POSTSCRIPT / October 6, 2002 / Sunday


Philippine STAR Columnist

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NAIA-3 won’t be ready by Dec. 15, but that’s OK

FACE-SAVING MOVE: The order of President Gloria Macapagal Arroyo for the “soft opening” of the NAIA Terminal 3 on Dec. 15 is a compromise of sorts, but it appears to be the best option at the moment for all parties involved in the $500-million project.

The new terminal will not be ready on Dec. 15 for full-blown operations, but its soft opening – which is really a ribbon cutting and a dry run — will not only ease tension and buy time for those in search of a hard solution, but will also save face for some of the major players.

The Philippine International Air Terminals Co. (Piatco) had announced that it would open NAIA-3 for operations on Nov. 26. The rash decision was made despite the knowledge that it would be disastrous to throw open the terminal to normal air traffic with many loose ends still hanging.

President Arroyo’s moving the opening date to Dec. 15, although downgrading it to a mere soft opening, pulled the Piatco from the embarrassing Nov. 26 corner into which it had painted itself.

More importantly, the President was able to reiterate subliminally that the government respects the sanctity of contracts — albeit with the unstated caveat that patently onerous provisions will not pass. As we said earlier (Postscript, Sept. 22, 2002), “Let’s open NAIA-3 first, and go after the crooks later.”

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TIME EXTENSION: The way we understood the assessment of some experts probing into the project, the terminal and its environs will not be fully ready even by Dec. 15.

But Malacanang’s unilateral decision for a soft opening on that date has preempted any Piatco move to open the terminal earlier (Nov. 26) even without the government’s active cooperation and declare the government in default.

At this point, Piatco has no choice but to go along with the President’s announcement. Never mind if in the process it loses to the government the lead in the homestretch race for the finish line. In fact, Piatco should be grateful it was pulled away from its impossible Nov. 26 opening.

The time extension also gave all the parties more time to negotiate for a win-win solution, assuming they still want to work with one another.

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FRAPORT IN DILEMMA: For instance, Fraport AG of Germany appears to have been badly burned in its dealing with the Chengs of Piatco and wants to disengage. It has put in the most money – something like $375 million to the Chengs’ $16.5 million — but the Chengs hold 60-percent control of Piatco.

Fraport is willing to be paid $300 million to be able to walk away from the problem. However, local politics in the German state of Hesse, where it is based, puts it under strong pressure to find a solution fast. If no way out is found by yearend, it is likely to write off the Piatco fiasco and face the music back home.

The Chengs naturally want to hold on in anticipation of dizzying megaprofits, but the amended contract they are holding is open to question.

When Malacanang implies it respects the contract, it might have in mind only the original Piatco agreement, with the questioned provisions in the amended and restated contract subject to renegotiation. Filing of charges is another obvious option for the government.

The best tack for Piatco is to play along with Malacanang. As they say, you cannot fight City Hall. It won’t be good business to jeopardize its thriving cargo handling business at the NAIA or losing Terminal 3 altogether.

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MASO UNCONVINCED: Some sectors are still not convinced. Jovino G. Lorenzo Jr., president of the MIA-NAIA Association of Service Operators, says:

“Let us assume that Piatco is able to pass all the rigid pre-opening tests to be undertaken by the MIAA, the Air Transportation Office (ATO), possibly the US Federal Aviation Administration (FAA) and whoever else. Let us further assume that the Chengs of Piatco — who put up only 4 percent of the project cost but actually run and are in total control of PIATCO at the total exclusion of their German partner Fraport which funded 96 percent or $409 million of the entire project cost — enter into renegotiation with government. We assume further that the Chengs may actually accept and agree to a lower passenger terminal fee of $11, allow Philippine Airlines to stay in Terminal 2, allow the Diosdado Macapagal International Airport (DMIA) to be developed unimpeded, and allow all the service operators in Terminal 3. At this point, the Chengs could be heralded as heroes.

“But one fact remains. If the illegal and grossly onerous provisions are not removed, such as the government guarantee, the President may indeed be falling into a trap. This would be the biggest blunder that this administration would have committed. Unless one has studied and cranked out all the numbers carefully and analyze the ramifications of all possible variables, like what Presidential Adviser Gloria Tan Climaco has done, he or she can be fooled by the acceptance of lower passenger fees and other conditions.

“Such terms and conditions would make the project financially unfeasible and the Chengs would not care. They have already made their pile from the project. Piatco will never be able to pay its obligations. So the Chengs will run Terminal 3. Their other companies which they own will make all the money on airport services, unofficial concession fees and rentals, and profit on the cargo services. Then when the time of reckoning comes, the government will be forced to assume all the obligations of Piatco as required in the concession agreement.

“The Chengs then go scot free with their millions of dollars, the German investors are forced to write off their total investment and the government is left holding the bag.

“The only real option of the government is to rescind the concession agreement. Clean up the mess once and for all. Then negotiate with the real owners of PIATCO or other bidders. That way the foreign lenders get paid, the original investors including the Germans get their money back, and the interests of the government and of the people are surely protected.”

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FOREIGN RETIREES’ PLEA: Some 6,000 aliens who have contributed a substantial amount of foreign exchange to the local economy by choosing to retire in the Philippines are appealing to President Gloria Macapagal Arroyo to look into their plight worsened by the rift between the Philippine Leisure and Retirement Authority (PLRA) and the organization representing them.

They have written the President four letters, to no avail.

Represented by an organization called the Philippine Retirement Authority Members Association Foundation Inc.(PRAMA), foreign retirees are estimated to have contributed over $300 million in direct investments through their required deposits and another $3 billion placed in various businesses.

Upon registering with the government’s retirement program, each participant is required to deposit $50,000 cash.

PRAMA Foundation president Ramon Collado, a retired lawyer from Spain, projected that an additional 1,000 retiree-families a year could bring in $124 million to the economy or $50,000 minimum direct investment out of their required deposit, $24,000 in spending and $50,000 in other business ventures.

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CREDIBLE AUDIT NEEDED: The rift between the PRA and the retirees’ PRAMA started almost two years ago when PRAMA’s external auditor reported that about 30 percent of members had not paid their annual dues.

Collado said that PLRA — then known as Philippine Retirement Authority (PRA) — was at that time in charge of collecting PRAMA membership dues using the organization’s official receipts. But some dues were allegedly not remitted to PRAMA and paying members were sometimes issued improper receipts.

To correct a bad situation, PRAMA tried to reconcile the list of retirees with PRA to update its data base, but the figures were found to be inaccurate.

Moreover, PRA denied PRAMA access to records and documents needed to pinpoint discrepancies. This denial led to a complaint reaching the Office of the Government Corporate Counsel (OGCC).

On Feb. 14, 2002, the OGCC recommended to the PRA board of trustees the dismissal of Vernette Umali-Paco as PRA general manager after OGCC investigating officer Melita Recto’s report implicating Umali-Paco was approved by Government Corporate Counsel Amado Valdez.

But the foreign retirees’ woes did not end with the dismissal of Umali-Paco. Now they want President Arroyo no less to force a cleanup.

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(First published in the Philippine STAR of October 6, 2002)

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