- Port users and shippers urge the government to probe tariff rises of 949% for bulk cargo, 615% for general cargo, and 71% for prime goods the Philippine Ports Authority will impose at the Pasig River port
- A group of 54 shippers and port users says the new operator of the river port is set to charge the new rates once it takes over the port
- The group said the new tariff rate hikes will “unjustifiably increase end-consumer prices of goods” shipped through the river port
A group of Philippine shippers and port users is urging the government to investigate an impending raft of tariff hikes at the Pasig River port that would drive up rates for bulk cargo by 949%, general cargo by 615%, and prime commodities by 71%.
The petitioners said the river port’s new cargo-handling operator is set to charge the new tariffs imposed by the Philippine Ports Authority once it takes over.
In an appeal published in newspapers on June 6, The Pasig Port Users Against PPA Tariff Increases sought the intervention of President Rodrigo Duterte, President-elect Ferdinand Marcos Jr., National Economic and Development Authority (NEDA) Secretary Karl Kendrick Chua, and incoming NEDA Secretary Arsenio Balisacan.
They asked the leaders to intervene in the “Philippine Port Authority’s [PPA] attempt to unjustifiably and unconscionably increase arrastre, mooring and other tariffs at the Port of Pasig.”
The group, comprising 54 shippers and port users, the group said the tariff increase will “unjustifiably increase end-consumer prices of goods shipped between Pasig and other domestic ports.”
The new tariffs take effect once the winning bidder assumes the port operations.
“Certainly, no amount of improvement in services can justify the up to 949% increase in tariffs,” the group noted.
The plea follows a similar appeal made by the group to the PPA Board of Directors in a letter dated April 11. The group said its appeal “appears to have fallen on deaf ears, brushed aside without the decency of a reply from the PPA, who are supposed to serve us port users.”
It added that similar appeals to PPA management had been made in the recent past by port users in Palawan, Tacloban and others and that these appeals “were also disregarded or not directly addressed.”
The Pasig port users’ petition came after PPA in April invited bidders for the 15-year contract to manage and operate the port terminal of Pasig River Port under the agency’s Port Terminal Management Regulatory Framework (PTMRF), which outlines new rules for terminal management contracts.
The opening of bids pushed through on April 25 and Mega Lifters Cargo Handling Corp. was awarded the contract last month after offering a concession fee of P2.49 billion.
The winning bidder will use PPA’s prescribed tariff under PPA Administrative Order No. 10-2019, which provides a uniform port tariff for operators that win contracts for Tier 3 ports under the PTMRF. Pasig River port falls under Tier 3.
According to the group, the new tariffs under AO 10-2019 are “exorbitant, without justification and disregard the qualities of the individual port/s.”
The group cited a November 2021 paper by the Philippine Chamber of Commerce and Industry-Tacloban-Leyte Inc. (PCCI-Tacloban) that says the new tariff “was done by the PPA for the sake of uniformity and without regard for the prescribed formula of its own administrative order.”
The group said PPA, when questioned about the increase in tariff, merely responded that “it was based on the rates of Cagayan de Oro” and “rates have not been increased for 10 years”.
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, the highest among PPA ports.
The group noted that to date, PPA has not shown the basis of its calculations for the tariffs in AO 10-2019.
Additionally, the group cited PPA general manager Jay Daniel Santiago’s claim that the tariff increases havea very negligible or “maliit lang” effect on the prices of products.
In a chance interview on April 13, Santiago said PPAwill continue implementing the new tariff rates for Tier 3 ports despite calls from stakeholders to reconsider the rates.
Santiago said contrary to the assessment of some stakeholders, the impact of Tier 3 rates is minimal compared with other logistics costs.
“Medyo nakakasilaw lang ‘pag tiningnan mo na 300% yung increase pero in terms of absolute peso value, napakaliit, yung sentimo lang yung pinag-uusapan natin (It looks daunting if you just look at the 300% increase but in terms of absolute peso value that’s s all; we’re just taking cents here),” Santiago said.
He said cargo-handling charges account for only around 5% of the total logistics costs and the bulk of it “is all the costs outside of the port” such a strucking, warehousing, labor, and fuel.
The group cited the PCCI-Tacloban report that noted the tariff for a bag of cement increased by P17 to P21.72 from P4.72 with the implementation of AO 10-2019 in Tacloban Port.
“By no stretch of the imagination is a P17 increase in the DTI-monitored cement price of P220 ‘maliit’ and we note that such a claim by the PPA is ‘salitang walang malasakit sa mahihirap’ (talk that has no regard for the poor),” the group said.
Additionally, the group said the uniform rates for all Tier 3 ports are “without consideration for the minimum wage in the locality of the affected port users” and is “clearly discriminatory and disadvantageous to some lower-wage provincial port users.”
In addition, the group claims PPA violated its own policy as no master plan study was conducted for Pasig River Port. It said PPA’s policy requires a master plan study prior to the bidding to determine optimal conditions to be included in the Terms of Reference of the contract.
While the current cargo-handler’s holdover authority expired on December 31, 2021, it has not been renewed despite the requirement for it to be renewed as stated in the PTMRF.
Moreover, under PPA AO 12-2018, which provides guidelines for selecting and awarding contracts under the PTMRF, bidding for contracts should commence six to 12 months before the existing contract’s expiration. The group said the bidding for Pasig River port should have been conducted between January and June 2021 instead of on April 25, 2022.
The group said the financial requirements placed on potential bidders at the last minute was also anti-competitive and “appears that the only purpose for the high paid-up capital is to exclude small-cap but very experienced and capable cargo handlers.”
Moreover, the group found it curious that the two-year experience requirement in port services for prospective bidders was removed from the bidding prerequisites of the Pasig River and Pagadian ports by a mere supplemental/bid bulletin.
The group claimed “only the winning bidder and the PPA will gain at the expense of the end consumers.”
It is estimated that the winning bidder stands to earn up to four times the gross income of the previous operator without the need for large investments. Pasig River port already has a port terminal building and roll-on/roll-off ramp, and the winning bidder is expected to provide one cargo truck, five cranes, two forklifts, one weighbridge, one fire truck and a variety of other small equipment.
“There is no indication in the bid documents of improvement in services as claimed by the PPA. Certainly, no amount of improvement in services can justify the up to 949% increase in tariffs,” the group said.
To raise tariff while recent world events have raised energy prices and the Philippines is still being in the early stages of economic recovery from the COVID-19 pandemic “is clearly against the interest of the people, and particularly of the poorest among us,” the group said.
Aside from Pasig River port users, several stakeholders, including the National Economic and Development Authority-Regional Development Councils VIII and IX, have earlier asked PPA to suspend implementation of new tariffs under AO 10-2019 at various ports pending consultation with stakeholders.
Philippine Inter-island Shipping Association requested the Lower House Committee on Transportation to review AO 10-2019, saying its rates are higher than the previous rates of Tier 3 ports and of North Port, the premier domestic port at Manila North Harbor.
To date, PPA has already bid out and awarded 18 ports under Tier 3, and one port under Tier 2 of the PTMRF. – Roumina Pablo
