Philippines urged to rebid broadband project with Chinese firm

MANILA — Senate Minority Leader Aquilino Q. Pimentel, Jr.
(PDP-Laban) today called for the scrapping of the
government’s flawed deal with China’s ZTE Corporation
to set up a $330 million national broadband network
(NBN) to pave the way for the rebidding of the
project.

Pimentel said the controversial deal has become
indefensible and not worth pursuing in view of
revelations that its terms and conditions are grossly
disadvantageous to the government and it was not
subjected to public bidding in violation of Philippine
laws.

“The government should withdraw this contract so that
there will be a public bidding of the
telecommunications project – one that is open and
transparent that will not leave any doubt in the
public mind about the transaction,” he said.

The minority leader said the validity of the NBN deal
between the Department of Transportation and
Communications and ZTE Corp. is under question because
of the lack of public bidding.

Pimentel refuted the claim of DOTC Secretary Leandro
Mendoza that this is a government-to-government
arrangement that supposedly requires no public
bidding.

“In fairness to the ZTE Corp., it was not the
company’s fault that there was no public bidding. It
was the fault of the Philippine government,” he said.

He said the government’s failure to hold public
bidding deprived it of the chance to look into the
track record of the ZTE Corp. and to consider the
offers of other telecommunications firms that may be
more favorable to the government.

Pimentel said there are allegations that the contract
is overpriced because while ZTE Corp. offered to build
the NBN for $330 million, the Amsterdam Holdings Inc.
(AHI) of The Netherlands and the Arescom of the United
States submitted much lower bids of $242 million and
$135 million, respectively.

The senator from Mindanao said an equally damning
reason to dissolve the DOTC-ZTE deal is the fact that
it deviated from the Arroyo government’s own policy to
undertake such telecommunications contract through the
build-operate-transfer (BOT) scheme in which the
contractor will shoulder the cost of the project.

But under this questionable deal, the project will be
funded through a “concessional loan” to be contracted
by the government from China’s Export-Import Bank
payable over a 20-year period.

Pimentel said the financial scheme for the NBN project
proposed by ZTE Corp. is similar to that of the North
Rail Project which is funded by a $400 million loan
from China which several senators have questioned.

He said Malacañang has nobody to blame but itself for
its present troubles over the national broadband
network contract because it has not been transparent
about the project.

Amid the controversy, a DOTC official came out with a
seemingly incredible story that the original copies of
the DOTC-ZTE Corp. agreement on the NBN project were
lost in a hotel hours after it was signed by Secretary
Mendoza and ZTE vice president Yu Yong on April 21,
2007 in Boao, Hainan province, China in the presence
of President Gloria Macapagal-Arroyo.

Pimentel said the mysterious incident has given rise
to suspicion that the contents of the agreement have
been altered to make it less unpalatable.

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