Some PITC procurement jobs may be discontinued – Lopez

Published December 10, 2020, 6:00 AM

by Bernie Cahiles-Magkilat

Trade and Industry Secretary Ramon M. Lopez has raised the possibility of discontinuing some of the P33-billion worth of procurement projects being undertaken by the Philippine International Trading Corp. (PITC).

 Lopez said this at the House committee on trade and industry virtual meeting, which tackled the controversy hounding PITC, the government’s trading arm attached to the DTI and chaired by the DTI Secretary, over the supposed P33 billion idle funds being parked at the procurement body by various government units.

Trade and Industry Secretary Ramon Lopez. (ALFRED FRIAS/PRESIDENTIAL PHOTO FILE PHOTO)

Lopez, however, said that the proposed review of PITC contracts will be discussed with the concerned project proponent agencies because these agencies already expected the procurement of their materials and equipment.

The DTI has formed its own task force to conduct a preliminary verification of the exact status of ongoing procurement projects between PITC and other government agencies.

The PITC Chairman explained that if the funds would be returned to the national treasury, this would make these agencies less efficient in performing their functions to the disservice of the Filipinos.

In addition, Lopez also said that the DTI has formed its own taskforce to conduct a verification of the ongoing PITC projects.

“We should really review each project whether the agencies would confirm that these are all ongoing,” he stressed.

Likewise, the DTI has the instructed the PITC to review its policies on the remittance of interest income, which Lopez said has been the practice even before the Duterte administration.

Lopez further defended PITC’s dedicated public servants stressing that after it cleaned up its books in 2019, PITC accounts now are all current and active.

For his part, PITC President Dave Almarinez also confirmed at the House Committee hearing that the DTI together with the Department of Budget and Management and the Department of Finance are part of the review committee, which will determine by end this which procurement projects to return to agency project proponents or retain.

Almarinez said that of the P32.5 billion procurement contracts with PITC, P20 billion are in various stages of implementation with a deadline set by December 2020, including P4 billion to P8 billion that PITC is completing. The remaining P12 billion are expected to be completed in the first quarter of next year, he said.

So far, he said, PITC already returned P1.3 billion of truly idle funds in procurement projects of various government agencies.

Most of the PITC procurement contracts are mostly supplies and equipment and services for government agencies, and a small portion is infrastructure projects, he said.

PITC, a self-sustaining government agency does not get any budgetary allocation from the General Appropriations Act, has a mandate and is allowed to charge service and management fees for their procurement to generate income for their operations.

  For approved projects of less than P50 million, the service and management fee is 4 percent and 3.75 percent for above P50 million to P100 million. For bigger projects P900 million to less than P1 billion the service fee is 1.5 percent and above P1 billion is 1 percent.

With the income generated from the service and management fees, PITC was able to remit to the National Treasury P8 million in 201 and P38.1 million in 2016. The PITC dividends to the national government improved to P64.5 million in 2017, P281.6 million in 2018 and P324.1 million in 2019.

Earlier, Lopez in a report to Sen. Francis Drilon, who first exposed PITC’s “parked” funds, said that based on the P32.5 billion PITC summary of projects, P10 billion to P11 billion have been awarded for deliveries and the rest of the P21 billion are ongoing procurement projects. The P32.5 billion procurement projects involved about 48 agencies including 11 agencies in the military.

All these projects are ongoing concerns at different procurement stages. PITC has also a 2-year self-imposed deadline for the delivery of the project from TOR to bidding. 

As such, Lopez explained that the P32.5 billion procurement funds are not technically parked at PITC. He said it takes time for the procurement process and to complete each project because government agencies have to come up with the TOR (terms of reference) for their projects, which at times could not be completed in just one year.

Once the TOR is completed, only then that the PITC can proceed with the bidding. The procurement funds, which are actually with the government banks Lank Bank of the Philippines and the Development Bank of the Philippines can only be withdrawn once the project is awarded.