PPA hikes cargo handling tax for North Harbor

posted June 25, 2017 at 12:01 am
by  Rio N. Araja
Despite protests from all major clients of Manila North Harbor, the Philippine Ports Authority has approved a 24 percent increase in the cargo handling tariff for the Manila North Harbour Port Inc., a move that an umbrella group of consumer stakeholders said was unjustified and would lead to higher cost of goods.

PPA's technical working group made the recommendation to approve the tariff hike even after receiving position papers from Manila North Harbour clients opposing the upward adjustment.

The increase was upheld by PPA general manager Jay Daniel Santiago through Memorandum No. 4.

“The members of the technical working group are going against what President Rodrigo Duterte had laid down in his 10-point socioeconomic, which is to increase business competitiveness, attract investments, and protect Juan dela Cruz from economic shocks,” United Filipino Consumers and Commuters president Rodolfo Javellana Jr. said.

“Consumers will ultimately bear the brunt of this tariff increase because traders will just pass on the added costs to the public. The public will always be at the losing end. MNHPI says it wants to upgrade its facilities to justify the tariff increase, but they want consumers to pay for their upgrade. It is as if MNHPI wants to be the only one who benefits from this setup and the technical working group sided with them,” Javellana added.

Javellana also slammed the double profit that San Miguel Corp., which holds majority share of MNHPI through Petron Corp., will enjoy with the tariff adjustment.

“This adjustment serves two purposes: on one hand, tariff increase for MNHPI, and on the other hand, more profit for Petron because of what they claimed to be increases in fuel cost. That is double profit for Petron and a double-whammy for all consumers,” he said.

“The technical working group that recommended the approval of the tariff increase is aware of this. In fact, during the consultations held by the PPA, almost all stakeholders have opposed the plan of MNHPI. Yet PPA still favored the increase,” Javellana said.

In his memorandum, Santiago said the upward adjustment will be implemented in three tranches.

The first tranche of eight percent from MNHPI's January 2015 tariff rates will take effect this year, while the two succeeding tranches of eight percent increase each will be implemented in 2018 and 2019, respectively.

Javellana said MNHPI virtually has a monopoly on domestic trade, which means it should actually reduce cost rather than increase it.

“It is unfair and unjustified for a monopoly like MNHPI to be allowed to impose upward tariff adjustments. Port stakeholders have no choice but to transact business with them,” he said.

Various port stakeholders have earlier slammed MNHPI's original petition for a 37.45 percent tariff hike.

The Philippine Inter-Island Shipping Association rejected the claim of the port operator that it needs to adjust cargo-handling tariff to compensate for the "upward trend in cost drivers" and the increasing cost of operating Manila North Harbour.

"For every increase incurred for any cost driver reflected as expense, computed per twenty-foot equivalent unit [TEU], there is already a proportionate revenue earned to compensate such costs incurred by the port operator," PISA said.

The group said statistics from the PPA would show that MNHPI's net income has been steadily increasing from P305.7 million in 2013 to P332.6 million in 2014.

MNHPI has listed labor, fuel and power rates as among the cost drivers to justify its tariff hike petition.

But the Philippine Liner Shipping Association said the fuel and power consumption MNHPI was "alarming" at the very least and should trigger an audit instead.

PLSA said the port operator's "remarkable" increase in fuel consumption—55 percent from 2012 to 2013 and 78 percent from 2013 to 2014—could mean "inefficient" fuel use.

Within the same period, MNHPI's power consumption also increased by almost 2 million kilowatts, or a 103.12 percent hike in power cost per TEU.

PLSA also raised the alarm against possible increase in prices of consumer goods if the MNHPI tariff increase is approved.

Using 2014 PPA statistics, additional annual cost of stevedoring for PLSA members alone will reach P118.78 million.

In addition to stevedoring, other cargo handling rates, which may eventually be passed on to the shippers were wharfage, cranage, storage, stuffing and shifting, among others.

Topics: Manila North Harbor , Philippine Ports Authority , PPA , cargo handling tax , Manila North Harbour Port Inc.
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