ICTSI Iloilo port proposal passes PPA bids committee

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Iloilo Commercial Port Complex
  • International Container Terminal Services, Inc.’s sole bid for the Iloilo Commercial Port Complex passed the Philippine Ports Authority Bids and Awards Committee
  • During the opening of bids on January 11, ICTSI’s technical and financial proposals were cleared by the bids and awards committee
  • ICTSI proposed a concession fee of P750 million for the sixth to 10th year of the concession period, higher than the P500 million minimum under the contract

International Container Terminal Services, Inc.’s (ICTSI) sole bid for the 25-year contract to manage and operate cargo-handling and related services in Iloilo Commercial Port Complex (ICPC) was declared “passed” by the Philippine Ports Authority (PPA).

During the livestreamed opening of bids on January 11, the PPA Bids and Awards Committee (BAC)-Port Terminal Management Contract declared ICTSI’s technical and financial proposal as having “passed”.

The next step will be for the proposal to go through post-qualification and once it passes again, the BAC will recommend to the PPA general manager awarding of the contract.

ICTSI’s offer for the 25-year cargo-handling contract comes with a concession fee of P750 million for the sixth to 10th year of the concession period, notably higher than the P500 million minimum under the contract.

ICTSI was the sole bidder for the project, initially bid out on December 18, 2023. It was later re-bid after ICTSI’s proposal was declared “failed” due to the absence of a notarized Secretary’s Certificate or any document showing proof of authorization attached in the Omnibus Sworn Statement, a legal requirement.

READ: ICTSI submits lone bid for Iloilo port but falls short of requirementsPPA rebids Iloilo port contract

Prior to the bidding, ICTSI in 2019 submitted an unsolicited proposal to invest over P5 billion to develop ICPC and the Port of Dumangas. The proposal was withdrawn in 2022 due to concerns about prolonged processes. PPA opted to bid out the concession under its Port Terminal Management Regulatory Framework (PTMRF), perceived as a quicker alternative by PPA general manager Jay Daniel Santiago.

Under the contract, ICPC operations will exclusively serve foreign vessels and cargoes. For the first five years, domestic vessels and cargoes are permitted until the Fort San Pedro port development turnover. Fort San Pedro, previously bid under PTMRF Tier 3, serves as the designated domestic terminal.

The contract specifies a minimum fixed concession fee of P500 million for the sixth to tenth year, with an annual fee of P100 million for the sixth year. Fees exclude taxes.

Investment requirements include an internationally-recognized terminal operating system, PPA-owned equipment maintenance, and infrastructure upkeep. The winning bidder must construct a 250-meter berth, upgrade the container yard for partial rubber-tired gantry operations, and provide cargo-handling equipment to meet future demand.

For the first five years, the winning bidder must remit 20% of annual gross revenues to PPA. From the sixth to tenth year, a fixed annual concession fee applies, followed by incremental increases based on the consumer price index every three years from the eleventh year onward.

In addition to the yearly concession fee, a 20% variable fee will be remitted to PPA if the actual traffic volume exceeds the volume threshold by 10%. The variable fee for the sixth year is based on the highest throughput from the initial five years. A minimum working capital of P51 million is required.

ICPC is the first port that has been bid out under Tier 1 of PPA’s PTMRF.

Introduced in PPA Administrative Order (AO) No. 03-2016, PTMRF aims to enhance port services by involving the private sector. It organizes port investments into three tiers for clearer arrangements. As of 2020, PPA has auctioned 19 Tier 3 ports (15-year concession), one Tier 2 port (20-year concession), and is currently bidding two clusters of Tier 3 ports.

ICPC falls under Tier 1, granting a 25-year full concession. Tier 1 ports, designed to attract investors, feature higher tariffs, ensuring the presence of necessary infrastructure and equipment.

During a public hearing on June 21, the PPA Port Management Office (PMO)-Panay/Guimaras, overseeing ICPC, highlighted the port’s outdated equipment, hindering efficiency.

This limits ICPC’s ability to fully utilize its yard and berth capacity. Additionally, the outdated infrastructure prevents direct shipping between Iloilo and international locations, leading to costly and inefficient container handling.

ICPC has not effectively served international shipping or handled containerized cargo, rendering it an underutilized investment. PMO Panay/Guimaras suggests ICPC has potential for expansion, with its current three berths covering 627.9 meters across 23 hectares. – Roumina Pablo