THE COMMISSION on Audit (CoA) has flagged the Authority of the Freeport Area of Bataan (AFAB) for not meeting its infrastructure targets for 2022 as well as failing to pay its loans to the Japan International Cooperation Agency (JICA).
In its 2022 audit report made available on June 27, state auditors said, “AFAB’s capital expenditure in 2022 fell short of the targets set in the GAA (General Appropriations Act), resulting in its failure to contribute to the economy.”
CoA noted that “only one out of two infrastructure projects was initiated and only 48% of the planned amount or P91.26 million was implemented according to the specified plans and specifications.”
The 2022 budget appropriated a total of P191.26 million to AFAB, covering P100 million for the construction of underground cabling for the freeport area’s electrical distribution system and P91.26 million for a vessel traffic management system.
CoA said only the vessel traffic management system was completed within the given timeframe.
State auditors said the low implementation rate was a result of the Budget department’s approval of a lower allocation and the bidders’ noncompliance with the technical requirements of the projects.
APAC, in response to CoA’s findings, said it will consider including short-term projects in the national budget to better achieve targets.
CoA also pointed out that the “AFAB refrained from immediately assuming and paying loans to JICA,” and “as a consequence, AFAB continues to accumulate default charges.”
“AFAB did not pay its assumed loan from the Philippine Economic Zone Authority (PEZA), the previous operator of the FAB (Freeport Area of Bataan), causing the loan to reach P471.45 million including default charges amounting to P13.45 million by the end of 2022.
The loan deal was originally entered into by PEZA with JICA to improve infrastructure facilities.
The audit team noted that the AFAB’s previous management did not pay the loans due to agreement concerns.
They referred to the Freeport Area of Bataan Act, amended by Republic Act No. 11453, which said that “All properties, assets, funds, rights, obligations, and liabilities are hereby transferred to the AFAB except for the liabilities that are not properly accounted for as per the reports coming from CoA, which shall be retained by the PEZA,” the audit report stated.
CoA said the management thought an audit report on loans and a supplemental loan agreement was needed and that without such, PEZA would be responsible for the loan.
“It’s worth noting that both the infrastructures and the loan that funded it were included as assets and liabilities in an interim financial statement as of June 29, 2020,” CoA said.
CoA also noted that the AFAB partially paid P150.65 million in 2017, 2018 and 2022. AFAB was also denied its request to have the interest and default charges waived and for the loan to be set off against the annual capital infusion. They committed to raise this matter to the Office of the President.
AFAB has yet to reply to an e-mail seeking comment. — Beatriz Marie D. Cruz
