath Lambert, AON, Marsh & McLennan, Arthur J. Gallanger, Alexander Forbes Ltd., and Andrew Higgins Pickering.

Three of them (Agnew Higgins Pickering, Marsh & McLennan and Heath Lambert) withdrew participation outright. The three others attended, but only to inform the committee that they were not participating.

As explanation, they cited the unfavorable condition in the capital market triggered by the Sept. 11 terrorist attacks on the United States.

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ALCORDO DABBLES IN INSURANCE: This is now water under the bridge, but had Alcordo not hit upon the not-so-bright idea of dabbling in insurance and presuming to handle the reinsurance of Napocor assets that had always been the exclusive business of GSIS, this problem would not have arisen.

Had Alcordo allowed the GSIS to do its job ordained by law, the bidding would have been completed last Sept. 10, before the terrorist attacks sent insurance premiums soaring by 50 to 100 percent. While he did not foresee the attacks, he knew the Sept. 30 expiry of his insurance.

Napocor is now desperately seeking an extension of its expired policy or preparing to buy interim coverage, however expensive, while looking for a broker to underwrite its regular policy.

With this, how can Alcordo sleep? His only consolation, it seems, is that he has the support of Malacañang in trying to corner business pertaining to Napocor.

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REVIEW PIATCO DEAL?: President Arroyo told newsmen on Clark Field last Friday that the government contract with the Philippine Air Terminals Co. Inc. (PIATCO) was “under review.”

But GMA sounded like she was merely trying to dampen the questions of the press about the PIATCO contract stunting the development of the Clark airport that had been named after her late father President Diosdado Macapagal.

Under the $350-million contract, the government agreed not to develop any international airport other than the Terminal 3 that PIATCO was to build and maintain for 25 years as the core of the Ninoy Aquino International Airport (NAIA) complex.

Terminal 3, which is being built on 65 hectares of Villamor airbase in Pasay and Parañaque, is envisioned to absorb the operations of Terminal 1 (NAIA) and Terminal 2 (now being used exclusively by Philippine Airlines).

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LEGAL COMPLICATIONS: Asked by newsman Ding Cervantes what moves the President has taken in the face of reports that the PIATCO contract would hamper the full development of the Diosdado Macapagal International Airport, GMA answered: “Well, it’s under review.”

She added: “But it’s been there through several governments. And even if we abrogate it, we’ll just get a lawsuit from PIATCO anyway. That’s what’s going to happen. And we get a TRO and all that.”

Her comments raised speculations that fear of legal complications, among other issues, holds back Malacañang’s reviewing in earnest, or even abrogating, the controversial contact.

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LEGAL PLOY?: Transportation and Communication Secretary Pantaleon Alvarez has announced separately that he had referred the contract to the Department of Justice for an opinion as to its legality.

That’s a routine ploy when a favored government contract is questioned. Predictably, the justice department would hand down a legal opinion upholding the contract. Until a competent court rules otherwise, the department’s legal opinion is the law on the matter.

There are moves in the Senate and the House of Representatives, meanwhile, to inquire into the contract. The controversy may derail the confirmation of Alvarez by the Commission on Appointments, unless the Palace runs to his rescue.

The MIA-NAIA Association of Service Operators (MASO) has filed with the Ombudsman a complaint for graft and unethical conduct in connection with the contract.

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WRONG QUESTION: President Arroyo said in the presscon that before going to Pampanga for the DMIA inaugural, she asked Alvarez five times “whether the PIATCO contract prevents us from making Clark an international airport.”

She said that Alvarez told her, “It does not. Clark can still be an international airport even if the PIATCO contract is there.”

The President apparently missed the point. The issue is not Clark’s becoming an international airport (which it already is), but the PIATCO deal’s hampering its full development as such.

Rep. Act 7227 established the facility as an international airport and made it the centerpiece of the development of the Clark Special Economic Zone while emerging as Luzon’s premiere aviation-led commercial, industrial and tourism hub.

But the PIATCO contract has a provision limiting Clark’s passenger capacity to 850,000 per year (from a rated capacity of 1.5 million passengers annually) until such time as Terminal 3 attains a traffic level of 10 million passengers per year for three consecutive years.

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AYALA BIDS LOW: Metro Pacific has found as “too low” Ayala Land Inc.’s bid of P1.23 billion to take over a 18.9-hectare section of its Fort Bonifacio Global City project. Sources said Ayala’s bid is about 1/3 of the cost that the Metro Pacific group paid the government to acquire the former military camp.

If Metro Pacific’s board accepts the Ayala bid, it is a give-away that the local subsidiary of the Hong Kong-based First Pacific is really cash-strapped and is looking for ways to share the huge redevelopment cost.

The Fort Bonifacio project is also hampered by height restrictions resulting from its proximity to the NAIA complex. The camp lies in the flight pattern of incoming and outgoing aircraft.

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(First published in the Philippine STAR of October 2, 2001)

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