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Monday, June 24, 2024

Kaliwa Dam uproar; Dubious steel imports

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The controversy over the bidding of the Kaliwa Dam project refuses to ebb.

The Metropolitan Waterworks and Sewerage System, hounded by accusations from the Commission on Audit that it committed irregularities in the bidding and vetting procedures for the New Centennial Water Source-Kaliwa Dam project, is fending off more allegations.

The Senate committees on cultural communities, public works and finance has found out in a recent hearing that the dam project failed to obtain the consent of the indigenous peoples, a requirement under the Indigenous Peoples Rights Act of 1997. Senator Imee Marcos concurred the IPs opposed (the project) and that no consent was obtained from them.

Civil society and non-government organizations have supported the call of the Agta-Dumagat-Remontado tribes in Quezon and Rizal provinces demanding the cancellation of the Kaliwa Dam project.

Earlier, the COA recommended an “immediate” investigation into findings that three shortlisted contractors for the China-funded Kaliwa Dam might have been qualified to participate in the bidding process “despite shortcuts made as per the pre-qualification requirements of the MWSS.”

The project involves the building of a dam at the Kaliwa River (Laiban Dam), and a downstream dam (Kaliwa Dam) in Tanay, Rizal to solve Metro Manila’s worsening water supply situation.

COA’s investigation came on the heels of President Rodrigo Duterte’s complaint during his 4th State of the Nation Address, when he expressed frustration over corruption within the government and his promise to use the remaining three years of his term to curb it.

COA said the three Chinese companies that the MWSS’ Technical Working Group (TWG) qualified to participate in the bidding did not meet the requirements under three categories: design engineering experience, construction experience and single largest completed contract. 

A public hearing held at General Nakar, Quezon, meanwhile, revealed that MWSS representatives reportedly changed the specifications of the project, lowering the planned dam’s height from 73 meters to 60 meters, in an attempt to placate sectors opposed to the Kaliwa Dam.

But a change in the dam height will involve a revision in the price of the Chinese contract. A different dam height should also be re-tendered among the previously qualified tenderers, or the newly invited tenderers, following the country’s procurement regulations.

Technical smuggling

A separate controversy is plaguing the steel sector. 

The Presidential Anti-Corruption Commission is investigating allegations of corruption between several big steel manufacturers and officials of the Bureau of Customs, who may have deprived the government of billions of pesos in tax revenues, including penalties for improper import declarations.

PACC chairman Dante Jimenez told a morning radio program his office had brought to the attention of Trade Secretary Ramon Lopez reports that large scale “technical smuggling” had been taking place over the past 10 years due to the alleged collusion between BOC officials and large steelmakers. 

“Aside from the smuggling allegations, there are also questions regarding the quality of steel, how this affects safety and the lives of people… these are all the subjects of an ongoing investigation by the PACC,” says Jimenez.

Jimenez concedes that the case, which involves steelmakers clearing their products at the customs point of entry despite discrepancies in the documents “may be bigger than the cigarettes smuggling and tax evasion issue two years ago.” 

Senator Panfilo Lacson earlier raised the alarm on the billions of pesos the Philippines could be losing annually to tax leakages from imports. Steel contributes a significant portion of Philippine industrial imports.

Citing World Bank data, Lacson said the Philippines may have lost P32.18 billion worth of value added taxes in 2017 alone due to ‘under-declaration.’ 

Industry sources said the PACC obtained documents detailing how the country’s largest steelmaker imported two million tons of steel billets last year, and may be responsible for over half a trillion pesos worth of lost revenues for the government due to systematic mis-declaration of import figures.

The PACC suspects that big steel importers, in collusion with BOC officials, have been manipulating the HS codes (the universal code for export and import goods). Specifically, the steelmakers have been describing the imports of cast and prime steel billets used for steel manufacturing as Grade 60 when in fact, the orders under the same code are a mix of Grade 40 (5sp) and Grade 33 (3sp). This allowed them to allegedly misdeclare the imported billets at a lower value.

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