Home » Ports/Terminals » Settle North Harbor ownership issue or face contract cancellation

PPA orders joint venture partners MPIC, HCPTI

THE Philippine Ports Authority (PPA) is threatening to cancel the North Harbor contract if joint venture partners Harbour Centre Port Terminals, Inc (HCPTI) and Metro Pacific Investment Corp (MPIC) do not immediately settle their row on ownership.

The two are wrangling over who will own the majority stake in their joint venture company Manila North Harbour Port, Inc (MNHPI), which holds the 25-year management, operation and modernization contract for North Harbor.

MPIC, which currently owns 35% of the venture, wants to buy controlling shares from the Romero family’s HCPTI. MPIC chairman Manuel Pangilinan said the company will pull out of the venture if it does not get its way.

The Romero family, which controls 65% of the venture, said it will not budge.

PPA sent separate letters to MPIC and HCPTI on June 1, 2010 requiring them to submit within five working days upon receipt of the letter proof of financial capability including at least P100 million in working capital representing the estimated monthly operating costs of MNH; at least P70 million cash representing the estimated past service benefits to be paid to the remaining 495 absorbed workers; and at least P2.048 billion representing capital expenditure as committed in their bid proposal to complete and implement the prescribed development plan for MNH for years 1 and 2 under the contract.

PPA said proof is needed to determine the capability of the surviving entity to maintain and comply with requirements of the 25-year contract.

The PPA Board in Resolution No. 2228 dated May 28, 2010 also noted that the recent developments will materially affect commitments to modernize the North Harbor. “It appears that the financial support being provided by MPIC in this modernization project clearly constitutes a major, if not principal, component of the operations of MNHPI, which if withdrawn, as planned, may necessarily result to (sic) a further delay, if not total cancellation of the modernization project,” the resolution said.

MPIC issued the P100.8-million performance bond which guaranteed MNHPI’s full compliance to terms of 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 899 absorbed port workers in compliance with an earlier agreement dated March 30, 2010.

MPIC also guaranteed procurement of additional cargo-handling equipment through a P120-million credit line agreement, now being withheld until MPIC ups its stake in MNHPI.

HCPTI, on the other hand, provides technical capabilities on port operations.

“Both parties are sternly reminded of the provisions of Art. VII of the Contract on the prior approval of the PPA in case of any assignment, transfer or disposition of capital stocks; and more importantly, of Art. VIII providing for clear grounds for the suspension, cancellation or termination of Contract and Damages resulting therefrom,” the PPA Board resolution said.

No comments yet... Be the first to leave a reply!

Leave a Reply

Your email address will not be published. Required fields are marked *

 
Close
Please support the site
By clicking any of these buttons you help our site to get better
Social PopUP by SumoMe
Copy Protected by Chetan's WP-Copyprotect.