HOME - MB.COM.PH - The Manila Bulletin = ONLINE

Documents obtained by the Manila Bulletin yesterday showed that = all the=20 claims of Blue Crown Marine and Hydro Services, Inc. from the PPA = as far=20 back as March 1999, as a result of a 15-month delay in turnover, = was=20 settled recently by the new PPA leadership.

=93All parties have been satisfied in this compromise agreement = with Blue=20 Crown. The PPA can now look forward with a clearer view of its = objective=20 to modernize North Harbor,=94 said PPA general manager Alfonso = Cusi.

The Blue Crown Contract

The Blue Crown contract, signed with the PPA on Feb. 17, 1998, = was the=20 result of the privatization of the water distribution system in = the North=20 Harbor and provided that government paid the private firm a fixed = fee of=20 R4.9 million per year, representing a consumption of 1.8million = cubic=20 meters at the rate of R2.72 per cu. m.

However, due to the repairs undertaken by the PPA at the = harbor, Blue=20 Crown was unable to immediately operate, losing 15 months of = potential=20 income.

Furthermore, engineering works done at the Marine Slipway = (Terminal 17)=20 did not support contract specifications, thus, adversely affecting = Blue=20 Crown=92s sales volume to the point that the PPA guaranteed volume = of=20 1.8-million cu. m. a year was never attained.

Although the original contract was revised after Blue Crown = filed a=20 case of breach of contract against the PPA before the a Manila = Regional=20 Trial Court (RTC), the settlement terms still did not cover Blue = Crown=92s=20 losses and claims, as shown in its audited financial statements = for 1999=20 to 2001.

PPA cuts just deal

Upon careful review of the original and revised contracts of = Blue Crown=20 with the old PPA management, the new PPA leadership drafted = compromise=20 terms with Blue Crown, partly to avert a long-drawn legal battle = that=20 would have needlessly jeopardized major port works at the North = Harbor,=20 under the MSW Improvement Project and the NH=20

Modernization Project.

The P44.18-million settlement was approved recently in = Resolution No.=20 1927 as agreed in the last PPA Board meeting, said Cusi, adding = that Blue=20 Crown, for its part, waived their demand for a refund of their=20 pre-operating expenses amounting to P10.1 million.

=93The amount (of P44.18 million) is computed based on the net = present=20 value of the stream of minimum income that Blue Crown is = guaranteed under=20 its contract,=94 Cusi said.

As for government, the PPA will still operate and earn from the = water=20 system without prejudice to the privatization of the services, = under the=20 scheduled implementation of the North Harbor Modernization = Program.

Likewise, the PPA is now enabled to cut on operational costs = and is=20 assured of a full, rehabilitated and tested water distribution = system.

=93But most importantly,=94 Cusi said, =93the deal makes the NH = Modernization=20 Project free from any encumbrance because of the Blue Crown = contract.=94

This means that the privatization of the water distribution = system,=20 which is a component of government=92s modernization program for = the ports,=20 will not be tied down to the Blue Crown contract.