* This is my column in BusinessWorld last October 22, 2018
Two weeks ago, I traveled from Manila to North Luzon by
bus. Going up via NLEx, SCTEx, Tarlac, Pangasinan, La Union, Ilocos Sur, Ilocos
Norte, finally to Gonzaga, Cagayan. I went there to visit a friend, also gave a
talk on TRAIN law and inflation at Cagayan State University (CSU) Gonzaga
campus. Going back I took the Cagayan Valley route, passed Isabela, Nueva
Vizcaya, Nueva Ecija, SCTEx, NLEx.
Among my observations in that nearly 1,500 kilometers
trip are (1) too many motorcycles and tricycles now in the highway except
tollways, and (2) lots of palay or corn are still dried on the highway
especially in Cagayan-Isabela, these slow down overall speed of regular
vehicles and may cause accidents. There is a need for more tollways around
North Luzon and by extension, down to South Luzon, big provinces in Visayas and
Mindanao.
The subject of private tollways and Public Private Partnership
(PPP) was discussed in a roundtable forum on “Unsolicited PPP Proposals”
jointly organized by the Stratbase-ADRi and the PPP Center last Oct. 15, 2018.
Among the speakers and reactors were Mr. Ferdinand Pecson, current Executive
Director of the Center, Ms. Cosette Canilao, former Executive Director of the
Center, Dr. Epictetus Patalinghug, Prof. Emeritus of UP College of Business
Administration, Mr. Romulo Neri, former NEDA chief, and Mr. Jimbo Reverente of
NAIA Consortium.
Dr. Patalinghug expressed reservations on unsolicited PPP
because of lack of competition, lack of transparency, and this leaves room for
corruption. The original proponent can match the best offer, which may
discourage further participation in the Swiss challenge.
I still support unsolicited PPP for at least two reasons.
One, government officials especially in DPWH, DoTr and OP are constrained by
their six-years term so the solicited PPP projects they will identify will
likely be aligned with their business partners before or after their term which
is a long-term engagement. And two, there are too many potential projects
nationwide that many investors with long-term exposure on certain provinces and
regions can think of.
Among the PPP projects that I think should be prioritized
is the construction of long and elaborate tunnels under the mountains going up
to Baguio City (via Kennon Road is 33.5 kms., via Aspiras–Palispis Highway or
Marcos Highway is 47.2 kms). Then the mountainous Dalton Pass connecting Nueva
Vizcaya and Ecija provinces. Buses and cars are crawling on those roads
(especially in Dalton Pass) as there are many big, long and heavy trucks,
sometimes tricycles, negotiating the climbs and curves.
It will be a partnership between mining firms and tollway
firms. The cost of construction and, hence, the future toll rates will
significantly decline because mining firms will get all the rocks and minerals,
metals and non-metals and, hence, will contribute big money for such extraction
and tunnel boring.
The advantages of these projects are (1) safety:
accidents and deaths due to landslides, cars and buses falling off deep cliffs
and mountains will be eradicated; (2) faster travel time: there will be no
intermittent landslides blocking roads, tricycles and bicycles on the roads;
and (3) huge employment generation in mining and construction.
Anti-open pit mining environmentalists who love to travel
across the country can support this as this is tunnel mining, not open pit, and
it will quicken their travels.
For mining companies, this is an opportunity for them to
join big PPP infrastructure projects while retaining their core business. Many
metallic products retain their high prices compared to a decade ago, like gold,
silver and lead (see table).
For toll road companies, this is a good exposure to the
engineering skills and machineries of miners in boring deep, long distances.
Meanwhile, the newly proposed mining tax bills in
Congress tend to be more extortionary. TRAIN law has raised the mining excise
tax from 2% to 4%, the new bills will impose variable royalties on mining
margins of 1-5% for firms outside designated mineral reservations.
These policies do not recognize the job creation,
community development, high taxes paid, and soon toll road-tunnel development
functions of mining. Government should step back from more taxation.
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See also:
BWorld 252, Mining, Itogon and Lee Kuan Yew, September 25, 2018
BWorld 258, Corrupted science to justify renewables cronyism, October 13, 2018
BWorld 259, Inflation, fare hikes and TNCs competition, October 17, 2018
BWorld 260, Oil tax hike suspension and newbie electricity companies, October 20, 2018
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