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PIA Press Release

Statement of Cabinet Secretary Ricardo Saludo: DOTC explains broadband project to Cabinet

Malacanang, Manila, 11 September 2007

After the Cabinet meeting today, Transportation and Communications Secretary Leandro Mendoza reviewed with several secretaries the key aspects of the National Broadband Network (NBN) project.

Secretary Mendoza showed how the project would save the government more than P3 billion a year. The annual cost will be P990 million when repayments begin on the proposed 20-year, 3 percent interest rate concessional loan to fund the project, after five years' grace period.

On the other hand, DOTC explained, the NBN system would provide telecom services now costing P4 billion yearly for national agencies alone, plus billions more for local governments, government corporations, community e-centers, and other state entities down to the poorest municipalities.

The NBN system will have 300 WiMAX wireless broadband stations to serve 25,800 offices nationwide. These facilities are several times larger than the systems proposed by competing suppliers.

Secretary Mendoza also recounted the procurement process:

  • DOTC/CICT review of rival proposals for more than a year.
  • NEDA Board approval of project proposal.
  • Advice from the Government Procurement Policy Board that NBN is covered by executive agreement (EA) with no public bidding.
  • China's designation of ZTE, a state telecom firm, as supplier under the agreement.
  • Department of Justice opinion that the contract was indeed covered by EA.

    Secretary Mendoza added that the ZTE contract still awaits Department of Budget and Management (DBM) commitment to allocate funds for loan payments (forward obligation authority), and a loan agreement with China's Export-Import Bank yet to be negotiated by the Department of Finance.

    The DOTC head noted that cases relating to NBN are now in the Supreme Court and the Ombudsman, where testimony and other evidence on legal and governance issues may be filed. He supports the President's longstanding policy of upholding transparency, integrity, the government and the public interest, and the inviolability of valid contracts in all government transactions.

    For reference, please contact Sec. Saludo at 0919-399215. (OPS) [top]

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