In understanding President Rodrigo Duterte’s announcements (and rants), one needs a sensible and “applied” approach – a technique well honed by former Presidential Spokesperson Ernesto Abella.
Unfortunately, Abella has been replaced by Harry Roque whose style is more akin to “predictive text” than Abello’s sanitized and politically-correct Berlitz translations. Still, this may well be the way to deal with President Duterte: Unless you really are one, pretend that the oligarch label does not apply. Present and behave like an internationally-known and respected conglomerate whether you be an Aboitiz or an Ayala. Draw up your own plans and include your funding as an alternative to official development assistance (ODA).
So President Duterte doesn’t trust the lowest bid auction system? Not to worry, we can apply the Dutch or Scandinavian qualifying system that determines the winner as the one who can successfully optimize or surpass “performance parameters” over and above the passive specifications standard of infrastructure construction.
Simulation exercise
Allow us to illustrate using the example of a Mariveles-Manila Bay-Maragondon Expressway or MMBMEX, a tollway from the Mariveles Export Processing Zone in Mariveles, Bataan to the Cavite Export Processing Zone in Maragondon in Cavite, passing along or through Manila Bay. The winning Private-Public Partnership (PPP) or Build-Operate-Maintain (BOM) bidder must prove that it can provide, perform and achieve performance parameters as follows:
The road must be usable in all kinds of weather, even in gale force winds;
It must be drivable even in heavy rain or fog (specify the minimum visibility limits);
It should be easy to maintain without massive shutdowns or closures that throttle capacity below 50 percent maximum traffic capacity;
It should allow or maintain unhampered passage by other forms of transport (water, air and rail) that are about or intersect the MMBMEX’s right of way;
Charge a toll of no more than PXX.XX per kilometer (to be determined by the National Economic and Development Authority) subject to the usual Toll Regulatory Board rate adjustment parameters; and
Specify a maximum time of one hour and 30 minutes in order to complete an end-to-end journey at traffic levels of 30 percent of highway max capacity. This maximum journey time will also be the benchmark guide for the operations and maintenance contract holder to target and build capacity expansion during a 30-year franchise.
The BOM/PPP proponent/bidder is also encouraged to design, build and plan the tollway in such a way that it is at least one step (or even more) ahead of traffic demand for the duration of the 30-year franchise life. At the bidding stage, the proponent should already include and integrate plans for lane/flyover additions, drainage enhancements, facilities, forecourts and even bypasses and tunnels.
With a broad objective, the proponents/bidders can build anything they deem necessary. A 120-kilometer Mariveles to Maragondon coastal expressway along Manila Bay ? A combination bridge and under-Manila Bay tunnel like the Oresund Straits bridge? Or a Tsing Ma-style stacked highway bridge connection, including a railway component ? An all-undersea tunnel set-up perhaps?
And if President Duterte still insists on ODA? Insist that the government, for its own protection, provide forward exchange cover. If this is too much, it should be factored in the costs so the private sector can choose to finance the project itself. Early on, choosing between private sector funding and ODA should be straightforward and not a source of delay. (Vaughn Montes of the Philippine Institute for Development Studies has warned that historically speaking, Chinese, Japanese and Korean ODA funded projects take 20 percent longer than PPPs reckoned from signing ceremony, detailed studies then to the first shovel of earth moved.)
So now who decides on the winning proposal? The first hurdle must be technical feasibility. For our MMBMEX, why not tap the Hong Kong Highways Department or China’s engineering road agency that approved the Tsing Ma bridge and the Hong Kong-Zhuhai-Macau bridge? Or the Scandinavian agency that approved the Denmark to Malmo, Sweden Oresund Strait bridge, the French agency that approved the Milau viaduct over the Tarne Gorge or the Virginia Highways Department that approved the Chesapeake Bay Bridge-Tunnel?
The next approving level will be for the PPP and the National Economic and Development Authority-Investment Coordination Committee (NEDA-ICC) to approve financing terms. At this stage, the PPP bidding procedures should be as conflict-proof as possible, precluding losing bidders from filing a case that would delay project implementation. Perhaps the bid qualification documents should also include that in case of dispute, they promise to abide by decision of a PPP conflict resolution panel or a NEDA-ICC’s arbitration committee.
Define oligarch
Oligarchs? Well the PPP Center or the Palace should be able to draw up a cursory list of oligarchs or oligarch characteristics that should be avoided. Bidders will then sign an undertaking that they are not a company that purposes oligarchic objectives, whatever or whichever these are defined to mean.
So how about newbie companies with no track records? Easy. Besides minimum paid-in-capital requirements, newbies (or new upcoming cronies) can form consortiums. Former IDF paratrooper and LRT-1 project consultant Eli Levin, having cobbled together both LRT-1 and MRT-3 investor consortia, knows how. Hire the best construction outfits, project managers, infra designers and brand name architects like UK’s Richard Rogers or Fosters + Partners, Denmark’s Ove Arup or Germany’s Hochtief. Hire known local specialist contractors for laying tollway fiber-optic cable and electronic surveillance. EasyTrip or Capstone (ex E-Pass) for electronic toll collection. GJB, the first of Norconsult’s Asian Development Bank-approved European Union standards traffic signmakers since 1977. Readycon pavement layers and menders. TPCP for high visibility and high wear resisting road markings. That newbie consortium or consortia will now match the established conglomerates of the oligarchs.
Infra investors who’ve developed cold feet, meanwhile, shouldn’t be always taking every President Duterte rant as a marching order. These are more of a broad outline of the moral objective – yes, believe it or not, those shout-outs are moral in intention. It is to President Duterte and our country’s loss that Abella isn’t around anymore to interpret. But once investors get past the political bluster, follow our PPP bids and unsolicited proposal investor guide, there should be a lot more of them wanting to build-build-build ASAP.
Tito F. HERMOSO is Autoindustriya’s INSIDE MAN
Send comments to tfhermoso@yahoo.com
