WHILE Customs Commissioner Alberto Lina was rushing the passage of the implementing rules and regulations of the new Customs law to allow the Manila North Harbour Port Inc. to engage in international trade, the shipping industry has rejected the MNHPI’s petition to increase its rates by 37 percent in its domestic trade.
In separate position papers submitted to the Philippine Ports Authority and published in the industry paper PortCalls Asia, the Philippine Liner Shipping Association and Supply Chain Management Association of the Philippines described NMHPI’s petition as “unwarranted” and “unjustified.”
“The industry is protesting Customs chief Lina’s illegal memos and moves to allow NMHPI to engage in international trade when it is obvious it could not even run its domestic operations efficiently as it is already seeking an excessive increase in its rates to sustain its domestic operations,” said the industry source, who did not want to be named.
“Lina did not lay down the basis for allowing MNHPI to operate internationally when it cannot even afford to make its domestic trade to be run efficiently. It would be unfair to pass on the MNHPI’s operating costs to the stakeholders,” the source pointed out.
MNHPI petitioned the PPA to impose a more than 37-percent increase in cargo-handling tariff at North Port, which the stakeholders found “excessive and had no basis.”
The PLSA and SCMAP asked the PPA “to compel MNHPI to be efficient, cost-effective and conscious of the need to ensure maximum utilization of its resources.”
For PLSA alone, the liner group said the increase being sought by the MNHPI would translate to an additional annual stevedoring cost of P118.782 million among PLSA members.
The liner group also asked the PPA to put a “reasonable cap” on fuel and power consumption, as well as on repairs and maintenance.
“This will be added to other cargo-handling rates, which may eventually be passed on to the shippers, including wharfage, cranage, storage, stuffing, and shifting charges,” the association said.
For its part, the SCMAP said it found the NMHPI’s proposed upward tariff adjustment to be unjustified.
“We believe that any upward tariff adjustment predicated on the need for additional investment on equipment and infrastructure would put into question the original basis for the awarding of a franchise to operate a port to a contractor,” SCMAP said.
MNHPI in August 2015 filed for a 37.45-percent increase in cargo-handling tariff, saying it needs to compensate for the “upward trend in cost drivers” and the increased cost of operating Manila North Harbor.
Without seriously considering the MNHPI’s efficiency and capacity to operate its domestic trade, Lina issued a memorandum circular granting NMHPI a Certificate of Authority to Operate as an Authorized Customs Facility (ACF) in December 2015, or a few months after Ang’s firm sought a 37-percent increase in its rates.
On June 2, 2016, Lina issued another Customs Memorandum Order 12-2016 assigning BoC to assume jurisdiction over MNHPI to operate as an ACF permitting the MNHPI to engage in international trade when it has an existing exclusive contract with PPA allowing it only to engage in domestic trade, the source said.
Lina invoked Republic Act 10668, allowing foreign vessels to transport and co-load foreign cargoes for domestic transshipment and RA 10863 or the Customs Modernization and Tariff Act (CMTA), whose implementing rules and regulations or IRR has yet to be subjected to thorough public hearings involving other stakeholders.
“This is not only a midnight deal, it is a sweetheart deal. Lina invoked RA 10863 in an internal memo issued on June 2 to allow MNHPI to engage in international trade. The public hearing on RA 10863’s IRR was set on June 10 but Lina was already invoking the law in granting concessions to MNHPI,” the Customs official, who requested anonymity, told The Standard.
The source also accused Lina of “railroading” the IRR as Lina only called for a hearing for one day last Friday and sent out a day advanced notice and a day advanced submission of the draft IRR.
“For a 1,805-section law, the one day hearing and one-day advanced notice smacks of railroading,” the source said.
The source stressed that under the same laws, the BOC’s rule-making power cannot impair or diminish any concession contract.
“Under the same laws that Lina was invoking, BOC’s jurisdiction over certain ports is limited only to those ports that are not within the exclusive jurisdiction of other regulatory bodies. Since MNHPI is under the PPA, then BOC may not validly exercise jurisdiction over MNHPI,” the source explained.
The PPA is under the Department of Transportation and Communications while the BOC is under the Department of Finance.
The MNHPI was owned by businessman Reghis Romero II but his ownership is being contested by his son 1Pacman congressman-elect Mikee Romero.
The young Romero sold MNHPI to businessman Ramon Ang, president and chief operating officer of San Miguel Corp.
MNHPI said the petition”•which comes after PPA granted the operator a total of 18-percent increase in 2013 and 2014″•is based on four cost drivers, namely: labor, fuel, power and repairs and maintenance.
With supposed brand-new equipment, the PLSA said it was “surprising” that MNHPI should incur an increase in costs of repairs and maintenance of 180 percent between 2013 and 2014, or 177.67 percent from 2012 to 2014.
“This is NOT acceptable. MNHPI should provide details otherwise it may be concluded that MNHPI didn’t purchase the suitable or appropriate equipment or that most are not brand new equipment for them to incur a 177.67 percent increase in repairs and maintenance,” the PLSA said.
On fuel, PLSA said a year-on-year increase in fuel costs of 55 percent from 2012 to 2013 and 78 percent from 2013 to 2014″•or a 126.11 percent increase from 2012 to 2014″•“showed a remarkable increase in fuel consumption that could mean inefficient use of fuel.”
“MNHPI should show the proportionate fuel consumption vis-à-vis cargo-handling equipment utilizing diesel vis-à-vis volume consumed,” the association said.
The PLSA questioned the basis of MNHPI in saying it needs to increase its pool of port workers from 1,100 in 2014 to 1,470, or a 34-percent increase.
On fuel, PLSA said a year-on-year increase in fuel costs of 55 percent from 2012 to 2013 and 78 percent from 2013 to 2014″•or a 126.11 percent increase from 2012 to 2014″•“showed a remarkable increase in fuel consumption that could mean inefficient use of fuel.”
The SCMAP said the NMHPI should put into account its projections on capital expenditure and operating expenditure for a particular time period.
“This information should be made publicly available for the perusal of stakeholders and other interested parties, to ensure transparency and allow for justifiable tariff adjustments, if needed,” the supply chain group said.
“We also believe that any additional investment on equipment and infrastructure should have an accompanying quantifiable improvement in performance,” it added.
A technical working group composed of concerned government agencies will review the position papers, as well as MNHPI’s reply to these papers, and make a recommendation to the PPA Board, which will make the final decision.