Billion peso blunder Part 1

Billion peso blunder Part 1

- in Opinion
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I was supposed to write about something more pleasant, but then I needed to get rid of the really bad taste in my mouth from the bullshit we were fed during the presentation of the Davao Sasa Port modernization project the other day. The event, which was hosted by the Davao City Chamber of  Commerce, was supposed to have been a consultation among the proponents of the project, led by the Department of Transportation and Communication, and the stakeholders from Davao region, as represented by local government officials, community and business leaders, and members of the media. The aim was to come to grips with some of the lingering questions in the minds of the public regarding the project, particularly the baffling increase in its proposed cost of four billion to a whopping seventeen billion pesos.

As a refresher, the controversy regarding the modernization of the port came about after the initial figure of four billion pesos ballooned to seventeen billion, four times the original cost, without any clear explanation as to why from the people and agencies tasked to implement it. Given the situation, Daang Matuwid notwithstanding, it is not at all surprising that there are persistent allegations of one or all of the following traits that characterize government projects – incompetence, inefficiency, overpricing, and corruption.

Unfortunately the proceedings, as a forum to clarify the issues, fell far short of the people’s expectations as DOTC Sec. Joseph Abaya and his team spent half the time painting unrealistically rosy pictures of the project and the other half weaving and bobbing away from the critical issues at hand. I think Councilor Danny Dayanghirang hit the nail perfectly on the head when he said that essentially what we had was “a problem in communications.” Between government officials who pontificate from their pedestals in Manila, and the rest of the country who are the victims of their insufferable arrogance.

This kind of bullheaded, smarter-than-thou management style typically practiced by our national government officials was again in full display during the presentation as Sec. Abaya, who comically is somehow under the impression that Davao City is still being serviced by propeller-driven passenger planes circa the1950’s, kept on insisting that modernizing Sasa was going to be good for the region. This despite having admitted, when questioned by Councilor Dayanghirang about reported irregularities about the port project, that the “MRT-3 has taken much of (his) time so hindi ko masyadong natututukan (ang detalye ng Sasa project).”

It is therefore no wonder that during the presentation the DOTC took great pains to make it appear as if everything was on the up and up, and that any discrepancy was merely the product of a misappreciation of the facts by the people. Abaya argued that Davaoeños are talking “apples and oranges” when they mistakenly compare the figures of four and seventeen billion, as the former is just for the rehabilitation of the port, while the latter is for an entirely new facility. Unfortunately this simplistic rejoinder fails to adequately explain how the privately-owned Davao International Container Terminal (DICT) was able to build a modern port facility from the ground up with a budget that is even smaller than what the government wants to spend for rehabilitating the Sasa pier. Which of course begs the question, does the government intend to pave the port in gold, or are some people’s pockets going to be lined with silver?

Continuing on this theme, Abaya likewise dismissed the concerns – or what he calls “the fixation” – of the people about the project’s seventeen billion-peso tag, saying that this is not the actual project cost but is merely an “indicative price” to be used as one of the reference points by the participants to the Public-Private Partnership (PPP) Program in making their bid proposals. And to demonstrate how groundless and naive the public’s fears are, he and his team were emphatic that it is very possible, even likely, that bidders will submit proposal for as low as five to seven billion pesos for a project that the government has estimated will cost seventeen billion.

So let’s take a look at this again, just to be very clear. The government, presumably after doing its own studies and estimates, has pegged the “indicative price” of the Sasa Port Modernization project at seventeen billion pesos. This figure, unless it was simply pulled out of Sec. Abaya’s ass without any basis in fact or reason, must have been premised upon specific technical and performance requirements that strictly follow industry standards – and prices.

All product classes – particularly those of a highly technical nature – have an almost inflexible cost matrix that allows for very little room for maneuvering. That is why luxury cars, regardless of the brand, are basically within the same price range, give or take a few hundred thousand pesos. A significant price reduction – such as in the scale of the fifty percent or more drop being suggested by the DOTC for the modernization program – would normally mean a change in the category or level of the product being offered. This is essentially the same difference between buying a Prado and an Avanza.

Therefore, while it is true that some bids may come in lower than the seventeen billion “indicative price” set by the government, it cannot be anywhere near the five or seven billion that Abaya is disingenuously trying to peddle to the public. And if ever it is, then it just proves that the only thing the “seventeen billion” is indicative of is the incompetence of the DOTC and the National Economic Development Authority in coming up with a realistic estimate for a project of this scale and magnitude. Either that or the bidders have cut significant corners in the proposal. Both of which would necessarily undermine the whole purpose and relevance of the project.

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