Iloilo port to levy Tier 3 rates on domestic cargo

Iloilo Port Commercial Complex. Photo from Philippine Ports Authority.
  • Iloilo Commercial Port Complex will impose tariff similar to Tier 3 rates on domestic cargoes during the first five years of the new port operator’s port terminal management contract
  • After the fifth year, ICPC will become an exclusively international terminal and domestic cargoes will be diverted to Fort San Pedro port in Iloilo
  • For international cargoes at ICPC, PPA’s proposed Tier 1 rates will be imposed once the new port operator takes over

Tariff similar to Tier 3 rates will be imposed on domestic cargoes shipped through Iloilo Commercial Port Complex (ICPC) in the first five years of the port terminal management contract (PTMC) for the Western Visayas terminal.

After the first five years, ICPC will become an exclusively international terminal. Domestic cargoes will be redirected to Fort San Pedro port in Iloilo, the Philippine Ports Authority (PPA) said in a recently published matrix of issues and concerns.

The matrix includes stakeholders’ questions and PPA’s responses during the two public consultations on the ports authority’s proposed development plan for ICPC and the proposed rates for Tier 1-category ports.

READ: PPA rolls out proposed P5.9B plan for Iloilo port complex

PPA Commercial Services Department manager Mark Jon Palomar said during the first public consultation on June 21 that the proposed ICPC development plan – to be carried out by the winner of the port’s PTMC – calls for turning ICPC into an exclusively international port.

Under the proposed tariff for Tier 1 ports, which include ICPC, the rates for domestic cargoes are the same as the rates under the tariff for Tier 3 ports.

Tier 3 rates are embodied in PPA Administrative Order No. 10-2019, which provides uniform port tariffs that will be the base tariff to be used by operators that will win contracts categorized as Tier 3 under PPA’s Port Terminal Management Regulatory Framework (PTMRF).

PTMRF comprises new guidelines in awarding port terminal management contracts as embodied in PPA AO 03-2016, as amended by AO 03-2023. The framework aims to promote private sector participation in port operations to provide higher-quality service.

ICPC is categorized as Tier 1, which covers a 25-year concession period. It will be the first Tier 1 port to be bid out under the PTMRF. Since 2020, PPA has bid out 18 ports under Tier 3 (15-year concession) and one port under Tier 2 (20-year concession). Fort San Pedro port was earlier bid out under Tier 3.

The proposed Tier 1 rates are higher than current rates in ICPC.

To attract investors and to have the necessary infrastructure and equipment in place, PPA noted that “there must be [tariff rates] that allow the [successful] bidder to build a world-class terminal and have reasonable returns.”

PPA said that, while the proposed tariff is higher, it “will have a minimum impact [on] the commodities passing through ICPC.”

PPA’s computation showed that for a non-containerized rice shipment, the proposed tariff will only add P0.43 per kilo or P21.43 per bag. For cement, it will add P0.75 per kilo or P37.71 per bag.

PPA added that once ICPC is developed into an international port, shippers can ship directly to the port from the port of origin instead of going through Manila or Cebu ports first, thus avoiding additional cargo-handling rates.

PPA said during the June 21 public consultation that the proposed tariff for domestic cargoes under Tier 1, which is similar to Tier 3 rates, is higher than the current rates at Fort San Pedro port by a range of 25% to 114% for general cargo, 409% for bulk, 79% for a loaded 20-footer, and 163.96% for an empty 20-footer.

PPA said the impact of the proposed tariffs for domestic cargoes will be minimal. For rice, the additional tariff will be P2.89 per bag or P0.06 per kilo. For sugar, it will add P2.33 per bag or P0.05 per kilo, and, for cement, it will be an additional P25.72 per bag or P0.51 per kilo.

“While the [proposed rates are] higher than the current domestic cargo-handling rates, the ports under Tier 1 will be modernized and the key performance indicators will be improved, hence an equitable tariff is just fair,” PPA said.

The proposed tariff for Tier 1 ports will be subject to evaluation by the PPA technical working group and to approval by the PPA board of directors.

Should the proposal merit consideration by the PPA board, the proposed rates will be considered in the TOR for the bidding of ICPC’s PTMC.

Palomar earlier said PPA plans to bid out ICPC’s PTMC this year after the agency makes “a bit of revisions” on the terms of reference for the bidding following the second public consultation on July 26 on the proposed development plan for ICPC. – Roumina Pablo