Deadline for bids to P19.7B Davao port upgrade extended anew

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Davao-1The Department of Transportation and Communications (DOTC) has again moved the deadline for the submission of proposals for the P19.7-billion Davao-Sasa port modernization project to give pre-qualified bidders more time to prepare their bids.

The submission date has been moved from January 11, 2016 to February 26, 2016 “in view of the numerous requests from pre-qualified bidders (for) more time to conduct technical, financial and legal due diligence,” said DOTC undersecretary and pre-qualification, bids and awards committee chairman Rene Limcaoco said in General Bid Bulletin No. 13-2015.

The deadline was originally set for December before being moved to January and now to February.

The government’s first public-private partnership (PPP) seaport project has attracted five qualified bidders: Pre-qualified groups for the project are Asian Terminals Inc.-DP World FZE Consortium; Bollore Africa Logistics; International Container Terminal Services Inc.; Portek International Pte. Ltd.-National Marine Corp. Consortium with contractor Toyo Construction Co. Ltd.; and San Miguel Holdings Corp.-APM Terminals Management (Singapore) Pte Ltd. Consortium with contractors Hyundai Development Co. and Hanjin Heavy Industries & Construction Co. Ltd.

Once the first phases of the project are completed in 2018, the Davao-Sasa Port “will be comparable to the country’s top ports in terms of speed and quality of service, cutting down cargo unloading from three days to three hours by using modern ship-to-shore cranes and port operating systems,” according to DOTC.

The economy of Davao thrives on banana exports, the region being the second largest banana exporter in the world. A study conducted by the International Finance Corporation and the Development Bank of the Philippines projects that container traffic in the Davao Region will increase by at least 6% annually over the next 25 years.

Without the added capacity that a modernized Davao-Sasa Port will bring, DOTC said “there will be a strong chance of shortage in port capacity in Davao bay which may affect small-medium banana growers who may not be able to export their bananas.”

The edge of an upgraded Davao-Sasa Port is its proximity to banana plantations, as this will help growers save at least P8,000 in trucking costs per delivery, DOTC noted.

Latest data from the Philippine Ports Authority shows that Davao-Sasa handled 142,182 twenty-foot equivalent units (TEUs) in the first semester of 2015, a 33% improvement from the 106,818 TEUs processed in the same period last year.

Opposition from the local business community

Government is determined to push through with the seaport project despite last week’s Sangguniang Panlungsod ng Davao resolution which opposed the bidding on account of non-consultation with stakeholders.

“This unnecessary project was being forced upon Davao without the proper consultation. This resolution will now enable Davaoeños to contribute meaningfully toward defining the correct need and use of Sasa Port,” Alexander Valoria, president of the Anflocor Management and Investment Corp. and a member of the Davao City Chamber of Commerce and Industries Inc., said in a statement.

Anflocor owns Davao International Container Terminal (DICT) located in Panabo, Davao del Norte.

Valoria said projections for the Davao Sasa modernization project were “unrealistic” given existing operators in the area.

He said container shipping requirements were already met by DICT as well as other groups such as the Terminal Facilities and Services Corp., Sumifru, Unifrutti, Dole/Pacinter and the planned Hijo International Port Services, Inc., many of whom have commercial port operations that would be affected by the PPP project.

Valoria said 75% of foreign containers totaling 358,312 TEUs are already using the private ports.

In its resolution, the Davao City Council resolution also cited Section 2 (c) of Republic Act 7160, otherwise known as the Local Government Code, which said: “It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations with appropriate local government units, nongovernmental and people’s organizations, and other concerned sectors of the community before any project or program is implemented in their respective jurisdictions.”

Apart from the lack of consultation, concerns were raised on the PPP project worsening traffic in Davao City. Sasa is a highly urbanized area crowded with commercial establishments and residential subdivisions already suffering from severe traffic congestion.

The project’s lack of a plan for bulk and break-bulk cargo facilities seen vital to the economy of Davao City was also raised.

There are likewise questions on the project’s lack of provision for cruise vessels. The Department of Tourism has identified Davao as a potential destination for cruise tourism but no private sector player has expressed willingness to invest in in this particular project due to market uncertainty.

The entire infrastructure undertaking includes building a new apron and linear quay; expanding the back-up area, container yards and warehouses; and installing ship-to-shore cranes and rubber-tired gantries.

The winning concessionaire will operate and maintain the port, collect port dues, provide port infrastructure including port assets, and hold a handover at the end of the concession period or on termination.

The concession period will run for 25 years from start of operation and maintenance.