Sunday, July 06, 2008 Opposition hits Agora BOT bid
ON THE process of re-acquiring two multi-million markets with borrowed funds, local officials in Cagayan de Oro are now gearing to enter yet another P250 million Build Operate and Transfer (BOT) agreement to reconstruct another market.
Opposition figures in the City Council have decried the plan, saying it smacks of “stubbornness” and “lack of judgment” on the part of the administration for its alleged failure to recognize that almost all BOT projects ended with the city losing millions in subsidies.
Councilor Reynaldo Advincula, chair of a taskforce overseeing the city’s public markets, said the “redevelopment” of the market and public utility vehicle terminal facilities will commence once the “buy-back” of Carmen and Cogon markets becomes final.
“The redevelopment of Agora market and passengers’ terminal facilities is on the pipeline and the private proponent will start construction after the city assumes operations of Cogon and Carmen markets,” Advincula told Sun.Star Cagayan de Oro in a phone interview.
The plan calls for a P250-million construction of Agora’s facilities to be undertaken by businessman Hong Sy under a BOT scheme.
Councilor Teodulfo Lao, an opposition member, said embarking on another multi-million BOT project similar to the losing Cogon and Carmen markets “reeks of “recklessness and lack of foresight”
Since 2005, the local government has subsidized both markets at P170 million, records from the City Treasurer Office disclose.
The subsidy scheme has been repeatedly questioned by the Commission on Audit (COA) on the grounds that BOT projects are supposedly free of any monetary obligations on the part of the local government.
“The administration thought it has solved the high rental rates in the two semi-private markets by buying them back for hundreds of millions from bank loans. Now it is saying that it will again enter into another trouble by constructing a multi-million market using the same time-tested disadvantageous BOT formula,” Lao said.
But Advincula said: “Rehabilitation of Agora market and terminal is badly needed. The market is already dilapidated and there is a pressing need to modernize the passengers’ terminal.”
Lao and two other councilors opposed last month a measure that gave Mayor Constantino Jaraula the green light to negotiate a P377 million buy-back for Cogon and Carmen markets—both at their infant BOT stages.
Lao and his two colleagues—opposition Councilors Roger Abaday and Zaldy Ocon—also voted against an earlier measure that gave the mayor authority to borrow P500 million from the Veterans Bank to fund the buy-back.
The three argued that both measures were disadvantageous to the City Government and tended to favor the contractor UKC Builders.
For his part, Abaday advised administration officials to let the questioned Cogon BOT contract decided in court first before undertaking another project of similar character.
The case, which is now pending at a regional court, was filed by several vendors in 2005, arguing that the BOT contract was onerous.
Meanwhile, City Ordinance No. 2008-148 provides for a buy-back price of P267,673,800.77 for Cogon market and commercial complex—completed in 2005 at a cost of P252,487,477.20 and has a BOT lifespan of 25 years. Carmen market and commercial complex which was finished in late 2003 at a cost of P118,006,529.81—covered under a 20-year BOT term—will be bought for P109,331,552.43.
Mayor Jaraula explained that the increment to the buy-back prices of both markets would cover “reasonable cost of money incurred during their construction.”
For his part, Vice Mayor Vicente Emano said the re-purchase of the two markets would solve the predicament of stallholders who are grappling with rising rental fees.
