San Miguel wins NAIA Expressway project

April 17, 2013 at 17:31

MANILA, Philippines (UPDATED) – The country’s largest conglomerate, San Miguel Corp., won the bid for the P15.86 billion-worth NAIA Expressway that will link the country’s 3 airport terminals and the upcoming casino complexes near Manila Bay.

In what has been touted as a battle of the Philippine giants over a less than 10-km toll road, San Miguel unit Optimal Development Infrastructure Inc. edged out lone rival Manila North Tollways Corp (MNTC), a unit of Metro Pacific Investments Corp.

San Miguel’s P11 billion cash bid was way higher than the P305 million bid of MNTC.

Both offered to pay the government the amount in a single tranche before the signing of the concession agreement in June. The upfront payment is government’s revenue share from the project for the 30-year concession period.

Based on the bid documents of San Miguel, the toll rate for the NAIA Expressway is P35 to P45 for the entire 9.97-kilometer stretch.

TRAFFIC BUSTER. This is the map of the NAIA Expressway project that San Miguel won over rival Metro Pacific. Map provided by the Department of Public Works and Highways

TRAFFIC BUSTER. This is the map of the NAIA Expressway project that San Miguel won over rival Metro Pacific. Map provided by the Department of Public Works and Highways

The toll road

The Build-Transfer-Operate project involves the construction and the operation and maintenance of a 4-lane, 7.75-km elevated expressway, and a 2.22-km, at-grade feeder road that will start from Skyway.

The project will provide access to Ninoy Aquino International Airport (NAIA) Terminals 1, 2 and 3, and link existing expressways, namely, the Skyway and the Manila-Cavite Toll Expressway.

It will have entry and exit ramps at Roxas Boulevard, Macapagal Boulevard, and the integrated tourism estate, Entertainment City of state-run Philippine Amusement and Gaming Corp. (Pagcor).

Casino project

The road project has been requested by four business groups that are set to operate casino and entertainment projects at Entertainment City.

Entertainment City operators Belle Corp, Bloomberry Investments Holdings Inc, Alliance Global Group Inc, and Japanese-led Universal Entertainment Corp were willing to finance P6.5 billion of the project cost to provide casino players and tourists easier access to the NAIA terminals, Department of Public Works and Highways (DPWH) Rogelio Singson had said.

The government, in turn, would finance the project’s right-of-way acquisition costs amounting to P2.25 billion.

Savings for government

Initially, the project was designed to have a P6.5 billion subsidy that the Pagcor City locators would put up. This meant that to win the bid, MNTC and San Miguel could opt for a lower subsidy (less than P6.5 billion) or give the government a cash out.

Both MNTC and SMC opted to not take the subsidy and just give government a cash out to undertake the project. The party willing to give a higher cash out won.

This cash out is over and above the P15.86 billion cost of the NAIA Expressway project.

“This is a very good bid for government as well as for the locators of the Pagcor City. In effect, what will happen here is they can keep their P6.5 billion subsidy because this will now come from the proponent of the NAIA Expressway 2,” Singson told reporters at the sideline of the announcement of bid winner on Monday, April 15.

“I hope they will now be more helpful in providing the right of way immediately so this road will move as quickly as possible. We want to assure everyone that this bidding was done in the most transparent way and we’re very happy with the results,” Singson said.

PPP projects

This is the second big-ticket infrastructure project successfully bid out under the flagship Public Private Partnership (PPP) scheme that the Aquino government launched in 2010. The first was the P2 billion 4-km Daang Hari-SLEx road that was awarded to the Ayala group in 2011.

The government also successfully bid out the P16 billion school building project, which was awarded to Megawide and the construction company of former MMDA chairman Bayani Fernando.

The NAIA Expressway project bidding marked the first financial bidding the government conducted this 2013. The project was the first to be bid out among 8 ”rolled out” PPP projects in 2012.

Ayala Corp. and Indian firm M/S IL and FS Transportation Network were prequalified, but they withdrew from the race, leaving only MNTC and San Miguel as the last bidders standing.

Ramon Ang heads San Miguel while Metro Pacific is chaired by Manuel V. Pangilinan. Both have been going after similar big-ticket infrastructure projects the Aquino government has been auctioning off.

The toll road was approved on May 30, 2012 by the National Economic and Development Authority. Bidders submitted their qualifying documents on Oct. 2, 2012.

Official notice of award will be given on May 14, while contract signing will be on June 25.

Project construction, which is scheduled to start this 2013, will take at least 36 months, and will be completed in 2016. - Rappler.com

OPENING THE ENVELOPE. Officials open the envelopes containing the financial bids of San Miguel and MPIC to see who is offering to make a higher upfront payment to the government. Photo by Cai Ordinario

OPENING THE ENVELOPE. Officials open the envelopes containing the financial bids of San Miguel and MPIC to see who is offering to make a higher upfront payment to the government. Photo by Cai Ordinario

Source: CAI ORDINARIO, Rappler. 15 April 2013.

Arangkada Philippines: A Business Perspective — Move Twice As Fast (Beta) | Joint Foreign Chambers of the Philippines