THE Metro Pacific group has agreed to shoulder P7 billion worth of road right-of-way (ROW) cost for a project that is envisioned to link the North Luzon and South Luzon expressways as long as the government extends flexible tariffs.

Manuel V. Pangilinan, chairman of Metro Pacific Investment Corp. (MPIC), said his group was asked by the government to amend its proposal, which was originally submitted in May last year, to include the road right-of-way cost in the project. The total project cost has ballooned to P34 billion.

“The right-of-way cost from McArthur Highway in Valenzuela to Buendia in Makati City is estimated to cost P7 billion,” said Pangilinan.

“The project cost, which we offered to absorb, is in the aggregate of P27 billion. So, the private sector’s share is P27 billion and the government’s share is P7 billion. In a financial perspective, that’s not a bad sharing of finances. That means that the project cost would be P34 billion. We will raise money for that but the tariff has got to be adjusted because the project cost has gone up,” he said.

Pangilinan said his group would have to pass on this cost to the consumers because “no private sector will invest if there’s no return.”

In line with this, Pangilinan urged the government to make clear its rules on right of way. He said that when the project was conceived last year, the assumption of his group was that the government would take over the right-of-way obligation and other relevant collateral financial obligations “which is a typical approach to a PPP [public-private partnership].”

“Now, they say, ‘No, that’s not right.’ If the government cannot do the subsidies, it means that the private sector will absorb the right-of- way cost, then fine, tell us. If those are your rules, then we will adjust. They have to make the ground rules clear and they have to be flexible on the tariffs,” he said.

In a recent legal opinion issued by Justice Secretary Leila de Lima, the agency had informed the Department of Public Works and Highways (DPWH) that the proposed government acquisition of additional roads right-of-way would constitute a direct government subsidy, something that is prohibited in any unsolicited proposals as stated under Section 4A, or the build-operate-transfer (BOT) law.

Section 4-A of the BOT law allows unsolicited proposals from the private sector, provided the project involves a new concept in technology and/or is not part of the list of priority projects; no direct government guarantee, subsidy or equity is required; and the proposal must be subjected to comparative or competitive proposals.

Metro Pacific Tollways Development Corp. (MPTDC), a wholly owned subsidiary of publicly listed firm Metro Pacific Tollways Corp. (MPTC), submitted to the DPWH an unsolicited proposal to build a connector road between the two expressways. The MPTC is the infrastructure arm of MPIC.

The Nlex and Slex connector road is included in the PPP Projects that will be auctioned by the government soon.

MPTDC proposed to finance the construction cost of the connector-road project estimated at P17.77 billion, while the DPWH, it said, would have to shoulder the cost of additional RROW estimated at P2.4 billion.

The connector-road project, which is a 13.2-kilometer elevated road via the Philippine National Railway tracks passing through Manila, requires additional road right-of-way outside of the railroad for efficient operations and effective utilization.

Pangilinan’s computation on the total project cost is higher because it includes segments 9 and 10 of the Nlex.

Segment 9 will connect the McArthur Highway in Valenzuela all the way to Nlex, while Segment 10 will link the same highway to the Port Area in Manila.