PIATCO FIASCO: GRIM EFFECTS OF PRIVATIZATION!

What is happening now at the NAIA (Ninoy Aquino International Airport), the construction of Terminal 3 in particular, is a clear example of the detrimental effects of the privatization program of the government where ownership and management of public services utilities would be transferred to private entities and/or foreign firms.  

The Philippine International Air Terminals Corporation (PIATCO), the private firm that will construct and manage Terminal 3, is wholly owned by Fraport AG (Operator of Frankfurt airport in Germany), Security Bank and Trust Co., Equitable Banking Corporation, Chuah Hup Holdings Co., and Philippine Airport Ground services (PAGS)--owned by a group of Filipino-Chinese businessmen who have succeeded in cornering a number of lucrative contracts at the NAIA complex ranging from cargo handling, aircraft maintenance to passenger service.

To privatize NAIA, the government has circumvented and rendered inutile the Philippine constitution, fostered graft and corruption, and will force 10,000 NAIA workers out of their jobs. As in the case of other lopsided and onerous contracts that the government had entered into with private entities, (Lopezes and Ayalas for water service and numerous foreign owned Independent Power Producers for electric service), the government would stand to loose more than P1 billion annually as a result of the PIATCO Concession Agreement (PCA) for 25 years.     

With majority of the PIATCO shares owned by Fraport and other entities with Chinese origin, the government had virtually violated the Philippine constitution of 60-40% Filipino-foreign equity ownership. As onerous as it could be, the PIATCO, this early, is already violating the contract when it begun constructing a cargo terminal at the NAIA 3 instead of the stipulated 2.7-km access road to NAIA 2 which, has already an existing cargo terminal. Obviously, PIATCO wants to monopolize and corner the income of the airport, which earned P4.685 billion last year.    

As in other sweet deal contracts with private entities corruption would always be a significant part in the processing and facilitation of the transaction. For one, PIATCO entered into a $2.3 million consultancy contract to a certain Mr. Leongson which PIATCO could not defend during a recent Senate hearing on the issue. Thus, it would not be suprising if the project cost ballooned from $350 million in 1997 to US$500 million as of today owing to the reported overcharging and cost-over runs.  

However, the most ravaging effects would be on the 10,000 workers now working at the NAIA Terminals 1 and 2. Section 3.02(b) of the PCA stipulates that PIATCO’s terminal 3 shall “exclusively operate” the passenger terminal thus, affecting passenger services of Terminals 1 and 2 leading to the grave displacement of its workers. Worse, Section 3.01(e) of the agreement stipulates the “no carry over clause” which, simply means that PIATCO would not recognize, among others, the existing employees contracts of the NAIA 1 and 2, thus, automatically making the employees jobless once PIATCO begins operations come November 2002.  

The PIATCO controversy is a clear manifestation of the bankruptcy and inutility of the privatization program of the government. It did not learn its lesson on the problems brought about by the privatization of water facilities and power industry. It is quite ironic that even if NAIA is a lucrative service enterprise the government would still want to privatize it, ostensibly to relinquish its responsibility and mandate to serve and protect the interest of the people. The government would not mind if it would loose billions of pesos in revenues and witness 10,000 workers die of extreme hunger with their families as long as big foreign and private capitalists are pleased and contented with a very caring and all embracing Philippine government.

The labor groups call on the Arroyo government to rescind the contract and abandon its privatization thrust on one of the most profitable public service facility and secure workers jobs instead of displacing them.

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