A day after President Benigno S. Aquino III offered guarantees to foreign investors who would participate in his administration’s public-private partnership (PPP) program, an official of a Belgian firm contracted to dredge the Laguna de Bay for P18 billion complained that Malacanang unilaterally cancelled the contract without first informing them.
Dimitri Ditielleux, North Asia manager of Baggerwerken Decloedt En Zoon (BDZ), said he was stunned by the statement released by Malacanang that Aquino had cancelled the project.
“How can you cancel a contract without informing the other party?” Ditielleux asked, criticizing Aquino for precipitately junking a project that he said had the support of the people living around the lake.
The Belgian executive said the BDZ will seek international arbitration and will inform the Belgian government about the unilateral cancellation. He said he would ask the Belgian government, which is the current president of the European Union, to suspend all forms of assistance to the Philippines.
Presidential Spokesman Edwin Lacierda said in a press briefing Friday that Aquino had cancelled the P18-billion Laguna Lake dredging contract, which was signed in April during the last days of the administration of Gloria Macapagal Arroyo.
Aquino canceled the dredging project, which aims to prevent water levels from rising and causing floods in nearby areas, after learning of allegedly questionable components of the project. He said the project was “illogical” since the dredged material would simply be dumped into another part of the lake.
“Even a Grade 5 student will easily see that this project is illogical,” he said. “There are still people who think they can pull a fast one that would cost at least P18.5 billion,” Aquino said.
But the Kilusang Lawa Kalikasan, an environmental group, said the President may have been misinformed about the project.
Obviously, whoever advised Aquino to cancel the project based his conclusion on a Grade 5 student’s logic. The project was the result of years of research, study and evaluation by a team of experts whose findings and recommendations were reviewed by the National Economic Development Authority (NEDA) and experts from the Belgian government, which was going to provide the funding through its overseas development assistance (ODA) program.
In effect, Aquino was saying a Grade 5 student’s “logical” opinion should be trusted more than a thorough study by engineers and other experts. No wonder Aquino’s policies and actions have been described as “amateurish” and his Cabinet members “lightweights” because they obviously look at things from the “logical” perspective of a Grade 5 student.
Obviously, Aquino scrapped the project for the simple reason that it was signed during the time of the despicable Arroyo administration. Aquino is falling into the same mistake of his late mother, President Cory Aquino, when she indiscriminately stopped or abandoned all projects initiated by her deposed predecessor President Marcos and the former First Lady, Imelda Marcos, simply because they were Marcos projects and were, therefore, considered tainted, including the commendable BLISS and other housing programs.
While the late President Cory Aquino didn’t have to worry about the legality of the constitutionality of her actions, her government being a revolutionary one, Noynoy Aquino must remember that the constitution is in place and all existing laws are, therefore, binding. These include the laws on contracts and obligations.
The Belgian government was reportedly so incensed by Malacanang’s unilateral scrapping of the contract and the “unprofessional” and “improper” act of announcing it to the press without informing the other party first that it is threatening to hold all ODA funding to the Philippines in abeyance. It is unfortunate for the Aquino administration that Belgium is currently the president of the powerful European Union and could, therefore, influence the European group’s decisions vis-as-vis the Philippines.
Malacanang seems to have forgotten that the Philippines is still being watched with skepticism by foreign investors following unresolved complaints by two major investors involved in two major build-operate-transfer (BOT) projects by previous administrations. BOT was the precursor of Aquino’s PPP program.
These projects were the NAIA 3 airport terminal project and the Southern Luzon Expressway (SLEX) project.
The NAIA 3 contract was awarded to Piatco by the administration of President Fidel Ramos in 1997, and was amended under President Joseph Estrada’s government. Piatco partnered with German airport operator Fraport.
The facility was scheduled to open in late 2002. That year, Gloria Macapagal Arroyo sought a review of the contract, saying it was unfair and breached Philippine law. In 2004, the Supreme Court ruled the contract void and the government subsequently seized the terminal.
Consortium members lost $1-billion compensation claims before arbitration courts in Washington and Singapore on jurisdiction grounds, and appeals are pending. The terminal, mothballed from 2002 to 2008 due to the court cases, is now only being partly used.
The other case involved Malaysia’s MTD Capital Bhd, operator of the South Luzon Expressway (SLEX) connecting the capital to southern provinces. It has been trying to implement toll increases that were allowed by its contract.
The Supreme Court last month upheld the toll increases, but referred them for review, and declared void and unconstitutional clauses in the contract covering compensation for the operator if the increases were not implemented.
Prior to the two-day conference on the PPP on Thursday and Friday, foreign investors expressed skepticism over the government’s sincerity in attracting investors largely because of previous experiences where the Supreme Court interfered in the decision-making process for large infrastructure projects and the Philippine government unilaterally cancelled contracts.
And now comes Malacanang scrapping another huge public works contract for the dredging of Laguna Lake on the eve of its moves to attract foreign investors to bid for its PPP projects.
Not one of the almost 600 investors who attended the conference had signed up nor showed interest in the 10 infrastructure projects despite guarantees and risk insurance promised by the Aquino administration.
By sending mixed signals to the investors following the cancellation of the P18-billion Laguna Lake dredging contract based on the logic of a Grade 5 student, the Aquino administration is not helping its cause.