The Public-Private Partnership (PPP) Program of the government is now under fire due to President Aquino’s statement on the possible rebidding of a multibillion-peso expressway project, casting shadows over the integrity and the transparency of the PPP framework.
President Aquino on Wednesday said he is inclined to reopen the bidding for the P35.4-billion Cavite-Laguna Expressway (Calax), as this would be the better option over favoring one group to another.
“There are private-sector individuals or companies that are willing to provide us the infrastructure we need and to deliver a premium to us. So how do we meet the attainment of the goal of getting the best deal for our people?” he said at the annual forum with the Foreign Correspondents Association of the Philippines on Wednesday.
“I am inclined to think that a rebid will be the proper course of action on this particular issue,” the President quickly added.
He said his administration will have some explaining to do if it accepts the earlier P11.6-billion winning bid made by Team Orion of Ayala Corp. and Aboitiz Land Corp., and forego the belated P20.105-billion offer of San Miguel Corp. (SMC).
The most diversified conglomerate in the Philippines was disqualified from the auction for the deal due to a defective bid security, prompting the group to file a petition before Malacañang to reconsider its offer.
It has been four months since the Executive issued a statement that it will review the petition of SMC, which is chaired by Eduardo Cojuangco Jr., the uncle of President Aquino. The President explained his decision to welcome the petition of the food-to-infrastructure firm, citing the foregone revenues from the premium offer of SMC.
“What is the fundamental issue there? The position there was a typographical error or a lack of four days in the bid security document,” Mr. Aquino said. “San Miguel, itself, stated that their bid security was good for 180 days as opposed to 176.”
Since Optimal Infrastructure Development Inc., the infrastructure arm of SMC, was disqualified from the bidding, the bid documents were returned to the bidder. The bid was then opened in front of the media.
“They said that their bid would have been over P20 billion, if I remember it correctly, versus the winning bid of about P11 billion,” he said. “Now, if we accept the winning bid at this time when there is an allegation that there was a much superior bid, then we will have to explain to the people the P9-billion difference that we forego.”
He said the government will ultimately decide based on whether “we get a premium of P20-billion allegedly from one bid, or an P11-billion premium from another bid.”
“Now, at the end of the day, we have to protect the people’s interests,” he said, pointing out that the proposal for the government to actually undertake the project defeats the whole purpose of his cornerstone infrastructure program.
However, rebidding the project puts the PPP Program in a bad light.
Team Orion said it found Mr. Aquino’s statement as distasteful, as the prospect of rebidding the deal despite an above-board auction held in June is contrary to good governance.
The tandem of Ayala Corp. and Aboitiz Land Inc. pointed out that such a move would remove the trust of the investors in the cornerstone program of the Aquino administration.
“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,” the group said in a joint statement issued a few hours after the President announced the prospect of staging another auction.
Team Orion warned the government of losing the two big companies as partners in plugging the leakage in the country’s infrastructure.
“We will not participate if government decides to rebid 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 law,” the tandem emphasized, referring to the Department of Public Works
and Highways.
The tandem urged the government to “respect the well-established process and uphold its own rules, and award the project to the highest complying bidder, so we can begin building much needed infrastructure.”
Optimal, for its part, is calling on Malacañang to declare its bid for the deal as compliant and accept its multibillion-peso offer.
“We support the position of team Orion, who submitted a lower bid of P11. 6 billion that the project should be awarded to the highest bidder,” the infrastructure company said.
“This huge undertaking will have a big impact on the country for many years to come and we believe government should have the best options available to it in order to make sure they get the best deal. However, we will respect any decision from Malacañang as far as this matter is concerned, even as we vow to continue to follow the due process of law,” it added.
The project is a 47-kilometer thoroughfare that would start from the Manila-Cavite Expressway in Kawit, Cavite, and end at the South Luzon Expressway (Slex)-Mamplasan Interchange in Biñan, Laguna. It would consist of nine interchanges and a toll barrier before the Slex.
The third PPP project under the DPWH, the expressway is seen to decongest traffic along the Cavite-Laguna road network.
Construction of the multibillion-peso expressway is seen to start by October next year. It is expected to be completed by September 2017.
Since the infrastructure program’s inception in 2010, the government has awarded seven contracts so far.
The government hopes to finish at least eight projects before President Aquino steps down from office in 2016.
Butch Fernandez & Lorenz S. Marasigan