Domestic shipping group seeks House probe on higher PPA tariffs

Zamboanga port. File photo from Philippine Ports Authority.
  • The Philippine Inter-island Shipping Association is asking the Lower House Committee on Transportation to review Philippine Ports Authority (PPA) Administrative Order No. 10-2019
  • The order contains base tariff that should be used by port operators awarded contracts under PPA’s new terminal management rules
  • PISA complained that uniform rates under AO 10-2019 are higher than previous rates of some Tier 3 ports and those of the Manila North Harbor domestic terminal

The Philippine Inter-island Shipping Association (PISA) is asking the Lower House Committee on Transportation (COTr) to review Philippine Ports Authority (PPA) tariffs for ports bid out under its new terminal management policy.

In a position paper dated December 6 and submitted to COTr chairperson Edgar Mary Sarmiento, PISA is seeking a review of PPA Administrative Order (AO) No. 10-2019, which provides uniform port tariff that will be used as base tariff by operators awarded contracts for ports categorized as Tier 3 under PPA’s Port Terminal Management Regulatory Framework (PTMRF).

READ: PPA uniform rules on port tariff out

“The Industrial Group of Zamboanga, Inc. and the Zamboanga Chamber of Commerce and Industry, together with other cargo owners and domestic shipping lines, vehemently opposed the issuance of this AO and pray that the matter be carefully evaluated by the House Committee on Transportation in the exercise of its oversight functions,” PISA said.

Based on comparisons provided by PISA, uniform rates under AO 10-2019 are higher than previous rates of some Tier 3 ports, as well as those of the domestic terminal in Manila North Harbor.

In Zamboanga port, stevedoring for a 20-footer laden container and 20-foot empty container is now 109% and 136% higher under AO 10-2019 than the previous rates, respectively.

For Tacloban, stevedoring for a 40-footer laden container and 40-footer empty container is 119% and 214% higher, respectively, while in Ozamiz, rates for the same service for a 40-footer laden container and 40-footer empty container are 192% and 319% more, respectively.

The rates under AO 10-2019 for stevedoring of a 20-footer laden container and 20-footer empty container are also 14% and 65% higher under AO 10-2019, respectively, than the current rates at Manila North Harbor.

The ports of Zamboanga, Tacloban, and Ozamiz are some of the Tier 3 ports bid out by PPA this year under PTMRF. The new cargo-handling operators are already charging the new uniform rates.

PPA started bidding out port management contracts of Tier 3 ports under PTMRF last year.

Embodied in PPA AO 03-2016 issued in 2016, PTMRF outlines guidelines for awarding terminal management contracts and categorizes investments in ports into six tiers, ranging from a fully private concession to a fully PPA-managed port. The framework seeks private sector participation in port operations to provide higher quality service and reduce the agency’s administrative burden.

For ports categorized as Tier 3, PPA handles the physical undersea and landside infrastructure (capital investment, wharves, piers, reclamation, dredging), while the contractor invests on above-ground fixtures and semi-fixtures and mobile handling equipment (e.g. passenger terminal building, cranes, forklifts, trucks).

PISA noted that, together with member organization Philippine Liner Shipping Association, it had opposed the then proposed new uniform tariff for ports under PTRMF during a public consultation in August 2019. The group also requested PPA to explain the basis for the proposed rates, and to present the formula to justify how the rates were computed.

During the August 2019 public consultation, PPA said it had based its proposed uniform tariff on Cagayan de Oro port’s rates, the highest amongst PPA ports.

Hardly any public hearings

PISA also asked the COTr to review the “failure of PPA to sufficiently conduct a public hearing despite a request from Zamboanga at one of the PMAC (Port Management Advisory Council) meetings held between PMO (port management office) Zamboanga and the stakeholders a year prior to the implementation of PPA AO 010-2019.”

The group noted that the only public hearing held was in Luzon in August 2019 and no public hearings were conducted in Visayas and Mindanao.

“For a policy such as PPA AO 010-2019 that deals with uniform CH (cargo-handling) tariff rates and will encompass PPA ports nationwide covering Tier 3 ports, PPA should have conducted hearings at all Tier 3 ports where such CH rates will be charged to sufficiently inform and likewise gather comments/inputs and address the concerns of affected stakeholders,” PISA pointed out.

It added that a regulatory impact assessment “should be done and presented for validation to determine the reasonableness of the said rates especially for those who will be significantly affected, in this case, shippers, consignees, cargo owners, shipping lines and logistics companies (in particular) and the general public as a whole.”

Moreover, PISA raised its concern that only two companies have been dominating the biddings for PTMRF port contracts, namely, Prudential Customs Brokerage Services, Inc. (PCBSI) and the joint venture (JV) of Harbour Centre Port Holdings, Inc. and Zamboanga-based Z.C. Integrated Port Services, Inc.

READ: 2 firms win 9 PPA port management contracts

According to the Notices of Award published on PPA’s website, PCBSI won the contracts for the ports of Ormoc, Puerto Princesa, Calapan, Legazpi, and Tabaco.

The JV, meanwhile, won the contracts for the ports of Iligan, Ozamiz, Zamboanga, and Tacloban.

Other ports bid out by PPA this year include Nasipit, Matnog, Fort San Pedro, and Pulupandan ports. – Roumina Pablo