Europe-PH News

This was after the Department of Public Works and Highways (DPWH) on Wednesday said it plans to start anew this Friday the auction process for the CALAx deal under the public-private partnership (PPP) program, after the National Economic and Development Authority (NEDA) Board gave the green light to do so last Feb. 16.

Some business leaders expect poor investor appetite for the project.

Nobuo Fuji, vice-president of the Japanese Chamber of Commerce and Industry of the Philippines, Inc. (JCCI), said in a text message: “The government shouldn’t expect foreigners [to participate in the auction].”

“We think it is a change of rules. The rebid [sic] isn’t fair. Foreign companies dislike such [changes]...”

The NEDA Board on Monday last week approved a P20.105-billion minimum bid price for the new CALAx auction. The amount was the top premium San Miguel Corp.’s Optimal Infrastructure Development Inc. offered to pay on top of project cost in the scuttled first tender on June 2.

“I’ll be most surprised if there’s more than one or two (bidders),” Peter L. Wallace, Management Association of the Philippines (MAP) Governor for the Energy Committee said in a separate text message.

“I don’t agree with this concept of giving the government a cash handout, which is higher [would be considered] the better (offer). I’d rather reduce the fees to users to the lowest possible [as the basis for the best offer].”

There were four bidders for CALAx the first time it was put on the auction block, namely: Optimal Infrastructure; Team Orion of Ayala Corp.’s AC Infrastructure Holdings Corp. and Aboitiz Equity Ventures, Inc.’s Aboitiz Land, Inc.; Metro Pacific Investments Corp. (MPIC)-led MPCALA Holdings, Inc.; and MTD Philippines, Inc. In November last year, Malacañang ordered DPWH to offer the CALAx contract in a new auction. It issued the order despite some business groups’ warning of its negative impact on the country’s attractiveness as an investment site. This was after Optimal Infrastructure sought Malacañang’s intervention due to its disqualification on a technicality concerning its bid security. Of the four original bidders, only MPCALA and Optimal Infrastructure have renewed their bid bond -- a guarantee that they have the financial muscle to carry out the project should they bag the contract.

“I doubt it if there will be any foreign player. The president stepping in over the heads of... his best secretaries don’t send a good message,” Mr. Wallace added.

Henry J. Schumacher, executive vice-president of the European Chamber of Commerce of the Philippines (ECCP), said via text: “It will be important that the bidding process will work this time or another failure will discourage ethical bidders -- local and foreign.”

Mr. Schumacher also said “the procurement system needs to be changed: the winner should be the lowest bidder who meets the technical requirements.”

He explained that “Juan de la Cruz pays for the infra [sic] at a higher price, which is unfair” if the biggest premium on top of project cost were made the basis of choosing the winning bid, since investors have to recoup costs.

In November last year, the Makati Business Club, American Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce Philippines, Canadian Chamber of Commerce of the Philippines, Employers Confederation of the Philippines, ECCP, JCCI, and MAP issued a joint statement discouraging President Benigno S.C. Aquino III from ordering the re-bidding of CALAx. “The proposed rebidding of the Cavite-Laguna Expressway would be an inopportune and ill-advised decision that would surely have a negative impact on our improving standing in the investor community,” the joint statement had read.

The government, however, remains confident, officials said.

“We are still seeing positive interest in all our PPP deals. A good example is the P122.8-billion Laguna Lakeshore [Expressway Dike project] wherein we enticed 24 groups,” Ariel C. Angeles, DPWH PPP Service officer-in-charge and director, said in a text message Saturday, while Communications Secretary Herminio B. Coloma, Jr. said via separate text: “We are still optimistic about investors’ appetite in PPP projects. Business confidence is sustained by our investment grade rating, sound macroeconomic fundamentals and good governance.”

The project involves a 35-year contract to finance, build and operate a 47-kilometer four-lane toll road between Cavite Expressway in Kawit, Cavite and the South Luzon Expressway-Mamplasan Interchange in Biñan, Laguna.

BUS RAPID TRANSIT
In a related development, the government plans to invite within the year prospective investors to build and operate a bus rapid transit (BRT) system between Quezon City and Manila, possibly under the PPP program, the Transportation chief said on Friday.

“In addition to the earlier announced PPP deals to be rolled out within the year, Manila BRT -- the one along Quezon Ave. -- is also expected to be rolled out this year, probably first half,” Transportation Secretary Joseph Emilio A. Abaya said in a text message.

He told reporters last Tuesday: “We were supposed to present Manila BRT in the last NEDA Board meeting, but we were pushed back...”

The proposed system will run along Quirino Highway to Manila City Hall, according to a notice on the Transporation department’s Web site posted last month. The project, according to the notice, will cut through Metro Manila areas not served by mass transit systems. It will connect to the Light Rail Transit Line 1, Metro Rail Transit Line 3 and Philippine National Railways systems. With around 300 buses, it will serve 279,476 passengers daily once launched in 2018, and with 32 stations a bus should be at each station every two to five minutes.

Nine PPP deals have been awarded since the program’s 2010 launch: P2.5-billion Integrated Transport System-Southwest Terminal project; P17.52-billion Mactan-Cebu International Airport Project; P64.9-billion LRT Line 1 Cavite Extension; P1.72-billion Automatic Fare Collection System; P2.01-billion Daang Hari-South Luzon Expressway Link Road; P15.52-billion Ninoy Aquino International Airport Expressway; P16.28-billion first phase of the PPP for School Infrastructure Project (PSIP); PSIP’s P3.86-billion second phase; and P5.69-billion Philippine Orthopedic Center modernization. 

Source: Business World Online