‘MILKING” money from investors by rebidding with high-premium-payment requirement the P55.5-billion contract to develop a toll road that aims to connect the cities of Laguna and Cavite places ordinary commuters at the losing end.
This was clear in the statements of officials from business chambers that the BusinessMirror polled hours after the fresh tender of the Cavite-Laguna Expressway (Calax) deal, which was met by a low turnout of participants.
American Chamber of Commerce Senior Advisor John D. Forbes said the unnecessary rebidding created a suction in the government’s thrust to improve the quality of infrastructure in the Philippines.
Forbes said the controversial Calax rebidding, launched by President Aquino himself, also reflects the long-standing problem of poor planning.
“Calax was needed yesterday to reduce congestion and is being delayed to get more money from bidders who could recover it with higher tolls,” he said.
Indeed, to recover from over P55 billion in investment at the very least, the winning bidder will have to increase toll rates every now and then, thereby passing the brunt to the consumers, experts observed.
The road network will connect the cities of Laguna and Cavite—two of Southern Tagalog’s agricultural and industrial gems—to spur economic growth through trade and tourism. But with the possibility of ridiculously high toll rates, prices of basic goods like food that will be transported through Calax will have to be adjusted for businesses to make money.
The thoroughfare aims to decongest road traffic in the fast-growing economic hubs for efficiency and comfort. But this will have to be paid at a higher price.
The government moved to place the deal under a rebidding to increase its supposed revenues from the premium offer of bidders. It placed a P20.1-billion floor price for the auction, reflective of disqualified bidder San Miguel Corp.’s alleged proposal.
San Miguel unit Optimal Infrastructure Development Inc. earlier sought President Aquino’s intervention after the Department of Public Works and Highways (DPWH) decided to disqualify the firm from the auction due to a technicality.
The “minor” technicality involved a defective bid security on the part of Optimal. It was asserted that the bid was four days short of the required cover period that could result in a few millions of pesos in losses should the concessionaire fail to deliver the infrastructure above board.
Team Orion of Ayala Corp. and Aboitiz Equity Ventures Inc. topped the original auction with a P11.33-billion premium offer on top of the project cost. Metro Pacific Investments Corp. trailed behind by a hairline difference.
This result outraged disqualified bidder Optimal, whose chairman is the uncle of President Aquino. It sought to overturn the results of the auction—to which it claims to have topped with a P20.1-billion premium offer—by taking its battle to Malacañang.
It took the government quite some time before it finally decided on the matter. Several petitions from Team Orion and Optimal reached the Public-Private Partnership (PPP) Center, the Palace, and the DPWH, with the two firms seeking to contradict each other’s position.
The two parties, however, came to a consensus that the road network is a pressing necessity, hence, Mr. Aquino should come to a conclusion.
He did. The Chief Executive called for the rebidding, voiding the clean and transparent tender that was launched in 2013.
This move received both the cheers and jeers of investors.
Makati Business Club Executive Director Peter Angelo B. Perfecto said the rebid of the project when the process was already concluded was an inopportune and ill-advised decision.
“The effect is now manifested by the decrease in the number of Calax bidders from four to two,” he said.
Perfecto was referring to the low turnout of bidders for the project, which only saw Optimal and MPCALA Holdings Inc. of Metro Pacific submitting their proposals.
Two other parties, represented by two different law firms, decided against the auction.
Metro Pacific and San Miguel are separately eyeing the expressway-development deal, as this would further enhance their toll-road businesses.
The flagship of Hong Kong-listed First Pacific Co. Ltd. currently holds the concession for the North Luzon, the Subic-Clark-Tarlac, and the Manila-Cavite Toll expressways.
San Miguel, on the other hand, controls the Skyway System, the South Luzon Expressway, the Southern Tagalog Arterial Road and the Ninoy Aquino International Airport Expressway Phase 2.
The low turnout, however, already made government officials cheerful. Public Works Secretary Rogelio L. Singson said his office is contented with the two bidders.
“I thought it will only be San Miguel,” he said, seemingly thanking the heavens for the participation of businessman Manuel V. Pangilinan’s firm in the auction.
Although this move has sent negative signals to the business community here and aboard, Perfecto believes investor support for the PPP Program will remain high.
“To say that the entirety of the government’s infra program is already tarnished is too extreme a conclusion, though. Investor interest remains robust but, perhaps, cautious due to possible uncertainty in contract awarding and other issues,” Perfecto said.
He noted that the state should ensure the sanctity of the bidding process for key infrastructure projects, while eliminating small roadblocks when possible.
“Moving forward, the government should guarantee the implementation of a project from bidding to its accomplishment with as little blockages and uncertainty as possible,” Perfecto said.
On the other hand, Philippine Chamber of Commerce and Industry President Alfredo M. Yao believes that the rebidding of Calax was the right decision, as this would allow the government to receive more gains to be used for social infrastructure.
“They should just maximize whatever will go to the government,” he said.
For his part, European Chamber of Commerce of the Philippines External Vice President Henry J. Schumacher wished the government would review its business strategy as a whole.
“We are looking forward to the implementation of a new government strategy to allow foreign-owned construction companies to operate fully foreign-owned in this country. That will be good for competition, and will hopefully have more than two companies bidding for projects,” he said.
Calax is envisioned as a 47-kilometer thoroughfare. The private partner will take on the financing, design, construction and operation and maintenance of the entire four-lane toll road.
The project will also include the construction of centralized toll plazas, a toll collection system, viaducts and bridges. The road should be operational by 2019, based on an indicative timeline.
The government has awarded nine contracts since the infrastructure program’s inception in 2010. It aims to sign at least 15 contracts by the time President Aquino steps down from office in 2016.
Source: http://www.businessmirror.com.ph/government-wins-public-loses-in-calax-rebid/
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