11 FEBRUARY 2008
P C I J I N V E S T I G A T I O N — ODA SURGE SPARKS SCANDALS FOR ARROYO, DEBT WOES FOR RP
As initially conceived by the DOTC and the Commission on Information and Communication Technology (CICT), a major NBN component was to provide Internet connection to 23,549 schools nationwide. This was on top of a telecommunications network linking close to 2,300 national government offices.
The Chinese government, however, refused to finance the education component, dealing the project a potentially fatal blow. The NEDA staff had estimated that economic return on the project would fall from 20 percent to only 13.01 percent, below the 15-percent hurdle rate, if the schools’ Internet connection were taken out of the project.
To keep project returns above 15 percent, DOTC and CICT proposed to substitute exactly 23,549 municipalities and barangay offices for the schools that would be taken out of the project. The NEDA-ICC Technical Board and Cabinet Committee, in a joint meeting on March 26, 2007, agreed with the project proponents.
“The option to provide connectivity to local government offices such as barangay offices may be explored, so as to optimize utilization of the NBN infrastructure,” the NEDA-ICC Technical Board and Cabinet Committee concluded, according to the meeting’s minutes.
NEDA’s evaluation report showed that benefits, consisting largely of savings in government’s phone, Internet and mobile expenses, are higher than costs over the next 15 years or so.
But in estimating savings, the NEDA staff largely adopted the optimistic assumptions of the project proponents. For example, all schools or offices covered by the project that do not currently spend for Internet access are assumed to have Internet connection through a private Internet service provider.
Even Neri found the assumption too optimistic and questioned it in one of the meetings of the NEDA-ICC Technical Board and Cabinet Committee. “Savings in Internet connection cannot be considered as a benefit given that the government does not have much Internet connection,” Neri had pointed out, according to minutes of the meeting.
Too bad Neri did not pursue the point further. It could have made all the difference in how the public and his former colleagues should regard him now.
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