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Volume 15, Number 3
February 12, 2009

economy

Also in this section:
Torrijos set back by fraud, political defections in Transmovil plan
At least 10 of Panama's 34 brokerages stung by Madoff
Can green jobs be good jobs?
Venezuela's economy after 10 years of Chávez
On strike!
Business & Economy Briefs


What if they had a bidding process with the name and surname of the winner written on it, and the winner still blew it?
Torrijos transport plan has spectacular setback
by Eric Jackson, largely from other media

Going to do a bus rapid transit system, like the one that was pioneered in Curitiba, Brazil? President Torrijos understood the part of it wherein the buses there are larger than regular ones, and are "articulated" --- hinged in the middle for easier turns. For much of his administration he threatened to replace the owner-operated "diablo rojo" buses in the Panama City - San Miguelito area with a new company using "articulated" buses. It was a mantra we heard for a couple of years.

The old diablo rojo bus drivers' organization, thoroughly corrupt and aligned with the PRD since its inception, basically crumbled under the pressure. However, a new grass roots set of organizations arose to fill the vacuum and the new leaders did their homework and knew something that Torrijos apparently did not. "Bus rapid transit" as in Curitiba and other places where it works is not primarily about the type of bus. It's about specially dedicated roadways that don't mix with city traffic, and in fact can't. It's about paying your fare at a bus stop and going through turnstiles or some such, so that there are no delays boarding or getting off a bus that are inherent in paying on the bus. And given the Torrijos administration's budgets and plans for road construction within the city, the infrastructure for bus rapid transit could not be finished --- really, couldn't be started --- before the Torrijos administration left office. Thus the bus drivers called the president's bluffs and the first two rounds of the Torrijos drive to replace the diablos rojos went to the drivers.

Now, with Torrijos set to leave office on July 1, he's moved to force the diablo rojo owners to sell out to the government --- for a maximum $25,000 for each combination bus plus cupo (route permit), to be paid in installments of $400 per month. He's hired a bunch of activists from his Democratic Revolutionary Party to put on Transito vests and hassle bus drivers for this, that or the other thing --- mainly to take those who don't accept the "go out of business now and get paid later" offer out of service --- and to close down many of the city's bus stops. He has succeeded to the extent that there is hardly any more bus service at night in the metro area, and that buses that run in the daytime are unbearably overcrowded.

But what is to replace the 1,500 urban buses he would take off the road? Well, 420 new ones, run by a new governmental entity called Transmovil.

There is a problem with that. In these days of on-demand parts supply manufacturing, nobody in the world keeps an inventory of 420 buses around to immediately fill such an order. None of the well known, established manufacturers would commit to a delivery schedule that would get the buses to Panama before Torrijos leaves office.

Ah, but there is the 11-year-old Chinese company, Higer. True, we don't know if its buses have a 10-year life expectancy, or really very much at all about them. However, the bidding process was delayed for lack of proper notice and then put back on track with a demand for an even shorter delivery schedule. The number of companies in contention shrank from 37 to three.

The bid specifications said that the bidders had to have offices and repair shops in Panama --- which Higer didn't --- but still the Torrijos administration accepted their bid, and it turned out to be the lowest submitted at the January 30 bid opening. Higer offered $51.1 million, as against Volvo's $76 million and the Mercedes Benz importers' $79 million. The government said that it would allow Higer to establish these facilities once it got the contract and gave the company 48 hours to fix a number of other defects in its paperwork.

However, the paperwork turned out to be the biggest problem for the Chinese bus makers. The specifications said that the bidders had to post a performance bond. Higer filed papers claiming to have such a bond issued by Interoceanica de Seguros, and certified by the Superintendent of Insurance. Interoceanica said not only had it not issued a bond to Higer, it had never had any dealings of any sort with them. Higer, which was eliminated from the bidding upon Interoceanica's revelation, said that the insurance company had lied about them and declared that it would charge Interoceanica with criminal defamation (calumnia e injuria).

 The Torrijos administration took Higer's word at face value and reinstated its bid. Then the Superintendent of Insurance pointed out that its purported certification that Higer had used to support its bid was a forgery. Higer was thrown out of the process again. The Transit and Land Transportation Authority (ATTT) sent the Higer case to the prosecutors.

So might one of the other bidders now win?

Grupo Q (the Mercedes Benz distributors) and Volvo might still be in the running, but both of those companies say that they can't meet the delivery schedule specification that the Torrijos administration was demanding.

In any case, Higer is taking its expulsion from the bidding process to court. Although it's not inevitable, there is a good chance that in the course of any such legal battle the
court of first instance, the Tribunal de Contrataciones Publicas, or an appellate court would order a freeze on the bus acquisition bidding process.

And then, still pending before the Supreme Court and the subject of much unverifiable gossip, there are the lawsuits brought by a militant bus riders' group and by those diablo rojo drivers who turned down the president's offer they couldn't refuse. Whether property amounting to people's livelihoods can be expropriated by the state with compensation to be paid in later installments, mostly by a future administration, becomes an issue that transcends the much-vilified image of city bus drivers. It runs to the heart of Panama's business climate, for how many foreign investors would want to take their chances with a Panamanian government that pulls that stuff on its own citizens?

The front runner to succeed Torrijos, businessman Ricardo Martinelli, had been equating the PRD and its presidential standard bearer with Hugo Chávez already and the business implications of what Torrijos is trying to do are more grist for that mill. Martinelli said that he doesn't understand the president's "obstinacy" in continuing with his Transmovil plan, opined that 420 buses can't possibly solve the metro area's mass transit woes, and announced that his adminstration would build a train system to get people around the capital. "This project has generated complaints of favoritism toward a particular company, a criminal accusation against the Transito Authority, complaints about forged documents and now the elimination of one of the companies. However, we see that the president isn't thinking of the public interest, but about continuing this absurd project."

And would the PRD rally behind its leader, the president?

Hardly. Presidential candidate Balbina Herrera studiously avoided criticizing Torrijos, but instead unveiled a transit plan that calls for a monorail from San Miguelito to Plaza Cinco de Mayo with cross-town feeder buses. PRD vice presidential candidate Juan Carlos Navarro called the Transmovil project "a nightmare" and challenged his fellow party member, the president, to a debate about it.

The popular perception is that the Transmovil plan is complete nonsense on its face, and thus probably has underlying corruption --- a kickback of some sort, maybe --- as its underlying rationale. But Panamanian public opinion is notoriously jaded, and wont to see crooks at work when the phenomenon is actually mere stupidity.

What's not a mirage or mere perception is the collapse of transportation in the capital. It's well nigh impossible to miss the signs of degraded bus service, near gridlock on the streets and expensive projects that no reputable urban planner opines will solve any of the problems. With national elections coming so soon, all of this is a major headache for the ruling PRD. 

Also in this section:
Torrijos set back by fraud, political defections in Transmovil plan
At least 10 of Panama's 34 brokerages stung by Madoff
Can green jobs be good jobs?
Venezuela's economy after 10 years of Chávez
On strike!
Business & Economy Briefs


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