Europe-PH News

Although public spending on infrastructure and other capital outlays spiked to P276 billion last year (it was 5.4% more than 2013’s P261.8 billion) budget secretary Florencio Abad admits that this total was 24.4% short of the P365.2-billion program for infrastructure.

The Department of Budget and Management (DBM), in its assessment of the disbursement performance at end-2014, traced the official underspending to the “considerably low” fund use by the Departments of Public Works and Highways (DPWH) and of Transportation and Communications (DOTC), along with “weather disturbances, peace and order problems, and delayed concurrence/difficulty in securing approval from authorities…..”

Less than a week later, the inter-agency Development Budget Coordination Committee (DBCC) reported that disbursements for infrastructure and other capital outlays would rise steadily this year from P94.3 billion in the first and second quarters to P100.8 billion in the third quarter and to P142.2 billion in the last quarter.

This is a total of P431.6 billion for infrastructure and public works this year, much higher than the 2014 program of P365.2 billion, accounting for 16.7% of the proposed 2015 budget of P2.559 trillion.

That Malacañang has a true sense of urgency to finally raise infrastructure spending is good news as poor road infrastructure—along with its resultant traffic congestion, especially in Metro Manila continues to dampen investor confidence despite the Philippines’ status as Asia’s newest economic star.

“Infrastructure is badly needed if economic growth is to be maintained. The implementation of PPP projects needs to be accelerated, especially on the DOTC side,” says Henry Schumacher, executive vice president of the European Chamber of Commerce of the Philippines (ECCP).

For John Forbes, senior adviser to the American Chamber of Commerce of the Philippines (AmCham), “The government can’t spend enough on infrastructure fast enough. Poor infrastructure combined with fast growth will lower growth if it creates too much congestion.”

The seemingly unabated congestion at the Port of Manila resulting in large part from the failure of cargo forwarders and truck haulers to move their goods fast enough in and out of the metropolis or do business more efficiently in alternate ports north and south of the capital that poor infrastructure and the ensuing monster traffic are major deal-breakers for prospective investors.

Even as Secretary Abad and the DBM were admitting the anemic spending on infrastructure, concerned business groups are complaining about the surfeit of charges and penalties—port-congestion surcharge (PCS), random container-cleaning fee, terminal-handling fee, container-deposit fee and container-detention charge, among others—that continue to burden them These are also caused by the government’s continued failure to unclog the capital’s ports.

Philippine Chamber of Commerce and Industry (PCCI) president Alfredo Yao notes that the surcharges slapped on businesses during the peak of the port-congestion problem amounted to $600 to $700 per twenty-foot equivalent unit (TEU).

Citing his own conservative cost estimates, ECCP president Michael Raeuber said port-congestion surcharges at the Manila International Container Terminal (MICT) and the South Harbor during the gridlock reached $166 million while those for trucking totalled an additional $418 million since last year.

Cabinet Secretary Jose Rene Almendras, who also chairs the Cabinet Cluster on Port Congestion, assures the Senate committee that Aquino will ease the congestion further and keep the port situation at normal level regardless of volumes by improving road access to the ports.

“Only a percentage of cargo actually goes to south or to the north (of Luzon) while a huge volume of cargo is intended for Metro Manila, majority of which is actually for the city of Manila,” Almendras said.

Almendras’ take on port congestion, which is but symptomatic of the larger problem of the entire Metro Manila’s road infrastructure woes and ensuing “Carmageddon” or monster traffic, point to the urgency for Malacañang to speed up completion of the parallel expressways being built separately by San Miguel Corp. (SMC) and the Metro Pacific Tollways Corp. (MPTC) to connect the North Luzon Expressway (NLEX) and South Luzon Expressway (SLEX).

MPTC’s unsolicited proposal of a 13.4-kilometer expressway linking NLEX and SLEX next to the parallel skyway now being built by SMC through its consortium with the Citra Metro Manila Tollways Corp. (Citra).

The SMC-Citra project did not have to go through a Swiss Challenge, is the Skyway Stage 3 of the SLEX, while MPTC’s portion involves the construction of the four-lane elevated expressway, originally via the Philippine National Railway (PNR) tracks, with three exits to connect NLEX with SLEX.

Both mega expressways are now facing delays after the National Economic and Development Authority (NEDA) Board chaired by President Aquino recently gave its go-ahead to the North to South Railway Project (NSRP), which has two railroad components from Manila to Bulacan in Central Luzon and from Manila to Legazpi City in Bicol.

About a week ago, DPWH Undersecretary Rafael Yabut said the completion of the two connector roads will be delayed by the entry of the North and South railway projects, as both will have to be “reconfigured” with the planned rebuilding of the railway to Southern Luzon.

This is because the railroad tracks will run parallel to the connector road now being built by SMC-Citra and to the other one that MPTC offered in May 2010 under an unsolicted proposal for the Build-Operate-Transfer (BOT) mode.

SMC-Citra’s Metro Manila Skyway Stage 3 is a 14.82-km. six-lane skyway from Buendia to Balintawak and is due for commercial operation by 2017.

In fact, one of the country’s top construction companies—EEI Corp.—announced last May 4 that it has been tapped by SMC-Citra to build Sections 3 and 4 of its Connector Road, covering Aurora Boulevard to Quezon Avenue and Quezon Avenue to Balintawak.

MPTC’s own Connector Road project has yet to take off as government agencies—true to the DBM’s admission of the “delayed concurrence/difficulty in securing approval from authorities”—have taken years to decide on how to implement it.

MPTC’s proposal has remained on the drawing boards three years after it was conditionally approved because bureaucrats from assorted agencies have, till just recently, disagreed on how to move it on to Stage 1.

MPTC’s connector road will run from C-3 Road in Caloocan City to the Polytechnic University of the Philippines (PUP) in Manila’s Sta. Mesa district.

Media reports that this project has moved back and forth through the years on the Aquino watch as the concerned agencies argued on whether to implement it via the Swiss Challenge—the normal course of action for unsolicited proposals—or the faster joint venture (JV) route between MPTC and the Philippine National Construction Corp. (PNCC), which holds the franchise for both NLEX and SLEX.

But now that Government has finally decided—after five years of dilly-dallying—that the best way is to subject this unsolicited proposal to a Swiss challenge—which is what MPTC offered back in 2010 in the first place!—the proposed NLEX-SLEX Connector Road has had another hitch, this time the need to “reconfigure” its design in light of Government’s belated plan to use the same PNR tracks for its P287-billion North-South Railway Project (NSRP) from Malolos, Bulacan to Tutuban in Manila and all the way to Legazpi City in Albay.

Phase 1 of NSRP, which was approved by the NEDA Board only last February, will involve the construction of a 36.7-kilometer elevated commuter railway from Malolos to Tutuban, and is due for completion by the third quarter of 2020.

However, as revealed by Undersecretary Yabut, the NSRP will require design realignment or changes that will further delay both Connector Road projects.

Under the original MPTC proposal, the 13-kilometer NLEX-SLEX Connector Road would cost about P18 billion, but, according to news reports, the amount was cut to P11 billion for an eight-kilometer stretch after MPIC reached an agreement with SMC for the latter to initially shoulder the cost of the five-kilometer common alignment connecting the NLEX-SLEX connector road to SMC-Citra’s Metro Manila Skyway Stage 3 project.

But the need to realign the MPTC project, for one, will reportedly jack up its cost by P3 billion more to P14 billion—as both NSRP and this proposed expressway will both use the PNR right-of-way.

The two Connector Road projects will address the port congestion problem because aside from making travel by motorists and commuters to and from Northern and Southern Luzon faster and easier, both expresways will decongest Manila’s ports in encouraging the movement of cargoes or delivery of goods to the alternate ports in Batangas port in the South and the Subic and Clark freeports in the North.

Both will improve transport logistics as a result of the more efficient movement of cargoes, roll-on, roll-off (RORO) vessels, and passengers in and out of the ports located in Manila, and would reduce travel time from NLEX to SLEX to only 15 to 20 minutes.

Investors would start flocking to the country when the project is completed because it would enhance connectivity between our international airports and seaports, including the Subic freeport by way of the NLEX-Subic-Clark-Tarlac Expressway (SCTEX) route, the Batangas Port via SLEX, and the Clark International Airport to the Ninoy Aquino International Airport (NAIA).

This will, in turn, improve linkages between the key growth areas of Metro Manila, Central Luzon, North Luzon and the Clark-Subic corridor.

Experts note that the speedy implementation of the two Connector Road expressways and other major infrastructure projects will not only raise public satisfaction in P-Noy’s performance; it will also boost investor confidence by addressing the concerns of foreign and local businesspeople over undue delays in PPP and other big-ticket projects.

With barely a year left, it is only now that several PPP contracts are being bidded out. Of 57 PPP projects drawn up in 2010, only eight have been awarded so far and all were solicited projects.

President Aquino will not realize his dream of having both Connector Road projects completed before he steps down in 2016.

Metro “Carmageddon” and the subsequent port congestion has started to take its toll on the public approval ratings of the once highly popular President during the homestretch of his term.

His Administration’s net satisfaction score, according to the March 20-23 survey by the Social Weather Stations (SWS), fell to +19 in the year’s first quarter from +34 during the previous quarter in 2014. His own net satisfaction rating, meanwhile, went down by over two-thirds to +11 from + 39 during the same period.

With the issues of monster traffic and port congestion obviously dragging P-Noy down to record lows on his watch, there are “surgical operations” that his alter egos in the Cabinet can perform—one of these being the fast-track implementation of the two Connector Road projects —to prevent his performance and satisfaction scores from further going south in the five remaining quarters of his presidency. 

Source: Columns from Malaya and Abante