With no "star witness" like Jun Lozada, the Cyber Education Project, which has a bigger price tag than the ZTE-National Broadband Network project, virtually escaped a closer look and a Senate inquiry. With Jun Lozada as star witness, the Senate refocused the spotlight to the details of the ZTE-National Broadband Network project, the P16.47 billion supply contract with ZTE that was earlier scrapped. But the Cyber Education Project with a heftier P26.48-billion price tag virtually escaped scrutiny. The CEP was approved despite the recognized overlap with the NBN project, adverse opinion from government experts, and doubtful economic viability. On February 19, President Arroyo put on hold 11 projects financed through Official Development Assistance (ODA). The suspension includes CyberEd, the ZTE deal’s “twin project," effectively sparing it from possible scrutiny.
Economic viability ‘re-calibrated’ The Department of Education’s CEP was like a pet student, passing the review process despite failing marks. It seemed to have gone through the NEDA approval process without pain, with NEDA holding DepEd’s hands all the way. The CEP, with its multibillion-peso satellite infrastructure, is the government’s distance education program. With technology, it aims to transmit quality education, via live interactive broadcasts, to public schools even in remote areas. NEDA’s March 19 Project Evaluation Report (PER) endorsed to the NEDA Board the CyberEd project because of “the highly desirable objectives" despite apparent issues on economic viability. The NEDA Board headed by President Arroyo approved the DepEd project less than two weeks later, on March 29. “That project would never have passed muster under the NEDA that I headed," said Professor Winnie Monsod, former NEDA chief under the Aquino administration. “The documents I read show that the data had to be massaged to make the project look respectable." Replying to questions sent by GMA News Research via email, Monsod called attention to the PER’s socio-economic analysis, which notes that the CyberEd’s Net Present Value is negative PhP11,236. 52 million, while the Internal Rate of Return is 5.12%, way below the standards set by NEDA for project approval. The PER states: “While the NPV is negative and the IRR is below the social discount rate, the undertaking of the project is still justified on the basis of the societal benefits that the DepEd failed to quantify." Daniel F. Pabellon, NEDA assistant Director General, signed the favorable report. It seemed that the societal benefits cited were not enough to quell the misgivings of NEDA officials about the approval of a project with doubtful economic viability. After five months, Pabellon issued an addendum that essentially “re-calibrated" the benefits of CEP. “The NEDA secretariat was advised that ‘a fiscal elaboration of the projects IRR is needed’ noting that the resulting economic NPV and IRR are negative PhP11,236.52 million and 5.12% respectively, using the discount rate of 15%," the August 14 memo stated. DepEd officials, who are proponents of the project, might have “failed to quantify" the benefits of their project, but the NEDA Secretariat did the math for them. NEDA presented two alternative “scenarios," both with passing economic viability figures. The NEDA secretariat thought to include another DepEd project, the Third Elementary Education Project (TEEP), in the computation. The other scenario even negated the initial DepEd assumption that the CEP would result in savings for textbooks. The result was a revised and acceptable – figure-wise – economic benefit: an economic NPV of Php4,933.71 million (as opposed to the earlier negative numbers) and an economic IRR of 19.94% (much higher than the earlier 5.12%). “These are all dead giveaways of a situation where the decision to implement a project has preceded its justification or rationalization," said Monsod. But NEDA defended its decisions on the CEP, citing the “unquantified benefits" of the project. “The Secretariat took a very conservative view of the project’s societal benefits during the initial presentation of the CEP to the Investment Coordination Committee (ICC)," the NEDA responded to emailed questions about the CEP. It added: “The ICC recognized that the project has other unquantified benefits." The NEDA Secretariat cited the CEP’s goal to provide access to quality education to remote schools throughout the country, improve the teaching capabilities of teachers, “develop a culture of research and quest for answers" and to “provide pupils endless possibilities that the current state of technology offers" among other things said to be gained from CEP. While the PER noted DepEd’s failure to quantify the CEP benefits, the NEDA Secretariat gave credit to DepEd, saying “the re-calibration of project benefits was conducted in close coordination with the DepED, wherein DepED made the initial representation of the assumptions for the quantification of additional project benefits."
Not one but two broadbands In discussions on the CyberEd and NBN projects, specifically on the ZTE deal, the recurrent issue has been the overlap of the two projects, and subsequently, the waste of money that it entailed. The Department of Transportation and Communication (DOTC) and the Commission on Information Communications Technology (CICT) confirmed that there is a “direct overlap" between the CEP and the NBN project. The DepEd will be putting up its own broadband with the CEP while the NBN will have its own. Instructed to study the issue, the DOTC and CICT submitted its position to NEDA, recommending “the establishment of a single national broadband network to cater to the needs of the Government in VOIP, e-governance, delivering e-government services and e-learning services." DepEd continued to push for its own system separate from the proposed Internet-based NBN project. It argued for CEP saying, “Internet connectivity is a by-product in the DepEd system, and internet connectivity for the scope of the schools considered would not be at broadband speeds." In the NEDA papers, DepEd further argued that while it may be possible “to harmonize the proposed project with the proposed broadband connectivity… and with other existing projects of similar nature….it will not address the huge, urgent and specific needs of the DepEd" citing the limitations of the NBN project. The project evaluation report took note of the DOTC and CICT report, listing the recommendations. DepEd’s arguments followed. But beyond allocating space for both the critique and the response, the NEDA report failed to present a discussion on the merits of the exchange. It seemed that NEDA adopted the DepEd response en toto because of the endorsement of the project to the NEDA Technical Board and the Cabinet Committee. The overlap issue continued to hound NEDA bodies, even shortly before the project approval. On March 26, three days before the CyberEd was given the green light, Finance Secretary Margarito Teves inquired about “the possibility of deferring the full implementation of the CEP until the Committee has obtained additional information related to the NBN alternative." This was stated in the minutes of the Special Joint ICC-Cabinet Committee and Technical Board Meeting. In the minutes, DOTC Assistant Secretary Lorenzo Formoso admitted that the “NBN is versatile enough to handle VOIP, e-governance and e-education applications, as well as election-related reporting." Teves inquired if there would be underutilization. The minutes show that Formoso said “there would definitely be some underutilization on both projects, even as he (Formoso) reiterated his suggestion that a versatile network capable of responding to all types of requirements be used as it is simpler to maintain a single network." The two projects remained on the table. For at least two months, the discussions were simply fixed on fixing the overlap, short of saying the two projects must be approved. Approval, a foregone conclusion? The Chinese officials and suppliers included expressed willingness to bend backward to iron the kinks and get the approval for both the CEP and the NBN. On March 1, ZTE’s Chief IT consultant Howard Xue sent a letter to DOTC Assistant Secretary Elmer Soneja to say that ZTE has revised its NBN proposal. The original proposal had a Distance Learning module, but ZTE made the adjustment and took out the education component to avoid the overlap with CEP. The move translated to a shift in the coverage of the NBN under the ZTE proposal – from the schools to barangays – as noted in the March 26 Special Joint ICC-Cabinet Committee and Technical Board meeting. On the same day of the NEDA meeting, Chinese ambassador Li Jinjun wrote to President Arroyo. “The two projects are mutually independent and cannot be combined as one since they are totally different in terms of technology," the Chinese ambassador told the President. The ambassador added: “Therefore, it would be very helpful and necessary if your Excellency could extend your personal attention to coordinate." It must be the two projects, China said. And the combined cost is over P40 billion, almost the entire amount to be loaned from China, tying up the Philippine government to pay off debts for up to 20 years. On March 27, the day after the ambassador’s letter to the President, the signals were clear for the approval of the CEP in the NEDA Board meeting chaired by President Arroyo. The minutes read: “The president added that technically the CyberEducation project has no more problems and the NBN project must be considered taking the Cybereducation project into account." The President gave the Board instructions to convene a meeting to make sure that the NBN and CyberEd have no “unnecessary or unjustifiable overlaps." Promptly, on March 28, Secretary Romulo Neri requested a report from Teves on the action taken by the DOF on the instructions to CICT to “modify the proposal of the NBN project to remove the overlap" with CEP. It was noted in DOTC’s chronology of events submitted during the Senate ZTE hearing. The NEDA Board, chaired by the President, approved the CEP on March 29. - with reports from Mary Ann Señir 
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