NEDA regional council backs suspension of new port tariffs in Visayas

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Photo from NEDA Region VIII - Eastern Visayas
  • The National Economic and Development Authority Regional Development Council VIII passed a resolution asking the Philippine Ports Authority to suspend implementation of new tariffs in the ports of Tacloban, Ormoc, and other areas in Eastern Visayas
  • The Philippine Chamber of Commerce and Industry Tacloban-Leyte, Inc. appealed to RDC VIII to issue such a request to PPA until after a thorough consultation with stakeholders is conducted
  • PCCI earlier said the new rates would push up prices in the region and hurt the regional economy already battered by the COVID-19 pandemic

The National Economic and Development Authority (NEDA) Regional Development Council (RDC) VIII passed a resolution requesting the Philippine Ports Authority (PPA) to suspend implementation of new tariffs at the ports of Tacloban, Ormoc, and other areas in Eastern Visayas.

The resolution came through during RDC VIII’s fourth quarter full council meeting last December 10 after Globalport Tacloban Terminal, Inc., the new port operator of Tacloban port, imposed higher tariffs on all vessels starting November 12.

The new rates are pursuant to PPA Administrative Order (AO) No. 10-2019, which provides uniform port tariff for use 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

During the August 2019 public hearing on the then proposed new uniform tariff for ports under PTRMF, PPA said it based its proposal on Cagayan de Oro port’s rates, which were the highest amongst PPA ports.

In a statement, RDC VIII said the Philippine Chamber of Commerce and Industry Tacloban-Leyte, Inc. (PCCI) had appealed to the Council to request PPA to suspend the new tariff until after the ports authority and Globalport have conducted a thorough consultation with local stakeholders.

PCCI earlier said local businesses were not consulted on the plan to impose the new tariff and argued the new rates would only push up prices in the region and hurt the regional economy already battered by the COVID-19 pandemic.

In a position paper last November, PCCI noted that cargo-handling cost would be a considerable input to the cost of goods as Tacloban port serves as a transshipment hub for prime commodities to the rest of the region.

PCCI said that based on its computation, the new tariff would push the prices of goods up, with general cargo being the most affected as the 360% increase in port tariff would raise prices of commodities such as rice, cement, sugar, and feeds. PCCI said the bulk of the cargoes passing through Tacloban port are general cargoes and any increase in cargo-handling charges would likely be passed on to end users.

The group also expressed concern with the rate of increase for empty containers because Eastern Visayas is a net importing region.

“With the rate of tariff adjustment in this type of cargo, local traders will find it difficult to engage shipping companies to transport their cargoes as most of their backloads are non-tradeable goods or empty containers,” PCCI pointed out.

The Tacloban City Sangguniang Panglungsod also earlier issued a resolution requesting Globalport Tacloban to reconsider the imposition of the new tariff.

No power to make changes

In response, PPA Port Management Office (PMO) Eastern Leyte/Samar port manager Manuel Boholano, in a letter dated December 7 to Tacloban City vice mayor Jerry Yaokasin, said they have already endorsed the issue to the general manager of PPA, noting that the issues raised are “not within the ambit of the PMO level since it touches on issues of declared policy of the State…”

GlobalPort Tacloban general manager Kenesto Soldevilla, in a letter to Yaokasin dated December 10, said they understand the concern of the Sangguniang Panglungsod but that it is “in no position to unilaterally change the rates mandated by the Philippine Ports Authority.” It added that as a private entity that entered into a contract with a government agency, “we are bound by the terms and conditions set by the PPA.”

RDC VIII said RDC IX also passed a similar request to PPA to suspend implementation of new tariff rates in the port of Zamboanga City through Resolution No. 93 series of 2021. Zamboanga port’s terminal management contract was also bid out this year and the port is already implementing the new rates under AO 10-2019.

RDC VIII hopes the resolution would lead to tariffs agreeable to both parties as a result of a complete and thorough consultation.

GlobalPort Tacloban is the joint venture (JV) of Harbour Centre Port Holdings, Inc. and Zamboanga-based Z.C. Integrated Port Services, Inc. in Tacloban. The JV won the bidding for the terminal management contract for Tacloban port with a concession fee of P1.758 billion.

The bidding was pursuant to PPA’s PTMRF under AO 03-2016, which 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.

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

With the bidding, Tacloban port was categorized from Tier 5 to Tier 3, which means 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).

Regulatory review needed

Relatedly, the Philippine Inter-island Shipping Association (PISA) in a letter dated December 6 requested the Lower House Committee on Transportation to review AO 10-2019, saying the rates it provides are higher compared to previous rates of some Tier 3 ports as well as existing rates of the domestic terminal in Manila North Harbor.

READ: Domestic shipping group seeks House probe on higher PPA tariffs

PISA said 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 the AO. PISA added that only one public hearing was held in Luzon in August 2019 and no public hearings were conducted in Visayas and Mindanao.

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 also raised its concern that only two companies dominate biddings for PTMRF port contracts so far: Prudential Customs Brokerage Services, Inc. (PCBSI) and the JV of Harbour Centre Port Holdings and Z.C. Integrated Port Services.

READ: 2 firms win 9 PPA port management contracts

According to the Notices of Award published on PPA’s website, PCBSI won 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.

The ports of Zamboanga, Tacloban, and Ozamiz are already implementing new uniform rates with the takeover of their new cargo-handling operators.

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