Japan firm's delay to cost RP P630M

The government "virtually gave away" P630 million when President Macapagal-Arroyo approved a four-month extension of the construction deadline of a Japanese contractor building the Bataan-Pampanga portion of the Subic-Clark-Tarlac Expressway, an Inquirer source said.

Ms Arroyo's approval, made on the recommendation of Secretary Edgardo Pamintuan, missed out on the payment of P630 million in liquidated damages for the delay by the Kajima Corp., Obayashi Corp., JFE Engineering Corp. and Mitsubishi Heavy Industries Ltd. (KOJM) Joint Venture, said the source, who was involved in and knowledgeable on the Subic-Clark development projects.

KOJM was supposed to finish its contract on Nov. 15 this year but sought an extension until March next year to make up for the delay due mainly to right-of-way problems. The Bases Conversion and Development Authority (BCDA) said part of the blame rests on KOJM for failing to bring in new pieces of equipment to finish its job.

The P630 million was based on a contract formula that calculated the "value of unfinished work and unusable of finished work."

For instance, while the KOJM has been struggling to finish the Dinalupihan (Bataan)-Subic (Zambales) section, this area would be rendered unusable because of a lack of interchange there.

According to the source's information, KOJM's unfinished work is worth P2 billion. Its contract amounts to P12 billion.

A debate has been going on for sometime now at the BCDA, the proponent of the P21-billion, 94-km SCTEx, over the amount of liquidated damages, the source said.

Government, the source said, should have demanded the KOJM to pay the liquidated damages to "compensate" for revenue losses in the delay of the opening of the toll way.

In four months, the same additional time given to KOJM, the source estimated that the toll revenues would run to about P200 million.

In the case of the other contractor, the Hazama-Taisei-Nippon Steel (HTN) Joint Venture, the source said the government would likely shell out additional expenses.

While the HTN reported delays, it did not pursue a deadline extension beyond August. It rushed its P9-billion contract but was claiming P500 million when it fast-tracked construction work on the 44-km Pampanga-Tarlac side.

Asked for comments on the P630 million in foregone damages, BCDA president Narciso Abaya said: "That is very… speculative."

Abaya said the Inquirer source "assumed" that KOJM did not have a valid claim for extension.

Abaya said it was "not true" that HTN was claiming P500 million from the BCDA.

He said the strongest argument for KOJM's non-payment of liquidated damages is that its slippage, or delay in work schedule, has been down to 13 percent, not beyond the 15 percent by which the BCDA could unilaterally terminate the contract.

Its actual remaining work is 18 percent, which it has to complete within eight months, he said.

HTN, on the other hand, has incurred a 3-percent slippage, meaning 97 percent of its work is done.

Of the P500 million that HTN was supposedly collecting from BCDA, Pamintuan had said: "That's not true. HTN doesn't have slippage anymore. In fact, it beat the deadline." By Tonette Orejas - Inquirer