Bangon Marawi? Rush to seal deals
locked in delay, confusion, funds lack

SINCE last May, the task force leading the government’s efforts to rebuild the Islamic City of Marawi in Lanao del Sur has been setting and resetting groundbreaking rites for a multibillion-peso, 22-component project under its “minimum scope of work” in the 250-hectare “conflict zone” or the city’s “most affected area” (MAA).

Task Force Bangon Marawi (TFBM) has rescheduled the groundbreaking rites for seven times now. The latest target date for the event is this September 19. By the Task Force’s record of extended negotiations in the last 10 months, however, the chances of that pushing through are slim. Unfortunately, that would mean that the 350,000 residents displaced and dispossessed by a war not of their own choice or liking may have to wait some more before their city is able to rise again and their lives can return to normal.

Amid the impatience and disgust of the displaced Meranaw, the Task Force is reportedly poised to announce shortly a strategic shift in its procurement mode to fast-track projects for Marawi’s MAA.

Instead of submitting all 22 components of the “minimum scope of work” for Marawi’s ground zero to a joint-venture agreement (JVA) with a private consortium, the Task Force may soon conduct a negotiated procurement for two urgent components: debris management and road infrastructure.

In a series, 12 other components deemed to be “non-income generating” will be bidded out, also via negotiated procurement. That would mean leaving only eight components deemed to be “profitable” or with some promise of income, to be covered by the JVA with the private consortium.

But money, billions of it, which government must guarantee would be available and be covered with budget authority, is the first requirement of the shift to negotiated procurement. Marawi’s MAA projects have no allocations as yet in either the current 2018, or in the proposed 2019, national budgets.

The options are few: public funds will have to be re-aligned for Marawi’s MAA projects from elsewhere, or a supplemental budget might have to be submitted and passed by Congress. Either way, Marawi’s displaced and dispossessed might have to brace for further delays.

“This is not delay, we are just updating indicative, tentative timelines,” TFBM chairman Eduardo del Rosario insisted in an interview with PCIJ. “We are doing everything possible.”

“We will still meet the deadline for the projects to be completed until last quarter of 2021,” he also said.

Fifteen months ago, on May 23, 2017, President Rodrigo R. Duterte had launched massive military operations against Islamist militants in Marawi. By “liberation day” six months later, the 8,407-hectare home of the Meranaw had been carpet-bombed, reduced to a hamlet of about 10 to 15 million tons of debris, a wasteland. More than 1,000 lives were lost, including those of at least 47 civilians.

The government pledged to do its best to rebuild the Islamic city and help it recover in the quickest time possible. It even convened an inter-agency task force for that purpose in June last year while the fighting was still going on, before replacing it with the TFBM four months later.

But nearly a year after the conflict ended, Marawi remains in ruins. In the meantime, the selection committee tasked to choose the entity to undertake the project is mired in major issues that divide or confound its seven members – among whom is the TFBM head — its consultants from the Public-Private Partnership Center (PPP), and the Office of the Government Corporate Counsel (OGCC).

‘Quick but legal’

The seven-person Bangon Marawi Selection Committee (BMSC) also serves as the bids and awards committee of TFBM. It is authorized to conduct negotiations and select private partners for the joint venture envisioned in the Marawi rehabilitation project.

“Quick but legal” – that is the goal, BMSC head Falconi V. Millar had told PCIJ.

The committee’s speed in accomplishing its work, however, has been hindered by one worry after another, topmost of which is whether or not to revise the procurement guidelines and scope of work it had prescribed and set out to enforce.

Option 1 is to include all 22 components of its original “minimum scope of work” in a joint-venture agreement (JVA) with a private consortium as its guidelines so state. Option 2 is to go not only for a combined JVA with a private consortium for the eight “profitable” components, but also a negotiated procurement for 14 other components with little or no promise of future income. That change in scope of work, though, would certainly require funding by government for the 14 “non-profitable” components if these would be submitted to negotiated procurement.

No budget cover

The Task Force has not enrolled these components as expenditure items in the proposed 2019 general appropriations act, however. It would not thus be unable to request or provide budget cover for them, unless it could move Congress and heaven and earth to secure supplemental funding before yearend.

This year, only PhP10 billion has been allocated for projects outside Marawi’s conflict zone. In the proposed 2019 general appropriations act, only PhP3.5 billion has been proposed for projects to rebuild Marawi (a portion of the budget for the National Disaster Risk Reduction and Management Council) apart from PhP1.5 billion more for the reconstruction of military camps.

The total funding required for Marawi’s full revival in the next five years, however, has risen and fallen from an initial estimate of PhP51.64 billion last February to PhP70.42 billion and then PhP73.42 billion in June, to PhP62.26 billion in July, and PhP86.4 billion this month, according to statements of NEDA and TFBM officials.

In all, until 2022 — according to a master plan that the government seems to keep revising and updating to this day — Marawi would need about PhP47 billion for projects outside the conflict zone, about PhP17.2 billion for projects in the MAA, PhP20 billion in compensation for the properties destroyed in the siege (excluding PhP882 million specifically for mosques), and PhP1.2 billion for livelihood. The master plan is a virtual shopping list of “800 priority programs, projects, and activities” that would be implemented by various departments and agencies.

At a press conference last June, the National Economic and Development Authority (NEDA) said that the hefty bill that Marawi requires includes PhP26.15 billion for physical infrastructure; PhP5.87 billion for social services; PhP10.38 billion for housing settlements; PhP7.77 billion for livelihood and business development; PhP1.25 billion for local governance and peace-building; and PhP2 billion for land resource and management. The MAA projects to be covered by a separate JVA are not included as yet in this budget breakdown.

Financing for the projects will reportedly come from public funds, grants and donations from national and multilateral donor agencies, Official Development Assistance (ODA), and the float of “Marawi Bonds” that is still on the drawing board of the Department of Finance.

National Treasurer Rosalia de Leon had told PCIJ earlier that the government was thinking of pegging the “Marawi Bonds” as partial compliance with the Agri-Agra Reform Credit Act of 2009 (Republic Act No. 10000), which requires private banks to allocate up to 25 percent of their loanable funds for the agri-fisheries sector, including agrarian reform beneficiaries. De Leon added, though, that government has yet to pitch the “Marawi Bonds” concept with the banks, and it might take months or until next year to finalize it before any launch schedule could be announced.

On July 16, Finance Secretary Carlos Dominguez in a press statement had also said that the government was thinking of issuing the bonds in several tranches as retail treasury bonds “so that people will really feel that they are participating in the rebuilding of Marawi City.”

“The tenor of the bonds would depend on market conditions and the issuance might be PhP10 billion a year, with the government probably end(ing) up raising maybe PhP40 billion of the PhP62-billion total rehabilitation cost,” Dominguez said.

Inertia, inexperience

Money, however, is not the only problem the BMSC has to deal with when it comes to Marawi’s MAA projects.

Indeed, inertia hounds BMSC’s work in part because of the lack of experience in the procurement of general construction and civil-works projects by a majority of the seven BMSC members who include loyal, long-term Duterte associates.

Task Force chair del Rosario (who is also Housing Secretary), for example, is a retired general who knew Duterte from 1983 when he was an Army lieutenant and later Task Force Davao commander in 2000. Del Rosario had also served as secretariat head of the National Disaster Risk Reduction and Management Council.

National Housing Authority (NHA) Administrator Marcelino P. Escalada Jr. — who had served with Duterte since 1995 as human-resource officer, special-projects head, planning and development officer, and city administrator of Davao City – meanwhile will sign on to the contract with the MAA contractor.

By mandate, NHA and the housing agencies under del Rosario have expertise largely in “housing finance, housing regulation, housing production, and institutional development.” See related story here: “A majority of Duterte allies will pick Marawi’s ground-zero contractor”
Unruly rules

The problems faced by the Task Force and the selection committee are far more complicated, and have included rules that have had to be revised and now reviewed for possible splitting of the 22 components of the scope of work for the MAA contractor.

Duterte’s Executive Order No. 49 dated Feb. 5, 2018 had exempted the Marawi conflict zone project from NEDA’s Guidelines on JVAs supposedly “to expedite the implementation of recovery, reconstruction, and rehabilitation projects in the most affected areas of Marawi City.”

Nearly a fourth or 24 of Marawi’s 96 barangays make up “ground zero” or the “most affected area” — bombed to the ground, rendered uninhabitable — even as the rest of the villages sustained widespread damage to private, commercial, and public structures and facilities.

But instead of rushing negotiations on the JVA for the ground-zero projects, the exemption from NEDA’s rules has put Task Force Bangon Marawi in a state of legal limbo. It has had to revise, improvise, and update its own rules on eligibility and documentary requirements for project proponents, and push back deadlines for their submission of documents. See related story here: “A patchwork of sketchy plans, loose rules, uncertain funding”

Consortium 1 out

In the case of the Bagong Marawi Consortium or BMC, the Task Force undertook eligibility check toward May and June 2018 only, or months after del Rosario had repeatedly announced since December 2017 that it was likely to be granted “original proponent status” for the MAA deal. BMC had quoted a P16-billion tab on its proposal.

In the case of a newer proponent, another consortium, the eligibility check commenced ahead of the review of its JVA proposal.

The BMSC spent five months, from December 2017 to June 25, 2018, in negotiations with BMC, led by a China state-owned enterprise (SOE), which was later disqualified for reported failure to meet technical and financial requirements.

BMC, Notice of Termination, 25 June 2018

And then for over two months now since July 2, BMSC has been conducting negotiations with a second consortium led by another China SOE; the talks will end on Aug. 24, barring further delays that the proposed splitting of the 22-component scope of work could trigger.

The Task Force’s row with the first proponent, BMC, is far from over though. BMC, led by China State Construction Engineering Corp. Ltd and its Philippine entity partner, Future Home Co. Ltd. (a company based out of Tacloban City that sells prefabricated, lightweight concrete houses, and other construction materials) has filed with the Task Force a motion for reconsideration of its disqualification.

FS in Chinese

In a letter dated June 18, 2018, the Task Force terminated its negotiations with BMC because of its “inability to submit legal, technical, and financial documents in proper form, to prove the Consortium’s Legal Capacity, Technical Capacity, and Financial Capacity — all requisites to participate in the Joint Venture Activity as prescribed in the JV Guidelines.”

Task Force chair del Rosario told PCIJ that BMC’s eligibility was denied because it had submitted financial statements in the Chinese language, and managed to show proof of only PhP900 million in a bank certification of funds available for the project, or way below the PhP4.8 billion or 30 percent required for its PhP16-billion proposal for the MAA.

On June 22, 2018, the consortium wrote the BMSC to clarify what “eligibility requirements” were needed, and to indicate its intention to file a motion for reconsideration or MR.

On June 25, NHA chair Escalada replied: “We maintain that BMC, with the information available, may pursue any proper remedy, including the filing of an MR, upon receipt of a letter of Termination of Negotiations… dated 18 June 2018.”

“Needless to say,” Escalada continued, “your letter of 22 June 2018 does not toll the prescriptive period for filing an MR, which will expire on 27 June 2018.”

He also said, “We would like to emphasize the fact that BMC is, up to this day, unable to submit its eligibility requirements in proper form.”

BMC Notice of Failed Negotiations 18 June 2018

MR still pending

BMC filed an MR or motion for reconsideration anyway; as of this writing, the BMSC has not ruled with finality on the appeal. The matter has reportedly been referred to “ADB (Asian Development Bank) consultants” assisting the committee. Final decision on the MR had been scheduled last Aug.18, but a “lack of a quorum” forced a resetting to an uncertain date.

PCIJ asked Future Home’s president, Ramil Joselito Tamayo, about the status of his consortium’s MR. On July 30, 2018, he replied: “I would like to inform you that the MR is still pending resolution by the BMSC, and we are constrained from disclosing its contents, as it might jeopardize our legal remedies.”

“Further, all project information at this point is proprietary,” wrote Tamayo. “Once the Project is awarded to a proponent (whether it is BMC or another entity), then the details may be made public for transparency. Hoping for your understanding.”

Clearly, though, the Task Force’s selection committee had headed off to a new round of negotiations with a second proponent, the consortium led by the Power Construction Corporation of China Ltd. or PowerChina, even before it could decide with finality on the MR filed by the first proponent, BMC.

And yet, by PCIJ’s research with various regulatory agencies, PowerChina seems to be no better prepared or proper with its documentary requirements. Neither is it more qualified to take on the MAA project through a subsidiary that just recently registered with the Securities and Exchange Commission as “a domestic corporation” with no operations as yet and only P90 million in subscribed capital. (See related story: Unlocking the PowerChina puzzle)

Del Rosario, however, remains upbeat. He also told PCIJ: “The negotiations have been very tedious, we work even on weekends. I don’t think the Selection Committee has been remiss in its duty.” — With research by Karol Ilagan and John Reiner Antiquerra, PCIJ, August 2018