RP,  CHINA  SIGN  $1.8-BILLION  LOAN  FOR  ZTE,  OTHER  BIG  PROJECTS

MANILA, AUGUST 27, 2007
(STAR) By Paolo Romero - The Philippines and China have inked a $1.8-billion loan agreement to finance big-ticket projects in the country, including the controversial $330-million National Broadband Network (NBN), officials said yesterday.Trade Secretary Peter Favila said the signing took place without fanfare on the sidelines of the ASEAN Economic Ministers (AEM) meeting held at the Shangri-La Hotel in Makati City on Saturday.

Favila said the agreement was signed by Department of Finance (DOF) officials and representatives of the China Export and Import Bank.

He said he represented the Philippine government together with Finance Secretary Margarito Teves and Transportation Secretary Leandro Mendoza in the signing with Chinese Minister of Commerce Bo Xilai who attended the AEM.

Favila said the loan facility was higher than expected and during his bilateral meeting with Bo at the AEM, the Chinese official indicated that the Philippines could expect more if warranted.

“This loan facility is a clear manifestation of China’s commitment to help us. Now it is up to us if we want to be helped,” Favila told The STAR.

Favila stressed the main architect of the package was the DOF.

Favila was designated minister-in-charge or the government’s point man for business in China with Bo as his counterpart for ease in coordination.

He said the facility was also one of the outcomes of the economic cooperation pact earlier signed between the two countries.

Favila claimed the terms were “very concessional” but did not elaborate and referred the issue to DOF officials.

The agreement already includes funding for the $450-million CyberEducation program and the NBN project with ZTE Corp. of China, as well as for the Northrail and Southrail projects.

The Northrail and Southrail projects are proceeding smoothly while the NBN, which would link all government agencies and offices, is facing stiff opposition from rival proponents and some lawmakers.

“The minister said the facility is for projects the government would like to nominate and it would be discussed if they would be qualified,” Favila said.

Favila though admitted numerous government agencies and departments have been lobbying for their respective pet projects for funding by the loan agreement. “They’re (projects being pushed) so many,” he remarked.

Mendoza, the chief proponent of the ZTE contract, earlier said the Department of Transportation and Communications (DOTC) is just awaiting the results of the DOF negotiations with the China Eximbank for the deal to finally push through.

Mendoza claimed they were able to secure a favorable opinion from the Department of Justice (DOJ) in saying the memorandum of agreement signed between the DOTC and ZTE in Boao, China last April was a government-to-government deal, which means that no bidding is required for the NBN project.

The deal took a mysterious twist after DOTC Assistant Secretary Lorenzo Formoso admitted losing the originals of the signed documents. He claimed the documents were stolen from a hotel room of a Philippine diplomat shortly after the signing.

Officials said the DOTC managed to reconstitute the missing contract.

Favila admitted Mendoza’s presence at the signing practically meant the ZTE deal will finally be implemented.

Among those opposing the contract is the US-based Arescom, and Amsterdam Holding Inc. (AHI), a local firm owned by Jose de Venecia III, son of Speaker Jose de Venecia Jr.

The two firms contended the ZTE deal was onerous, violated the Built-Operate-Transfer (BOT) laws and unconstitutional because similar contracts should have gone through a public bidding.

The two firms also claimed they have submitted much lower bids.

AHI, however, asserted their proposal was superior since it does not require a loan, much less a sovereign guarantee, since it would be fully privately funded.

Iloilo Vice Gov. Rolex Suplico earlier filed a petition before the Supreme Court against the DOTC to stop the deal.

Favila said the controversy over the ZTE contract was briefly touched during his meeting with Bo who appeared unfazed over the opposition.

He said Bo expressed full support of the NBN project and pointed out ZTE and its rival Huawei, a partner of AHI for its own proposal for broadband project, are actually top caliber companies in China on good standing with experience in countries all over the world.

“I think he (Bo) understands that we have some domestic processes and he did not appear worried at all,” Favila said.

AHI counsel Marinelle O’Santos, for her part, claimed she was not aware of the signing but expressed alarm that such a move has been made.

“Up to now, nobody has seen a copy of the (ZTE contract). I think the Filipino taxpayers would want to know what kind of debt they are shouldering and going to pay for the next 20 to 25 years,” O’Santos said.

She debunked claims from Mendoza that anyone who would formally write to the DOTC would get a copy of the supply contract it signed with ZTE.

O’Santos claimed writing to Mendoza and Formoso for a copy of the deal but the request had been ignored.


Chief News Editor: Sol Jose Vanzi

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