TWO nongovernment organizations on Monday called for the annulment of a multibillion-peso “toxic debt” that was used to finance the importation of medical waste incinerators by the Department of Health (DOH) 10 years ago.

Saying that the government was “duped” into buying the “expensive yet totally defective and useless machines” at the expense of the public- health sector, the Eco Waste Coalition (EcoWaste) and the Freedom from Debt Coalition (FDC) called on the national government to rescind the contract and immediately stop paying the loans to the Austrian Bank.

EcoWaste and FDC, during the press launch of its “Stop Toxic Debt Campaign” in Quezon City on Monday, said the loan, which was contracted in 1997 between the Bank Austria and the Department of Finance (DOF), will have to be paid until 2014.

The loan financed the DOH’s P500-billion “Austrian Project for the Establishment of Waste-Disposal Facilities and Upgrading of the Medical Equipment Standard in DOH Hospitals,” which was originally intended to provide development assistance to Philippine hospitals in the area of medical waste management.

Its major component, which is waste disposal, costs P241,678 million in 1996, the year the project was conceived, in an attempt to solve the growing medical waste-disposal problem in the country.

All of the 26 incinerators, with capacities of 300 kilos to 500 kilos of waste per day, and purchased from Vamed Engineering, cost P133,208,665, and were delivered and installed in 26 DOH-controlled hospitals in 1997 and 1998.

What made the deal highly questionable was the fact that the technology vendor, Vamed Engineering, is partly owned by Bank Austria, the groups said.

Greenpeace, which first brought up the issue in 2002, was surprised to learn that the government is still paying the loan, despite the fact that incinerators that were supposed to be purchased were already put out of commission by the subsequent ban imposed by the Clean Air Act of 1999. 

“We discovered that the government continues to pay the loans at the expense of the public-health sector. These incinerators are defective and were put out of commission,” says Von Hernandez, Greenpeace Southeast Asia campaigner said.

A 2002 case study of technology transfer, entitled “Bad Medicine—The Austrian Medical Waste Project in the Philippines” conducted by Greenpeace Southeast Asia-Philippines, reported that Vamed Engineering, the supplier, based in Vienna, Austria, is one of the companies of the Vamed Group. Vamed AG shares are held by Fresenius AG (77 percent), OIAG-Austrian, a state-owned industrial group (13 percent) and Bank Austria (10 percent).

Bank Austria is one of the biggest banks of Austria.  

“The fact that the bank financed a project involving a company where it owns 10 percent of the shares raises ethical questions and possible conflicts of interest,” the 37-page case study noted.

EcoWaste and FDC said the payment amounts to $2 million a year.

The government started paying the principal of the loan only in 2002 in the amount of US$1,069,000, or P48.8 million, plus interest of US$256,000, or P11 million, at 4-percent annual interest rate.  (US$1=P45.72).

Last year, the government paid a total of $1,530,990, or approximately P70 million, plus interest of $402,650, or approximately P18.5 million.

Hernandez claimed in an earlier report that the incinerators were substandard and did not meet the emission levels guaranteed by the supplier.

Hernandez said the incinerators exported by Austria to the Philippines were of such low quality that they would never have been allowed to operate in Austria.

For his part, FDC secretary-general Milo Tanchuling pointed out that the incinerator loan is a classic example of an illegitimate debt that was “incurred to finance an ill-conceived development project that posed danger to our environment and the people.”

Bishop Julio Labayen joined the two coalitions in calling for the annulment of the loans.

He vowed to bring the campaign to cancel the incinerator debt to Austria, as he appealed to the DOH and the DOF to closely look into the loan agreement and seek ways to divert the loan payments to a more environment-friendly, nonburn medical waste-treatment technologies.

Labayen said what makes the loan unconscionable is that the Philippine government is practically throwing away at the same time that it is progressively cutting back on health outlays.

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TWO nongovernment organizations on Monday called for the annulment of a multibillion-peso “toxic debt” that was used to finance the importation of medical waste incinerators by the Department of Health (DOH) 10 years ago.

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