Local and foreign business groups are contesting the proposed rebidding of the Cavite-Laguna Expressway (Calax) project, labeling it as an “ill-advised decision” that will damage investors’ confidence in the administration’s Public-Private Partnership (PPP) Program.
This came as Malacañang said the government has yet to fix a new date for the rebidding of the P35.2-billion toll-road project, even as both the winning and disqualified bidders indicated they would not go to court if plans for a new bidding pushes through, as earlier announced by President Aquino.
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, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc. and the Management Association of the Philippines, released a joint statement on Tuesday, dissuading President Aquino from pursuing his plan to reopen the bidding process for the huge PPP deal.
“While the PPP Program encountered some difficulties in its initial stages, it has since begun to catch up, with high-impact projects being steadily rolled out, catching the attention of domestic and international investors. It is imperative that this pipeline be clear of any blockages and inconsistencies if we are to protect the credibility of this program and our procurement system as a whole. In light of this, 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 read.
Moreover, the groups said in their statement that they believe the Department of Public Works and Highways (DPWH) conducted the bidding of the Calax with “complete transparency and fairness” and in full compliance with the build-operate-transfer (BOT) law, thus rebidding the project would have no legal basis.
“We share the concern of our colleagues in the private sector that a disregard of the present rules through a rebid will adversely impact investor confidence in the PPP Program and in our bidding procedures… Thus, we call on the government to remain consistent with the provisions of the BOT law, not just in this particular case but also for the other projects in the pipeline,” the groups further said in their statement.
The tandem of Ayala Corp. and Aboitiz Land Corp., Team Orion, submitted the winning bid for the expressway project with an P11.6-billion premium payment on top of the project cost.
A P20.105-billion premium payment, on the other hand, was offered by San Miguel Corp.’s infrastructure arm, Optimal Infrastructure Development Inc., which was disqualified from the auction due to its alleged defective bid security, which was a few days short of the required cover period.
The diversified conglomerate then filed a petition before Malacañang to reconsider its offer. It has been four months since the Executive said it will review a petition of SMC, chaired by Eduardo Cojuangco Jr., the uncle of President Aquino.
The President explained his decision to welcome the petition, citing the foregone revenues from SMC’s offer of P20 billion if the winning bid of P11 billion from Team Orion is accepted.
“Wala pa [none yet],” Palace Spokesman Edwin Lacierda told the BusinessMirror on Tuesday after checking with DPWH officials tasked to set the ground rules for a likely re-bid of the multibillion-peso Calax project.
President Aquino, fielding questions at a forum of the Foreign Correspondents Association of the Philippines on October 22, disclosed he was inclined to back a rebidding.
“Anyway, ’yung Calax, what is the fundamental issue there? In the bid documents submitted and the portion, which is more or less a template, SMC [position] is… there was a typographical error of parang a lack of four days in the bid security document. The DPWH asked for a clarification—a clarification by the ANZ Bank [Australia and New Zealand Banking Group]—and San Miguel itself stated that their bid security was good for 180 days as opposed to 176,” Mr. Aquino recalled.
He added that “allegedly… and allegedly because the bid documents were returned to SMC and they opened it up before 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. 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. We get the infrastructure; 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.”
President Mr. Aquino admitted that there was another proposal for government to actually undertake the project; but he ruled out this option, saying it “defeats the whole purpose of the PPP project wherein we free our resources for other infrastructure needs.”
According to Aquino, “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? So, I am inclined to think that a rebid will be the proper course of action on this particular issue.”
But Communications Secretary Herminio B. Coloma Jr., in a separate interview late last week, quoted Executive Secretary Francisco Ochoa as saying that the planned rebidding of the Calax project “is pending consideration.” Ochoa assured, however, that “whatever the final decision will be, such decision shall definitely have legal and factual basis.”
The business chambers also asked the government to swiftly enact the amendments to the BOT law that will institutionalize the PPP Center and its processes. It will further strengthen the country’s PPP framework and prevent hindrances to the implementation of critical public projects.
“Consistency and predictability in policy and adherence to rules, among other factors, form the bedrock of investor confidence in any economy. In light of the significant attention that the Philippines has been gaining from the international and domestic investing community, it is our firm belief that the country must hold fast to these principles in order to sustain the gains that the country has achieved in the past four years,” the foreign chambers and business groups said.
The deal has been in limbo for four months now due to a petition for reconsideration filed by a disqualified bidder.
Sore loser
The seemingly too long a decision of the President on the issue left an independent investments-management company based in Hong Kong “wondering.”
“Why listen to noise produced by a sore loser? How credible is a bid by a party who is unable to submit the requested documents and fails to lodge an orderly appeal?” HSZ Group Chairman Hansrudolf Schmid asked.
He said if President Aquino “protects the outcome of the orderly bidding, he builds trust in rules-based governance.”
“But, if the President reaches for the extra P8 billion, he does the opposite. He undermines the rule of law. Potential investors, in particular foreign ones, take note,” Schmid warned. “The extra P8 billion is a small amount compared to the damage caused by not moving the process forward in a principled way.”
“Mr. President, the longer you remain stuck, the more we wonder,” he said.
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 conssist 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 eight contracts so far.
(Lorenz S. Marasigan, Catherine N. Pillas & Butch Fernandez)