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Saturday, November 18, 2017

Exporters oppose increase in cargo handling fees

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by Bernie Cahiles-Magkilat

Exporters have opposed the 24 percent increase in cargo handling rates at the Manila North Harbor Port, Inc. (MNHPI) and urged the departments of trade and industry and agriculture to intervene in their behalf.

Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation (PhilExport), said they will call for a board meeting of the Export Development Council (EDC) to formalize their position against the rate increase.

“We will take it up with EDC and protest because it is not only bad timing but questionable,” he said.

On June 25 this year, the Philippine Port Authority (PPA) approved the MNHPI petition for rate hike. MNPHI previously applied for a one-time 37.45 percent increase in tariff in order to recoup their investment at the Manila North Harbor from the time MNHPI took over operations from PPA in 2010. MNHPI is set to invest about P14.5 billion from 2010 to 2035.

Ortiz-Luis said the port operator got already a reprieve when PPA granted an 8 percent increase in January, 2015 in addition to the 10 percent provisionally approved in 2013.

“But the fuel cost has remained low, they did not even invest in the pier’s facility because it was the government that invested, and they there was no additional labor,” Ortiz-Luis pointed out.

In addition, Ortiz-Luis said they were caught unaware of the rate hike saying there was no hearing. They thought that the petition had long been set aside because “everybody protested against in 2015.”

“This policy is making exports uncompetitive,” he said because the bulk of agriculture products especially from Mindanao pass through Manila North, which is the largest port in the country.

Since 2015, MNHPI is imposing a P214.88 cubic meters cargo-handling rate for loose cargoes while a standard 20-foot container is charge P1,545.93. By July 21, the new rate for loose or non-containerized cargo will be P232.07 or P17.19 higher while a 20-foot container will be charge P123.67 higher or a total of P1,669.60.

The said amount of increases will be the same amount that will be imposed next year and on 2019.

Translating its financial impact to the public, it is less than a centavo or P0.004 centavo will be added for a sack of rice passing through the North Harbor, which the PPA believed, is negligible.

But Ortiz-Luis said that 24 percent is still big and will definitely impact on prices of goods to consumers, especially the agricultural products from Mindanao.

“It is bad enough that people are complaining about the high cost of shipping and trucking and now they are implementing another rate hike for cargo handling,” he said. The higher cargo handling fees will further worsen the still high trucking fees, he added.

He also called for a change in the policy setting for cargo handling fees. According to Ortiz-Luis, the PPA should not be allowed to decide on rate petitions by port operators because it gets 10 percent of every increase granted.

“A regulator should not be the one making the rate increase because they are a party of it,” he stressed.

In granting the tariff hike, PPA General Manager Jay Daniel R. Santiago said that MNHPI has so far infused some P5 billion in investments from 2010. However, pursuant to MNHPI’s 25-year concession agreement with PPA signed in 2009, MNHPI is only entitled to apply for tariff increase only after 3 years from takeover and commencement of operations or no earlier than 2013.

“Pursuant to the PPA Board approval of the increase, the 24 percent tariff increase will be implemented in 3 annual tranches of 8% per year, all based on January 2015 rates,” Santiago explained.

“The first tranche will be implemented on July 21 this year and the remaining two tranches will be on July of next year and July of 2019, respectively. The increase will not be on a compounded basis,” Santiago said.

“The staggered implementation and the non-compounded basis are aimed to cushion to impact of the increase to the public,” Santiago added.

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