Guys, just an update:

MOTORISTS TO SUE PNCC (Bernardo V. Lopez, Business World, Feb. 21,2007)

The Road Users Protection Advocate (RUPA) is set to sue the Transportation Regulatory Board (TRB) and Philippine National Construction Corp. (PNCC), the franchise holder for the South Luzon Expressway (Slex), over a tollway contract which is predicted to result in toll rates increasing tenfold in the next five years.

This is beginning to smell like the NAIA-3 contract which the Supreme Court declared null and void for being disadvantageous to the government. Whether PNCC’s joint venture partner for the SLEX expansion, Malaysia Thai Development Corp. (MTDC), will be included in the court case is not known. The issue revolves around a provision in the Slex expansion contract under Section 2.03 of the Supplemental Tollway Operation Agreement (STOA),which states, “Moreover, regardless of whether or not the PNCC Franchise is renewed, the Concession granted to the investor and the Operator hereunder and this Agreement shall remain valid and subsisting in the event of a change in ownership of PNCC”.

In other word, the franchise holder can still operate the franchise even if it loses its franchise, which is ridiculous. All it has to do is effect a change in ownership, whatever that means.

RUPA claims the STOA is null and void because it was not signed by the President as provided by the STOA itself under Section 2.04, which states, “This Agreement shall come into effect upon the approval of this Agreement by the President of the Republic of the Philippines….”. RUPA says it was only signed by the TRB executive director Manny Imperial and PNCC chairman Art Aguilar.

The PNCC franchise expires on April 30 and there is no way for Congress to renew it with the special session having concluded February 20. However, it does not operate the tollway as explained above. The franchise will lapse, but franchise or no franchise, PNCC and its partner MTDC still operate the tollway.

RUPA, together with an array of motorist organizations and federations – bus, jeepney, truck, shuttle operators, homeowners’ association and Calabarzon chambers of commerce – is a force to reckon with. This force was able to pressure the TRB to suspend an increase in toll rates in the Alabang to Fort Bonifacio portion of the SLEX under the Citra franchise a few years ago. When people started stoning toll booths, the TRB backed down. We hope this does not happen in the protest against PNCC.

This huge motorist force wants the “STAR model” adopted in the Slex. The STAR expressway in Batangas offers cheap toll rates for the riding public because the construction of the expressway by the DPWH loan from Japan. Infrastructure construction, normally corruption-prone worldwide, should never be the onus of the riding public.

The PNCC franchise is corruption-prone because a franchise does not require a public bidding, which is a requirement for the DPWH. PNCC can unilaterally choose its contactor without oversight. In the STAR model, not only was there a bidding by the DPWH but construction was also not charged to motorists, only operations and maintenance.

The SLEX expansion comes from a World Bank IFC loan. The World Bank will have a bigger loan and bigger profits if it supports PNCC, which is doing. The World Bank says it will now give loan if PNCC does not get the franchise, say the motorists. It is therefore virtually supporting an entity being investigated by the Senate for corruption. Perhaps we should turn to the Japanese for the loan.

Meanwhile, the Senate has adopted Senator Franklin Drilon’s Resolution 618, directing the Committee on Finance to investigate the so-called “Radstock deal”. Virgin Islands-based Radstock Securities Limited, represented by Sonny Dominguez in the Philippines, is “an unknown business entity with a capitalization of only $50,000,” according to Senate documents. Radstock bought PNCC’s 50-million debt to Marubeni for $2 million.

The Senate hearings focused on a corruption issue involving PNCC and Radstock. Senators Drilon and Serging Osmeńa questioned PNCC for suspiciously resurrecting an expired bad debt so that it could pay a stagerring P13 billion to Radstock with P10 million as attorney’s fees. According to Senate documents, Radstock and PNCC then entered into a compromise agreement for the latter to turn over assets worth of P6 million.

The assets were composed of “19 pieces of real estate properties, the bulk of which is 12.9 hectares in the Pasay City Financial Center…. 20% of the outstanding capital stock of PNCC… and 50% of the PNCC’s share in the gross toll revenue of the Manila North Tollways Corporation for 27 years.” MNTC grosses about P17 million a day, and Radstock’s share is a windfall that can easily dwarf real estate and equity acquisitions. If the Radstock deal is ruled illegal and null and void, all these billions may have to go into escrow and returned to PNCC, including MNTC toll income shares. That is, if they have not been somehow laundered. The Senate documents says the country stands to lose P36 billion owned by PNCC and P3 billion in taxes.

It is unfortunate that the “sins” of a handful can bring down the entire institution itself to the detriment of its many rank-and-file workers.

Let me quote a letter from motorists headed by RUPA, “Salamat po senators. Mabuti na lang po may Senado (Thank you senators. It is fortunate we have a Senate).” Otherwise, House Bill 5749 would have succeeded in making life difficult for the local economies of South and North Luzon.