PortCalls

Negros Navigation enters rehabilitation program

NEGROS Navigation Co. (NENACO) has filed a petition with the Manila Regional Trial Court to enter into a corporate rehabilitation program for an immediate suspension of debt payments. The petition was triggered by actions of Cebu-based Tsuneishi Heavy Industries Inc. (THI), a joint venture company with Aboitiz & Company, the privately held company of the Aboitiz family.

THI on March 20, 2004 seized a NENACO vessel for repayment of past drydocking and shiprepair services totaling P130 million on the basis of an order of attachment from the Cebu Regional Trial Court. Approval for the filing of the petition for rehabilitation was unanimously given by Nenaco's Board of Directors at a special meeting held last Monday. Metro Pacific Corp., which holds 97.6% of all the shares outstanding in NENACO, also gave its approval to the filing of the petition in a subsequent meeting held also last Monday by its Board of Directors.

NENACO's management stressed the filing "was undertaken in the best interest of the company, its creditors and other stakeholders." "Under a court-approved corporate rehabilitation program, NENACO intends to implement an equitable and orderly debt reduction and restructuring program, addressing its consolidated debts and trade payables of approximately P2.5 billion, while preserving its assets for cash generation and future growth," the shipping firm said in a statement.

In line with the filing, the NENACO Board of Directors also announced the formation of a Rehabilitation Committee, to be comprised of Chairman of the Board Daniel L. Lacson, Board of Directors members Manuel V. Pangilinan and Edward S. Go, Metro Pacific president and CEO Jose Ma. Lim, and NENACO president and CEO Conrado A. Carballo. The Rehabilitation Committee will oversee the efficient administration of the company's debt rehabilitation program, consistent with both the Board of Directors. The shipping operator likewise announced the appointment of Lim as a member of its Board of Directors, replacing Eric G. Filamor.

Additionally, Seumas Gallacher, chief advisor to NENACO since 2000, has retired from service effective last Monday. The creation of the Rehabilitation Committee, and further Board of Directors and senior management changes, reflect the ongoing commitment by Metro Pacific to improve NENACO's financial and business foundation for future growth, the company said. Metro Pacific acquired a majority equity stake in Nenaco in 1998 and during the period since, has infused both equity and assumed NENACO debt in exchange for equity, in the aggregate amount of approximately P5 billion over the past six years. NENACO stressed all ship schedules remain unaffected despite today's filing; all passenger and freight cargo traffic continues on schedule, and day-to-day operational supplier and vendor contracts remain in effect. The company likewise announced it has no immediate intention to effect any significant reduction in workforce levels.

Ship seizure. Meanwhile, NENACO ship M/V St. Peter the Apostle, which was the subject of a writ of attachment issued by the Cebu Regional Trial Court Branch 5, remains grounded at Pier 2 in North Harbor, Manila. The writ was served by two Sheriffs of the CRTC last March 19 for failure of the shipping firm to settle its debts with Tsuneishi for drydocking services running to millions of pesos. THI claimed aside from the P36 million arrears of the M/V St. Peter the Apostle, NENACO owes Tsuneishi another P84 million for similar works rendered on its vessels the M/V Sao Paolo, M/V Señora Fatima, M/V Princess of Negros, M/V San Sebastian and M/V Sta. Ana.

Responding to the claim by NENACO president and general manager Conrado A. Carballo that the shipping firm's payments to Tsuneishi were withheld pending a previously scheduled renegotiation, THI legal counsel Serafin Rivera said that the negotiations broke down a long time ago. "There is no ongoing renegotiation on the payment of their debts. These talks broke down a long time ago. The matter is now with the courts.

Agreements were previously made but not lived up to by Negros Navigation. Negros Navigation in short has not been paying it debts to Tsuneishi," Rivera said. Rivera also said that they have gathered information through sources that Negros Navigation moved to Tsuneishi for their drydocking requirements after failing to address its arrears with its previous contractor, Keppel Shipyard. After Tsuneishi refused to serve Negros Navigation, the shipping firm has reportedly moved to a shipyard in Bataan which has agreed to take them in but on "cash basis".

Further, Rivera said NENACO has an allegedly "ballooning" payables with its suppliers over the past years. "These include Negros Navigation's payables to Petron which runs to P110 million and P200 million with Shell Philippines for bunker fuel and various oils used in the operation of its fleet," it claimed.

Cebu port ISPS-ready by April

THE port of Cebu should be 100% compliant with the International Ship and Port Facility Security (ISPS) Code by end of April, said Transport Secretary Leandro R. Mendoza.

The Cebu Ports Authority (CPA) has "promulgated guidelines and identified, trained and assisted security officers of ports in conducting security assessments and developing security plans… based on the provisions of the ISPS," he said. The Code, an International Maritime Organization initiative, will be implemented worldwide starting July 1.

In a recent visit to the port of Cebu, Mendoza and the CPA identified concerns that may hamper full compliance to the code, one of which is the presence of informal settlers in the area. Mendoza suggested that the port authority provide fencing or some form of barricade to prevent entry of unauthorized entities within the port and the terminal as this poses a threat to security. Other concerns are the separation of domestic and international berthing areas and the presence of ships impounded by the Bureau of Customs (BOC). Sec. Mendoza noted the CPA is already constructing a new berth for domestic trade. The P260-million facility will be completed by April 15, he added.

On the issue of BOC-impounded ships, Mendoza said the CPA has already transferred the impounding area away from the international berthing area/port.

Customs spells out ASEAN harmonized tariff scheme

THE Bureau of Customs (BOC) recently outlined the governing rules and regulations for the ASEAN Harmonized Tariff Nomenclature (AHTN) in accordance with the protocol for its adoption among ASEAN member countries.

The AHTN scheme was signed by the ASEAN Ministers/Secretaries of Finance last August. The latest amendment took effect in January. The scheme incorporates the Common Effective Preferential Tariff (CEPT) rates updated with the recently issued Executive Orders 262, 263, 264 and 268 among countries included in the CEPT concession. The BOC said the adoption of the AHTN, through Customs Memorandum Order No. 6-2004, calls for updating of the Customs' tariff database or ASYCUDA (Automated System for Customs Data) files for automated processing.

The AHTN replaces each ASEAN member country's current six-digit tariff nomenclature with a common eight-digit nomenclature. "The first six digits are based on the Harmonized Commodity Description and Coding System (HS) 2000 amendments. The last two digits, which used to refer to national headings/subheadings under the Tariff and Customs Code of the Philippines, have given way to the regional headings for harmonization ASEAN-wide," the bureau explained. The new tariff scheme indicates both the Most Favored Nation (MFN) and CEPT-ASEAN Free Trade Agreement (AFTA) rates, including information as to what ASEAN country the CEPT-AFTA rates are applicable.

The BOC noted the AHTN is applicable in both intra-ASEAN and extra-ASEAN trade. "The AHTN will be used by all ASEAN countries not just when trading between or among themselves, but also when trading with the rest of the world," it said. Also, in order for the AHTN to be recognized by the bureau's ACOS, alphabetic characters or letters tagged on to the eight-digit nomenclature/code will be converted into their corresponding number.

The Philippine Tariff Commission said the adoption of the AHTN will bring about greater flow of goods between ASEAN and the world. - Maritess R. Mesias

Show-cause order vs Sulpicio strikers

THE Maritime Industry Authority (MARINA) recently issued a show-cause order against all striking crew of domestic shipping operator Sulpicio Lines, Inc. for failure to return to work despite an order from the Department of Labor and Employment (DOLE).

MARINA Legal Office director Ma. Hiyasmin Delos Santos said the maritime agency is currently hearing arguments of both Sulpicio Lines management and the striking employees. "They should explain to us why their Seaman's Identification Record Book (SIRB) or seaman's books should not be cancelled despite the return-to-work order from the DOLE," Delos Santos said. Delos Santos pointed out the refusal of the striking crew to return to work amounts to insubordination and misconduct per Memorandum Circular No. 163.

The petition was filed specifically against a certain Generoso Sasis, Edo Elmedorial and all striking members of the Unyon ng mga Mandaragat ng Sulpicio Lines, Inc and the Solid Towage and Lighterage Co. Inc.-Alliance of Nationalist and Genuine Labor Organizations-Kilusang Mayo Uno. The respondents filed a motion to dismiss the show-cause order but Sulpicio lawyers countered it and filed an opposition.

Earlier, Sulpicio Lines president for Passanger Service Salvacion W. Buaron said the company's lawyers were preparing criminal and civil charges against the striking workers. Buaron said negotiations between management and the union failed as the company rejected the strikers' request that they not be slapped with retaliatory action. The shipping line was estimated to have lost P50 million when some of its workers went on strike from March 9 to March 13. "It is as if they held hostage the ship because they did not allow us to release the cargo from the ship and even the non-striking crew were held hostage. They were not allowed to get off," Buaron said.

Possible cases to be filed against the strikers could be based on the clear defiance of the DOLE's return-to-work order, the apparent capture of the vessels and its crew, and the damages caused to the company, shippers and passengers.

EFFORT picks new set of officers for 2004-06

MEMBERS of the Ecozone Federation of Forwarders/Brokers & Truckers, Phils. (EFFORT) recently elected their 2004-2006 board of directors.

Voted into office were: Engineer Virgilio Veneracion, president; Augustus Caezar Gan, executive vice president; Rolando Ruedas, vice president - Internal Affairs; Dominador de Guzman, vice president - External Affairs; Mario Migallos, director - Treasurer; Eduardo de Guzman, director; Dolores Guiamano, director - Brokerage Affairs; Rodrigo Anabu, director - Airfreight Forwarding; Julio Roxas, Jr., director - Seafreight Forwarding; Panfilo Castro, Jr., director - Trucking; Irene Manguiat, director - PEZA Affairs; and Ailene Torres, secretary.

The officers will be inducted on April 23, 6pm at the Heritage Ballroom, Heritage Hotel. Atty. Lilia de Lima, PEZA director general, will be the guest of honor.

Subic box port starts construction in May

CONSTRUCTION of the new container port in Subic will start in May, said Subic Bay Metropolitan Authority (SBMA) senior deputy administrator for Operations Victor L. Mamon.

In a telephone interview with PortCalls, Mamon said the $185-million project will involve construction of two new berths and acquisition of four new gantry cranes worth $5 million each from Japan. The project will be funded through a concessional loan package worth $158 million from the Japan Bank for International Cooperation (JBIC) and the Japan International Cooperation Agency (JICA). SBMA will fork out the remaining 15% of project expense costing or $27 million.

The Penta Ocean-led joint venture between Shimitzu Corp. and TOA Corp. won bidding for the project. "We are targeting around 300,000-600,000 TEUs [twenty-foot equivalent units] in about five years after the new port becomes operational," Mamon said. The two berths will measure 560 meters in total, including back-up area. They can accommodate vessels with a capacity of up to 3,000 TEU. "These berths can service even the post-panamax types," he noted. At present, Subic port operates a naval supply and a conventional container port with only one gantry crane that can handle 120,000 TEUs per year. It handles an average 30,000 TEUs every year.

Complementing the port modernization project is the 47km Subic-Clark Toll Road Project by the Bases Conversion Development Authority which is seen to provide producers and exporters from Central and Northern Luzon easier access to Subic port. The road will also serve as an alternative route to the lahar-threatened Gapan-San Fernando-Olongapo Road. It will later connect to Tarlac, benefiting not only Subic Bay Freeport Zone, Clark Special Economic Zone, and Luisita Industrial Park but also Basa Airbase, Hermosa Ecozone, the Limay Petrochemical cluster of industries, Mariveles and Morong Technopark.

Mamon said SBMA is considering International Container Terminal Services Inc. affiliate Subic Bay International Terminal Corp., Subic Bay's present cargo handler, to operate the first berth of the new container port. The remaining berth will be bidded out, he added.

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