Home » Ports/Terminals » HCPTI poised to buy out North Harbor partner

HARBOUR Centre Port Terminals, Inc (HCPTI) will buy out its joint venture partner Metro Pacific Investment Corp (MPIC) in Manila North Harbour Port, Inc (MNHPI), operator of the North Harbor, so it can keep control of the company.

HCPTI — which owns 65% of MHNPI — is offering to purchase MPIC’s 35% share for P350 million, on top of refunding every guarantee made by MPIC to the Philippine Ports Authority (PPA) under the 25-year management and operation contract of the North Harbor.

HCPTI said it would rather buy out MPIC than surrender control of MNHPI to its partner.

MPIC chairman Manuel Pangilinan earlier said he wanted majority stake in MNHPI and threatened to pull out of the joint venture if he did not have his way.

Between the joint venture partners, MPIC is the acknowledged project financier. It issued the P100.8-million performance bond to guarantee MNHPI compliance under the contract; the upfront fee of P18 million; and the initial amount of P41.5 million representing full payment of past service benefits to 403 of the total 899 absorbed port workers.

MPIC also guaranteed procurement of additional cargo-handling equipment through a P120-million credit line agreement now being withheld unless the company gets a controlling share in MNHPI.

HCPTI provides technical capability on port operations.

PPA prior approval

Gaining 100% control of MNHPI is easier said than done though. PPA general manager Atty. Oscar Sevilla, who is vice chair of the PPA Board, said any change to the composition of MNHPI needs to go through the PPA first. If this process is not followed, the North Harbor contract may face cancellation.

“It would really depend on whether Harbour Centre can financially live up to its commitment without or with a new partner,” Sevilla said in a text message. “All of which will be subject to PPA prior approval.”

PPA is now drawing up contingency plans to avoid disruption at the North Harbor in case the Board decides to rescind the contract.

The agency has already amended its Administrative Order (AO) 01-2006, known as the Compendium of Regulations on Cargo Handling Operations, to allow it to take over cargo-handling operations arising from conditions such as this.

Under PPA AO 03-2010 published on June 9, cargo-handling and other related port services may be provided under any of the following circumstances:

  • On its own or by administration where PPA procures directly the labor service, equipment and other logistics requirements for handling of cargoes and other related port services.
  • By contract, either as a result of competitive bidding or negotiation under the prevailing circumstances in the port such as a) By competitive bidding following the guidelines set forth under Article III of PPA AO 01-2006; and b) By negotiation wherein ports have low-volume of traffic, renewal of existing contracts as set forth in Article V of the aforementioned AO or issuance of new contracts with cargo handlers of proven operational expertise, financial capability and with at least 10 years experience in the port applied for, and newly constructed ports for new development and promotion where there is no history or recorded traffic which can be used as basis for the preparation of the terms of reference and other bidding parameters.

The PPA Board has scheduled a meeting this month to scrutinize financial documents submitted separately by MPIC and HCPTI. The Board required proof to determine whether the surviving entity — in case the joint venture is dissolved — has the financial prowess to fund the North Harbor modernization.

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