By Roy Mabasa
March 04, 2009 [ Manila Bulletin Online ]
Due to a snarl over land payments, the government has threatened to close down the ambitious Batangas Port Phase II project.
This would mean that the country stands to lose billions of pesos worth of investments emanating from a loan extended by the Japan Bank for International Cooperation (JBIC).
Executive Secretary Eduardo Ermita told reporters that negotiations are being undertaken between the Philippine Ports Authority (PPA) and the Batangas land owners.
“There are negotiations going on because there is already a court order regarding the price of the land. PPA said if we pay up we might as well close shop. They (PPA) said they might as well return the land to the owners. However, the PPA is still negotiating for the price of the land,” Ermita said.
The PPA hopes to settle the legal tussle with Batangas residents that is now with the Supreme Court to allow it to bid out this year a 25-year management contract for the port’s cargo terminal in which already big names in the industry such as International Container Terminal Services Inc. (ICTSI) and Asian Terminals Inc. (ATI) had expressed interest to participate.
Owners of land in Batangas that has a zonal valuation of only P298 to P440 per sq m want P8,000 per sq m because the PPA wants to buy it to expand the Batangas port.
“The courts fixed the just compensation at P5,500 per sq m and ordered the PPA to pay up. If the PPA pays up, it would go bankrupt and close shop,” Ermita said.
The PPA needs room to expand the Batangas port which, next to the Port of Manila, is the principal port in Luzon. But at P5,500 per sq m, the almost 130 hectares of surrounding land, mostly agricultural as aerial photos show, would cost P11.3 billion. The annual budget of the PPA, which operates 23 major shipping gateways and thousands of terminals all over the country, is only P4 billion. Thus, the cost of the new land will eat up its entire budget for three years.
What this means is that for the next three years, all ports operated by the PPA may cease to operate and deteriorate because there will be no money to repair and maintain them. There will be no money to dredge navigation channels to prevent marine disasters. And there will be no money to pay the more than 3,000 PPA employees all over the country. It will prevent the completion of all ongoing development projects in various ports and the PPA will not be able to remit to the national government the P2.4 billion expected cash dividends. Furthermore, it will prevent the PPA from paying its billion-peso loans to international and local creditors -- and think of the negative impact that will have on the shipping industry and the economy.
On the other hand, only a small number of the original 231 lot owners and their lawyers will rake in billions of pesos. A number of lot owners have already disposed of their properties at P600 per sq m.
The PPA said that if the Supreme Court will not reconsider its decision, it would give up the expropriation as it cannot afford the cost. That means the Batangas port cannot expand and progress.
Expropriation proceedings for 185 lots started in October 1999. The PPA said it needed the lots for the development of Phase 2 of the Batangas Port Zone pursuant to two executive orders of then President Corazon Aquino. It alleged that the Land Acquisition Committee of the project recommended that the market value of the lots be fixed at P336.83 per sq m.
The lot owners, represented by three different law firms, asked the trial court to fix the just compensation at P8,000 per sq m. The court appointed a three-man commission to conduct hearings to determine the actual market value of the land. The commission recommended P4,800 per sq m. as expropriation price. The PPA said the price should be lower because the lands are agricultural and not being used for commercial or industrial purposes. Aerial photos show that they are indeed agricultural. The court-appointed commission submitted its second partial report reiterating its recommendation of P4,800 per sq m.
Nevertheless, the trial court issued on Aug. 15, 2000 an order fixing the fair market value at P5,500 per sq m and subsequently ordered the PPA to pay the lot owners. The PPA filed a petition for certiorari with the Court of Appeals and an appeal from the P5,500 market value set by the trial court.
The Court of Appeals denied the consolidated petitions. The PPA went to the Supreme Court with a petition for certiorari.
Basing its decision on technicalities and not on the merits of the case, the Supreme Court denied the petition on Aug. 24, 2007. The PPA filed a motion for reconsideration last Sept. 6 of the same year.
The ATI currently operates the domestic and international port terminal on a yearly contract but a port official said there is barely any cargo business to keep the interest of investors going for the 25-year international cargo contract.
JBIC which funded the loan for the project had required the international port and terminal operator to pay the PPA a fee of $2.2 million a year for the first two years of operations which will rise to as much $5 million a year depending on the cargo volume that the operator will handle.
Two quay or ship-to-shore cranes and four rubber-tired gantries or RTGs will be provided to the winning bidder as start-up equipment to operate the container terminal. The units were delivered into the port and were ready since November 2007 on expectations that the bidding would have had a result by last year.
The PPA has rescheduled the bid this year but the legal dispute with Batangas residents and delayed completion of collateral infrastructure works are conspiring to make investors think twice before committing their money to the project particularly amid a global downturn in trade.
American President Lines, Maersk Lines, Aboitiz and Lorenzo Shipping were at separate times lessees in the Batangas international cargo terminal but left subsequently because of high freight costs shouldered by their customers since truckers and brokers are mainly based in Manila and doing business in Batangas is also costlier for them.
Shippers earlier criticized PPA for not having proper cargo handling equipment as most of of the ships that dock in the Batangas Port should have their own gear to handle cargo.
To address the issue the Bureau of Customs, PPA and the Philippine Economic Zone Authority (Peza) officials met with ecozone locators and international container shipping lines of the possibility of “forcing shippers to use the Batangas port in a move to decongest the ports of Manila and for shippers to save on costs.”
According to PPA’s computation, shippers can save as much as 14 percent on arrestre fees as promised by the Batangas port’s temporary cargo handler, ATI, compared with the rates of the Port of Manila.
On transport cost, if shippers from the Calabarzon area use the Batangas port, they can save at least P6,000 on transport cost per trip, or savings of about 40 percent to 60 percent.
In addition, the country’s leading shipping companies has urged the government to hasten the development of ports, particularly the Batangas Port, to support the expected growth in the volume of cargo.
Aboitiz Transport System unit MCC Transport Philippines has expressed its plans to use the port in Batangas, but only after it has upgraded to international standards.
Initially, the vessels of the container transportation unit of ATS will call only on the international-grade container ports of Manila, Cebu and Cagayan de Oro.
“We are also considering calling on Batangas but it is not yet fully developed. We need a port that can accommodate fast cargo turnover and volume growth,” ATS president and CEO Enrique Aboitiz Jr. said.
“Batangas has a lot of potential, especially because of the plan to link it to the South Luzon Expressway. This will take shipments closer to more service areas, but international-standard operations have not been fully established there,” Aboitiz pointed out.
