Friday, January 04, 2008 COA gripes on BOT projects By Lizanilla J. Amarga
AMID moves to buy-back the Cogon and Carmen public markets, the Commission on Audit (COA) discovered "undisclosed income-generating guarantees" granted by the City Government to the Build-Operate-Transfer (BOT) project proponent UKC Builders, Incorporated for it to recover its investment.
The agency reportedly complained that City Hall is violating the law by "juggling" the funds from its General Fund Main and that of the rental collections from vendors of both public markets.
The two public markets were re-developed by UKC Builders, Inc. under two separate BOT agreements with the former city mayor now Vice-Mayor Vicente Emano.
But recently, Emano and City Mayor Constantino Jaraula are looking into "buying back" the two public markets from UKC Builders, Inc. to control rental rates set and charged supposedly by the project proponent to almost P400 million.
The undisclosed indirect guarantees granted by City Hall is already in addition to the 80 percent share in the projected collection of rental rates for the next 20 years for Carmen Public Market and the next 25 years for Cogon Public Market.
Already, the City Government earlier allotted its own public funds worth P38 million to be given to UKC Builders, Inc. for the 2005 and 2006 operations of the two markets.
It has recently authorized the disbursement of P30 million, also to be given to UKC Builders, Inc. as revenue share for 2007 and a whooping P60 million budget directly guaranteeing the contractor that it has funds should the vendors fail to pay their rents in 2008.
Meanwhile, the COA in its Annual Audit Report 2006 as signed by city auditor Olivia Flores revealed that UKC Builders, Inc. is being allowed by the City Government to recover its investments - P252 million for Cogon Public Market and P119 million for Carmen Public Market - than the 80-20 percent "revenue sharing."
And all these other "indirect guarantees" are similarly contained in the two separate BOT contracts City Hall signed with UKC Builders, Inc. but were not disclosed to the audit agency even after almost three years of operations already.
COA pointed out that aside from the already guaranteed expected and projected 80 percent share in the stall rentals, the BOT agreements allow UKC to manage and operate the communal complex areas of the two public markets along with the third floor for Cogon Public Market and the second floor for the Carmen Public Market among others.
"Income relative to the spaces occupied, managed, and operated by the project operator-proponent was not made known in the contract agreement or even not charged with the facility usage fee in both BOT project," the audit report reads.
The auditors pointed out how "the fact that the proponent manages and operated the commercial complex of both markets, income relative thereto must also be made known to the City Government."
"...Even for record purposes only since the space they are occupying is part of the Total Cost of the BOT Projects which the proponent need to be recovered together with the reasonable return of investment for a certain period as stipulated in the amended agreements, so that reasonableness of rate return of investment can accordingly be computed and assessed," the report reads.
