Olongapo Telecom & Information Technology

Thursday, August 02, 2007

Broadband deal challenged at SC

Iloilo Vice-Governor Rolex Suplico on Wednesday asked the Supreme Court to nullify the controversial broadband contract between the government and Chinese company ZTE Corp.

In a 129-page petition the former congressman said the $329-million contract to build a National Broadband Network violates the Procurement Act, the Build-Operate-Transfer Law and the Telecommunications Policy Act which calls for the privatization of all telecommunications projects.

Suplico said the contract was also one of the reasons why Romulo Neri was pulled out as Socio-Economic Planning Secretary to temporarily head the Commission on Higher Education.

He said he had anticipated that the Department of Justice would consider the contract as an executive agreement that does not need a public bidding.

In an interview, Suplico said Neri was demoted to CHED to keep him out of the decision-making process on the escalating controversy hounding the NBN project.

“Neri was taken out of the loop on the NBN Project because he now shares a different view on its viability and regularity. He was demoted for giving the right advice to the President,” he said.

Neri had recommended to President Arroyo that the telecommunication project be implemented by the private sector at no cost to the government. Based on transcripts of their meeting on the Cyber Corridor Initiative in November last year, Mrs. Arroyo agreed with Neri.

But apparently, Neri was forced to endorse the proposal that the project be carried out by ZTE through an alleged government-to-government agreement, and not through a Build-Operate-Transfer (BOT) scheme as had been agreed upon, Suplico said.

“Neri had no choice but to toe the line. There’s nothing much he could do but to endorse it, as he was apparently kept in the dark until the final stages of the ZTE agreement had been drawn-up. But among colleagues and his close circle of friends, he has maintained that this deal was a mistake and that it should be undertaken by the private sector by way of BOT,” Suplico said.

Under the deal, ZTE will set up the network using funds the Philippine government would loan from the Chinese government and turn over its operation to the government after it is completed. The deal also contained a “sovereign guarantee” clause which requires the government to refund ZTE in case of financial losses.

Neri had preferred that instead of loaning money from the Chinese government just to establish a national Internet backbone, the government should have allowed the private sector to build the network.
--Maricel V. Cruz - Manila Bulletin

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