Bid TOR for 5 ports may be approved this month

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Bid TOR for 5 ports may be approved this month
PPA Port Operations and Services Department manager Ma. Asuncion Hiyasmin delos Santos at the Mindanao leg of the PortCalls Visayas and Mindanao Shipping Conference 2023 on March 3, 2023 in Davao City. PortCalls photo.
  • The Philippine Ports Authority hopes to secure approval of the bid terms of reference for the ports of General Santos, Opol, Benoni, Balbagon, and Guinsiliban will be approved within the month
  • The ports will be bid out under PPA’s Port Terminal Management Regulatory Framework, which outlines the ports authority’s guidelines for awarding terminal management contracts
  • PPA Port Operations and Services Department manager Ma. Asuncion Hiyasmin delos Santos said implementation of the PTMRF addresses the issue of conflict of interest raised against PPA

The Philippine Ports Authority (PPA) hopes to receive approval within the month for the bid terms of reference (TOR) for the ports of General Santos, Opol, Benoni, Balbagon, and Guinsiliban.

In a presentation during the Mindanao leg of the PortCalls Visayas and Mindanao Shipping Conference 2023 in Davao City, PPA Port Operations and Services Department manager Ma. Asuncion Hiyasmin delos Santos said the bid TOR for the five ports is still under review.

“We hope that the TOR for these ports will be approved within the month and, once approved, we’ll proceed with the procurement process as designed under our regulations,” Delos Santos said.

The ports will be bid out under PPA’s Port Terminal Management Regulatory Framework (PTMRF), which outlines the port regulator’s guidelines for awarding terminal management contracts.

Since 2020, PPA has been bidding out PTMCs under its regulatory framework embodied in PPA Administrative Order 03-2016. The order categorizes port investments into six tiers, ranging from a fully private concession to a fully PPA-managed port.

One of the framework’s objectives is to promote private sector participation in port operations to provide higher-quality service.

PPA has, so far, bid out 19 ports, according to Delos Santos. Of these, only one port – Davao – is classed as Tier 2, while the rest are Tier 3: Puerto Princesa, Ormoc, Tabaco, Legazpi, Zamboanga, Iligan, Ozamiz, Calapan, Tacloban, Nasipit, Matnog, Fort San Pedro, Pulupandan, Surigao, Masao, Tagbilaran, Pagadian, and Pasig River ports.

PPA general manager Jay Daniel Santiago earlier said PPA will also bid out Iloilo Port and is looking at “clustering” the ports of Roxas, Mansalay, and Bulalacao in Oriental Mindoro, and three or four ports in Bacolod.

Santiago said that with clustering, the management of vessel traffic will be “flexible” because the operator can then divert vessels to another nearby port it operates in case of vessel queuing.

He said General Santos and Iloilo ports will be under PRMTF Tier 2. This means the winning concessionaire will be responsible for the two ports’ physical landside infrastructure (wharves, piers, land reclamation), above-ground semi-fixtures (cranes), above-ground fixtures (passenger terminal building, pavement, fence), and mobile-handling equipment (forklifts, trucks), while PPA will be responsible for the physical undersea infrastructure (capital, maintenance dredging).

Ports under Tier 3 means PPA will handle the physical undersea and landside infrastructure (capital investment, wharves, piers, reclamation, dredging) while the contractor will invest on above-ground fixtures and semi-fixtures as well as mobile handling equipment (e.g. passenger terminal building, cranes, forklifts, trucks).

Addressing conflict of interest

Delos Santos, meanwhile, said implementation of the PTMRF addresses the issue of conflict of interest raised against PPA because it receives a share from the tariff imposed by cargo-handling operators.

Some industry stakeholders and business groups have for years recommended the separation of PPA’s functions, citing conflict of interest and saying exercising both functions “unnecessarily increases logistics costs.”

Stakeholders said the policies allowing PPA to get a share from cargo-handling revenue constitute a “conflict of interest” as the regulator “now benefits from its own regulation” and, hence, provides itself “the incentive to increase the rate to improve its financial health.”

Delos Santos said under the PTMRF, “there is no government share being collected”, only a “minimum concession fee” to be remitted by the concessionaire for the duration of the concession.

“So, even if there is a request for approval of [increase of] rates, PPA will not benefit because the concession fee has been defined already in the terms of reference and also in the contract of the port terminal management operator,” she said.

Under AO 03-2016, the contactor should remit to PPA a periodic concession and/or management fee and a variable fee as specified in the agreement between the ports authority and the contractor. The concession and/or management fee will be increased periodically subject to a pre-established formula to be determined by PPA.

Should actual traffic volumes exceed certain pre-determined amounts in any given period during the agreement, the contractor should also remit a variable fee to PPA.

GM Santiago earlier said the privatization of more ports through PTMRF is “in order to migrate [PPA] from its regulatory operator function into a purely regulatory regime.” – Roumina Pablo