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By Imee Charlee C. Delavin and Chrisee J. V. Dela Paz, Reporters

Fresh bids mulled for road PPP

Posted on October 23, 2014

THE GOVERNMENT is “inclined” to reopen bidding for the P35.42-billion Cavite-Laguna Expressway (CALAX) public-private partnership (PPP) project, President Benigno S.C. Aquino III announced yesterday, following questions on the outcome of a tender last June 2.

“I am inclined to think that a re-bid will be the proper course of action on this particular issue,” Mr. Aquino said, answering a question at a forum in Marco Polo Ortigas in Quezon City held by the Foreign Correspondents Association of the Philippines.

Mr. Aquino said “accepting the winning bid at this time when there is an allegation that there was a much superior bid, will mean having to explain the P9-billion difference that the government will forego.”

Despite having the highest bid for the toll road project, involving an offer of a P20.1-billion premium on top of project cost, San Miguel Corp. (SMC) subsidiary Optimal Infrastructure Development, Inc. was disqualified on a technicality concerning its bid security -- a move for which the company formally sought Malacañang’s intervention later in June.

That left Team Orion -- the consortium of Ayala Corp.’s AC Infrastructure Holdings Corp. and Aboitiz Equity Ventures, Inc.’s Aboitiz Land, Inc. -- as the highest bidder with an offered premium of P11.66 billion that bested the premium offers of P11.33 billion of Metro Pacific Investments Corp.’s (MPIC) MPCALA Holdings, Inc. and P922 million of MTD Philippines, Inc.

In an order dated June 30 issued by the Office of the President (OP), Malacañang suspended implementation of the Department of Public Works and Highways resolution to disqualify San Miguel’s Optimal Infrastructure.

“There are private sector individuals or companies that are willing to provide us the infrastructure we need and to deliver a premium to us... We get the infrastructure; we get a premium of P20 billion allegedly from one bid, or an P11-billion premium from another bid,” Mr. Aquino said.

“So how do we meet the attainment of the goal of getting the best deal for our people? At the end of the day, we have to protect the people’s interests.”

The project involves a 35-year contract to finance, build and operate a 47-kilometer four-lane toll road connecting growth hubs south of Metro Manila. The expressway will run between the end of the Cavite Expressway in Kawit, Cavite and the South Luzon Expressway (SLEx)-Mamplasan Interchange in Biñan, Laguna. Construction is scheduled to start by October next year and end by September 2017. CALAX is DPWH’s third PPP project after the Daang Hari-SLEx road link awarded to the Ayala group and the NAIA Expressway that went to San Miguel.

Malacañang’s announcement, however, did not sit well with the other bidders.

“We are very concerned with the Office of the President’s current inclination to pursue a rebid of the CALAX project because of the severe negative impact this decision would have on investor confidence in the PPP Program and on the integrity of the entire bidding process,” Team Orion said in a statement on Wednesday.

“We will not participate if government decides to re-bid the project because there is no legal basis for this course of action given the fact that the original DPWH-led process was conducted above board, transparently and within the framework of the build-operate-transfer (BOT) law.”

Optimal Infrastructure said in a separate statement: “Our pending appeal is for Malacañang to declare our bid for the CALAX project as compliant and accept our P20.1-billion bid to get this vital infrastructure going.”

Sought for comment, MTD Philippines, Inc. President Isaac S. David said by phone that “all qualified bidders have opened their financial bids, so to win, you should come up with a tender higher than those of San Miguel.”

“If the highest premium is still the basis of the winning bid, we will not participate.”

MPIC Chief Financial Officer David J. Nicol said in phone interview: “These bids are very expensive to prepare.”

“The Ayala bid seemed to be the best... within the defined process. It’s hard to see how the competitive process in a re-bid would really work,” Mr. Nicol added.

“Naturally, the government wants the best deal for the public, but I do wonder what the hidden costs of a rebid would be. In any PPP bidding anywhere in the world, bidders want to believe in certainty of process don’t they?”

Asked if the floor price will change should the government decide to hold an auction anew, Public Works and Highways Secretary Rogelio L. Singson replied via text: “I still don’t know as we still have to receive official notice from OP.”