Press Release
July 3, 2007


Senate Minority Leader Aquilino Q. Pimentel, Jr. (PDP-Laban) today called for the scrapping of the government's flawed deal with China's ZTE Corporation to set up a $330 million national broadband network (NBN) to pave the way for the rebidding of the project.

Pimentel said the controversial deal has become indefensible and not worth pursuing in view of revelations that its terms and conditions are grossly disadvantageous to the government and it was not subjected to public bidding in violation of Philippine laws.

"The government should withdraw this contract so that there will be a public bidding of the telecommunications project - one that is open and transparent that will not leave any doubt in the public mind about the transaction," he said.

The minority leader said the validity of the NBN deal between the Department of Transportation and Communications and ZTE Corp. is under question because of the lack of public bidding.

Pimentel refuted the claim of DOTC Secretary Leandro Mendoza that this is a government-to-government arrangement that supposedly requires no public bidding.

"In fairness to the ZTE Corp., it was not the company's fault that there was no public bidding. It was the fault of the Philippine government," he said.

He said the government's failure to hold public bidding deprived it of the chance to look into the track record of the ZTE Corp. and to consider the offers of other telecommunications firms that may be more favorable to the government.

Pimentel said there are allegations that the contract is overpriced because while ZTE Corp. offered to build the NBN for $330 million, the Amsterdam Holdings Inc. (AHI) of The Netherlands and the Arescom of the United States submitted much lower bids of $242 million and $135 million, respectively.

The senator from Mindanao said an equally damning reason to dissolve the DOTC-ZTE deal is the fact that it deviated from the Arroyo government's own policy to undertake such telecommunications contract through the build-operate-transfer (BOT) scheme in which the contractor will shoulder the cost of the project.

But under this questionable deal, the project will be funded through a "concessional loan" to be contracted by the government from China's Export-Import Bank payable over a 20-year period.

Pimentel said the financial scheme for the NBN project proposed by ZTE Corp. is similar to that of the North Rail Project which is funded by a $400 million loan from China which several senators have questioned.

He said Malacañang has nobody to blame but itself for its present troubles over the national broadband network contract because it has not been transparent about the project.

Amid the controversy, a DOTC official came out with a seemingly incredible story that the original copies of the DOTC-ZTE Corp. agreement on the NBN project were lost in a hotel hours after it was signed by Secretary Mendoza and ZTE vice president Yu Yong on April 21, 2007 in Boao, Hainan province, China in the presence of President Gloria Macapagal-Arroyo.

Pimentel said the mysterious incident has given rise to suspicion that the contents of the agreement have been altered to make it less unpalatable.

News Latest News Feed