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

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Iloilo Port Commercial Complex. Photo from Philippine Ports Authority.
  • The Philippine Ports Authority rolled out its proposed development plan for Iloilo Commercial Port Complex
  • The plan will be carried out by the future winner of the port’s terminal management contract
  • Of the total estimated project cost, capital outlay projects will take up P4.61 billion and major equipment, P1.26 billion
  • Proposed tariff for ports categorized as Tier 1 such as ICPC was presented
  • ICPC is the first Tier 1 port to be bid out under a 25-year full concession
  • The proposed tariffs for Tier 1 ports are higher than current rates, but PPA claims these will have minimal effect on commodities

The Philippine Ports Authority (PPA) rolled out its proposed P5.87-billion development plan for Iloilo Commercial Port Complex (ICPC) during a public consultation on June 21.

Of the total estimated project cost, capital outlay projects will take up P4.61 billion and major equipment, P1.26 billion.

PPA Commercial Services Department manager Mark Jon Palomar said the plan—to be carried out by the winner of the port’s terminal management contract—calls for turning ICPC into an exclusively international port.

During a five-year transition period, ICPC will continue to handle domestic cargoes then these will later be coursed through Fort San Pedro port.

At the public consultation, PPA also presented the proposed tariff for ports categorized under Tier 1, which includes ICPC.

PPA Port Management Office (PMO)-Panay/Guimaras, which has jurisdiction over ICPC, presented the development plan, minimum equipment requirement, and expected key performance indicators (KPI) that will be part of the terms of reference (TOR) for the bidding of the ICPC port terminal management contract under PPA’s port terminal management regulatory framework (PTMRF).

PTMRF comprises new guidelines in awarding port terminal management contracts as embodied in PPA Administrative Order No. 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).

In a presentation, PMO Panay/Guimaras said the port is lacking in modern equipment, resulting in low productivity and preventing the facility from maximizing its yard and berth capacity.

“Furthermore, it prevents cargo owners from shipping directly to and from Iloilo and international origins, and from avoiding multiple and expensive handling of their containers,” PMO Panay/Guimaras said, adding ICPC has not served international shipping lines or handled international containerized cargo, “making it a severely underutilized investment.”

The PMO said ICPC still has potential for berth and yard expansion. The port has three berths totaling 627.9 meters and occupies an area of 23 hectares.

PPA general manager Jay Daniel Santiago earlier said PPA is hoping to bid out the port terminal management contract of Iloilo port this year.

RELATED READ: PPA targets Iloilo, GenSan port bidding by June

The proposed development of ICPC includes projects needing capital outlays, such as improvement of the main gate and centry post and construction of ship-to-shore (STS) rail lines in year 1, construction of an onshore power facility in years 1-8, and berth expansion/widening to include installation of STS rail lines and an electrical system for 428 linear meter wharf in years 5-7.

Further expansion of 6,380 square meters that include the installation of STS rail lines and electrical system for 135 linear meter wharf in years 8 to 10, and development of additional open storage/container yard and reclamation of 2.35 hectares in years 11 to 12 as the need arises, depending on volume/demand.

Major equipment required are two units of mobile harbor cranes by year 2 and two STS cranes from berth 1 to 2 (one unit for year 3 and another unit for year 4). The port will have a draft of 13.5 meters.

PPA noted that ICPC, as a Tier 1 port, requires the prospective concessionaire to deliver a wide array of project components, such as building landside infrastructure, installing information technology systems, and deploying sophisticated equipment and gear for managing and operating cargo-handling and other port related services.

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

Thus, the proposed Tier 1 rates are higher than current rates in ICPC. For example, the current rate for a 20-footer loaded container is P1,154.50 while the proposed rate is 858% higher at P11,060.63. For an empty 20-foot container, the current rate is P701 while the proposed rate is P1,714.70, which is 903% higher.

PPA noted 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.

Per PPA’s computation, a 20-footer laden container from Singapore discharged at Manila International Container Terminal and transferred to Manila North Harbor for its eventual shipping to ICPC will cost a shipper a total of P134,747.64. If shipped directly to ICPC after its development, the total estimated cost from Singapore would only be P46,898.84, saving the shipper P87,848.80.

The proposed tariffs for domestic cargoes are also higher than 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 port terminal management contract.

Stakeholders have five working days after the June 21 public consultation to submit to PPA their position papers on the proposed development of ICPC and tariffs for Tier 1 ports. – Roumina Pablo