Home » Maritime » PPA defers North Harbor turnover yet again

New operator not ready, says PPA GM

THE Philippine Ports Authority (PPA) has indefinitely shelved the turnover of North Harbor to Manila North Harbor Port Inc (MNHPI) until the new operator shows proof it has complied with all of its contract obligations.

Today (February 15, 2010) was to have been the turnover date, although the schedule has already been pushed back from January 15.

PPA general manager Atty Oscar Sevilla handed down the indefinite deferment last Friday after an evaluation showed the new operator has yet to comply with some contract requirements.

In a February 12 letter to MNHPI president and CEO Michael Romero and chief financial officer/treasurer Jose Ma. Lim, a copy of which was obtained by PortCalls, Sevilla said, “After careful evaluation and validation…, the Philippine Ports Authority ia constrained to formally serve notice of further suspension of the turnover of the operations of MNH” due to a number of “critical reports and developments”.

These include a “verified intelligence report” pointing to “bloodshed due to the fierce resistance of labor groups” if the turnover is effected without “firm and solid commitments on their absorption and hiring”, Sevilla wrote.

In addition, MNHPI failed to show proof it could make available the minimum cargo-handling equipment required by February 15, in serviceable condition as required under the contract.

“This finding is supported by the report of the Port Manager, North Harbor, and the Asst. General Manager for Operations… This report directly contradicts the representations of Mr. Henry Rophen B. Virola, General Manager of MNHPI, in his letter to PPA dated 08 February 2010…,” Sevilla pointed out.

Among the minimum cargo-handing equipment required of MNHPI are three 35-45 tonner, twelve 25-30 tonner, ten 5-10 tonner, and thirty 2-4 tonner forklifts; nine 15-20 tonner (high mast) and four 15-20 tonner (low mast) forklifts; three 35-tonner cranes; four 3-tonner grablifts; 16 tractor heads; six transfer trucks; 12 chassis 20-footers; 12 chassis 40-footers; and two payloaders.

Sevilla pointed out that if it had not been for the deferment to February 15, MNHPI was expected to have already put in place 125 units of the minimum cargo-handling equipment by the original turnover date of January 15.

“The fact that up to this time, or almost 30 days after the original turnover date, MNHPI has failed to show proof of full and complete compliance thereof, is tantamount to lack of actual readiness of the MNHPI to provide uninterrupted service at MNH upon commencement of operations thereat by 15 February 2010.”

Concession fee

The PPA general manager also pointed to another unresolved issue – the 5% concession fee on ancillary services provided by third party service providers which MNHPI wants to impose without prior approval of PPA. Sevilla said this would be “in clear violation of the Contract, the TOR (terms of reference) and its related documents.”

In an earlier letter to MNHPI officials Romero and Lim, the PPA general manager reiterated that under the PPA charter, the “primordial function of management, operation, development and maintenance of its ports is vested upon the PPA. As such, PPA has issued port rules and regulations relating to all aspects of port operations, by itself or through its authorized agents, including rate setting for services rendered therein.

“On this basis and since PPA’s creation in 1974, no cargo handling operator/terminal operator or service provider in ports supervised by the Agency, could operate and impose any tariff, rate, fees or all other forms of charges for essential and/or ancillary services provided, without prior approval, by PPA.”

Industry questions

A mere two months after the North Harbor contract winner was announced on November 19, 2009, carriers and shippers began questioning the capability of MNHPI to operate the port.

The Philippine Liner Shipping Association (PLSA), whose clients are major manufacturing and distribution firms, was wary of MNHPI’s ability to produce even the minimum cargo-handling equipment.

PLSA had also sought the scrapping of the 5% concession fee on ancillary charges, arguing the fee is a pass-on cost.

In a February 10, 2010 letter to Sevilla, PLSA president and chairman of the board Daniel Lacson said, “If left uncorrected, it (concession fee) will have serious repercussions on the cost of logistics. Consequently, it will also have an inflationary effect on the prices of goods in the market.”

In the same letter, Lacson expressed concern over the potential labor unrest arising from the takeover. “Based on information from laborers assigned to our members, this is a pending issue because there is no clear indication as to how their demands, such as past service benefits can be met. They are exercising aggressive resistance at the port if only to ensure that their issues are settled before any takeover takes place.

“This is a concern for our members, not to mention for other shipping companies that call at North Harbor. The potential violence that the labor groups are capable of can affect the smooth flow of our operations to the detriment of our services to our clients, the passengers and cargo owners.”

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