MANILA, Philippines?The business community Monday hailed the entry of Metro Pacific Investments Corp. (MPIC) into the business of operating the Manila North Harbor Port, saying this will improve service and help put pressure on the neighboring international container terminal and South Harbor to lower their rates.

MPIC is led by Philippine Long Distance Telephone Co. chief Manuel V. Pangilinan.

?It?s better for the country [to have] more competition. For those shipping cargos, it will impact on the rates and benefit stakeholders. It?s better if there are more vendors on the street, and if there are more service providers,? said Astro del Castillo, managing director at First Grade Holdings.

The consortium of MPIC, the local infrastructure holding company of First Pacific Co. Ltd. of Hong Kong, and Harbour Centre of the Romero family announced on Sunday that the joint venture had passed the two-year rigorous prequalification and bid process conducted by the Philippine Ports Authority.

The consortium submitted a P14.5-billion investment proposal for the modernization of the North Harbor port in Tondo, Manila.

In a disclosure to the Philippine Stock Exchange Monday, MPIC announced that after a 15-day post-evaluation process, the PPA was expected to give a notice of award to the consortium, the lone group that qualified to bid for the 25-year contract to modernize and operate the port.

Jose Mari Lacson, head of research at Campos, Lanuza & Co., said the immediate impact would likely be on volume rather than pricing, as it remained to be seen whether Harbour Centre would compete head-on with the container business of the older players.

Harbour Centre CEO Michael Romero said the project would improve the image of Manila and the Philippines as the project would raise more than P6.8 billion in revenues for the PPA over the next 25 years and reduce port rates at an average of 10-15 percent.
Boosting competition

The entry of the Pangilinan group in the port business is expected to boost competition in this sector and may put pressure on rates charged by long-established players International Container Terminal Services Inc. (ICTSI) and Asian Terminals Inc. (ATI).

ICTSI is led by businessman Enrique Razon, while ATI is led by Australia-based P&O Ports and the group of Eusebio Tanco.

Del Castillo said there was a lot of interest in the port business because of the good prospects once the domestic and global economy turns around.

On Monday, for instance, the stock market posted its best performance this year as investors cheered comments from the US Federal Reserve chief that the US recession may be ending.

Access to NLEx

Lacson said the entry of MPIC in port operations was in line with its infrastructure business, as Manila?s North Harbor could be the only port that would have access to the North Luzon Expressway (NLEx).

A unit of MPIC holds the concession to operate NLEx. Recently, it unveiled plans to put up new toll roads linking the expressway to Letre, Malabon, a gateway to the port area.

Lacson said it could be cheaper for goods landing in Manila going all the way to Clark using the MPIC?s network of roads.

?Port operations are still regulated but I guess you could say that it?s being liberalized now. There?s more competition here in terms of having a third player,? he said.

With parent First Pacific coming from Hong Kong where the big conglomerates are into port businesses, MPIC may start with ?something small? and work its way from there, according to Lacson.

Long overdue

Romero said the North Harbor modernization plan had been long overdue.

He said about 1,000 laborers at the harbor would be absorbed by the consortium and the collective bargaining agreement of the four labor unions would be upheld.

Some 5,000 more jobs may be generated due to the construction and development of North Harbor.

The consortium is expected to invest in Information Technology equipment and systems to ensure efficient and accurate data transfer. Investment cost is placed at almost P1 billion for the IT systems.

The consortium is also committed to invest heavily in equipment, such as shore and gantry cranes, a fleet of chassis trucks and forklifts.

Ro-Ro container, vessels

One terminal of the port will provide roll-on, roll-off (Ro-Ro) container and passenger vessels.

Another will offer container and passenger vessel services while a terminal will be used for conventional, non-containerized, bulk or break-bulk vessels and passenger ships.

Diversification

The venture marks a diversification by MPIC?which is now into toll roads, water distribution and hospital businesses?into a new business line.

The involvement of Reghis Romero II in the project has had its share of criticisms over the years.

Former Socioeconomic Planning Secretary Romulo Neri, now president of the Social Security System, had earned the ire of ICTSI chair and president Enrique Razon for his advocacy of liberalizing Manila?s port services.

Neri was not available for comment Monday.

Overpriced

In a privilege speech in 2004, Rep. Eduardo Zialcita (Lakas, Parañaque) claimed that the rates of ICTSI and ATI were ?grossly overpriced.?

Zialcita alleged that the PPA had dragged its feet in giving the Harbour Centre consortium a permit to handle foreign containerized cargo to protect the two existing players.