Fire trucks overpriced

Solons question PNoy, Mar on P1.3-b Austrian deal

OPPOSITION lawmakers on Monday accused President Benigno Aquino III and Local Governments Secretary Manuel Roxas II of authorizing the importation of 76 overpriced fire trucks for P20.14 million each, rather than the P7 million that the administration publicized in 2012, or P6 million each for locally manufactured units.

Abakada Rep. Jonathan dela Cruz, Bayan Muna Rep. Antonio Carlos Zarate and former Agham congressman Angelo Palmones also warned the President and Roxas against importing 300 more firetrucks from the same source, Rosenbauer of Austria.

Controversial fire trucks. Picture shows one of the
Rosenbauer fire trucks that was distributed to the
allies of the Aquino administration last year.
Dela Cruz vowed to summon Roxas to a Question Hour in Congress to shed light on charges that the Rosenbauer fire trucks were priced even higher than those contracted by the previous Arroyo administration.

After President Aquino came to power in 2010, the Liberal Party led by Roxas questioned the loan concession that the Arroyo administration had signed with Rosenbauer in 2008 or 2009, saying that the contract price of each unit, at P16 million, was too high.

Local Governments Secretary Jesse Robredo, also a Liberal, had branded the loan contract “onerous,” prompting the Aquino administration to renegotiate the deal, government to government.

Robredo had publicly announced that the renegotiation was successful and that the Philippine government had managed to obtain a 40 percent grant from the Austrian government that supposedly lowered the price of each truck from P16 million to only P7 million.

Shortly before he died in a plane crash in August 2012, Robredo told the Manila Standard that the Philippine government had already signed the supply contract and boasted that a “lot of savings” had been generated because the units were priced at P7 million each.

But a 44-page supply contract signed Dec. 14, 2011 by Robredo and Ralpf Schmid, vice president for international sales at Rosenbauer, a copy of which was obtained by the Manila Standard, showed the total contract price was EU20.49 million or about P1.33 billion—which worked out to P17.52 million per truck.

The signing of the P1.33-billion loan agreement was held on the same day that President Aquino issued a “special authority” to proceed, Palace documents show.

“All prices mentioned in this contract (EU20.49 million or P1.33 billion) and payments to the benefit of the supplier (Rosenbauer) shall be made in euro,” the supply contract said.

But import duties and taxes and local transport were not part of the contract price, and these were to be paid by the buyer, in this case, the Philippine government.

Dela Cruz said this clause raised the grand total of the purchase to P1.53 billion or P20.14 million per truck.

The supply contract signing was witnessed by Bureau of Fire Protection Chief Supt. Samuel Perez and Austrian Embassy Commercial Attache Isabel Schmiedbauer.

“We demand that Congress summon Roxas to a Question Hour to explain why, despite the overpricing, the DILG plans to acquire 300 more fire trucks from the same source of the overpriced units,” Dela Cruz said.

“The Aquino administration should conduct a thorough due diligence check and postpone the purchase of 300 fire trucks until the overpricing issue of the 76 units delivered had been resolved,” Zarate added, noting that former Bayan Muna congressman Teddy Casino had already exposed this during the 15th Congress.

“The DILG, the BFP and the contractor should be made to explain first before proceeding with the purchase of 300 additional fire trucks. If there explanations are not satisfactory, if need be, these people should be penalized instead of proceeding with the total purchase,” Zarate said.

Palmones was among the first to question the government’s decision to prefer to import fire trucks in the 15th Congress when the country has a local manufacturer that sold a “tropicalized fire truck” invented by a Filipino entrepreneur at only P6 million to P9 million per unit.

“At the time of the contract signing, Robredo announced that the present value per unit of fire truck was at P7,077,494.34 or P537,889,57 million for the 76 units or 40.37 percent of the total loan amount valued at P1,332,093,100. How come the formula they used made the fire truck appreciate the value to P20.14 million? This is the first time I hear that the value of a fire truck can appreciate instead of depreciate its value over 17-and-a-half years,” Palmones said.

Palmones had filed a House resolution to give priority to local manufacturers but House leaders at the time, mostly members of the Liberal Party, archived the measure.

The Palace documents, particularly those presented and submitted to the President, showed that the Aquino government renegotiated the total contract price at an exchange rate of P65 to a euro.

But when the loan contract was signed on Jan. 12, 2012, or on the same day that the President gave it a go, the prevailing euro to peso exchange rate was pegged at P56.50.

“The President was well aware of the scandalous and anomalous overpricing and onerous loan agreement yet he still gave the go to proceed with the procurement at the expense of the taxpayers as the loan deal and the supply contracts were onerous and caused undue disadvantage to the government,” Dela Cruz said.

In 2012, the highest rate was at P57.68 to a euro on Feb. 24 and the average for the year was P54.28.

The peso weakened to P65 to a euro during the time of the Arroyo administration in 2009 then reached a maximum of P70.89 on Oct. 22, 2009.

In 2011, the highest per euro was at P63.82 in May and the average for the year was at P60.28.

In 2013, the highest was P61.34 on Dec. 30 and the average was P56.38.

“Is it possible that the Palace men may have made a mistake like a typographical error so instead of P56, it became P65 to a euro?” Dela Cruz asked.

“Last time we checked, the euro-peso exchange rate never reached P65 during the Aquino government since 2010 up until now. So where did President Aquino and the DILG get the exchange rate of P65? Because that mistake had cost the taxpayers several millions,” said Dela Cruz, a member of the independent minority bloc in the House, said.

The loan agreement became effective on April 16, 2012 when the prevailing exchange rate was at P56.16 to a euro, Palace documents showed.

The first four shipments were made from October 2012 to March 2013 and arrived in the country starting January 2013 up to May 2013 or before and during the election campaign period with 50 units worth P1 billion distributed to various provinces and fire stations all over the country, Palace documents showed.

The last two shipments, involving 26 units worth P523.64 million, were made starting June 2013 and ended in November 2013, with all six deliveries received and distributed nationwide by Roxas.

Dela Cruz said he could not help but notice that the purchase and distribution nationwide of 76 imported units had been made before, during and after the 2013 midterm senatorial elections under Roxas’ leadership while the next planned 300 units would be made at the onset of the 2016 presidential elections, when Roxas is expected to be the Liberal Party standard bearer.

After President Aquino gave the green light by issuing a special authority to proceed with the signing of the loan agreement, the country’s economic team all endorsed the deal. The Monetary Board approved the project on Feb. 16, 2012 that was affirmed by the Justice Department on March 1, 2012.

The Finance Department, led by Secretary Ceasar Purisima, was authorized to act as the “borrower” on behalf of the Philippine government and the Department of Budget and Management, headed by Secretary Florencio Abad, who was the President’s campaign manager in the 2010 presidential polls, approved the project’s Forward Obligation Authority.

Purisima and Abad were members of the LP and part of the Balay Group headed by Roxas against another faction in the Palace, the Samar Group, led by Executive Secretary Paquito Ochoa Jr.

Taxpayers will be paying the loan for 17.5 years, including the 3.5-year grace period at an interest rate of 1 percent per annum, but with a grant of supposedly 40 percent as a concession from the Austrian government.

The payment period for the principal payments comes in 28 equal semi-annual payments at P47.57 million while interest charges range from a low of P999,069 to a high of P66.66 million.

The Philippine government paid a total of P185.46 million in taxes and duties and P13.32 million in “project administration.” A total of P198.78 million was thus added to the total loan amount of P1.33 billion, bringing the grand total to P1.53 billion.



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