Ayala may lose P18-B infra project

The Ayala Group stands to lose the P18.24-billion Manila Calabarzon Express (MCEx) project as government is now considering the possibility of removing it from the build-own-operate (BOO) scheme and applying it for Japanese funding.

This change in government policy also opens the door for the Fil-Estate Group, Ayala's closest competitor in the property development sector, which had already expressed interest in the project.

Although Ayala was the proponent of the project and had already submitted an unsolicited proposal, the Presidential Committee on Flagship Programs and Projects (PCFPP) said that MCEx is being repacked for official development assistance (ODA) under Japan's Special yen Loan Package otherwise known as the Obuchi Fund.

Flagship Projects Secretary Roberto Aventajado told reporters that government is looking for the cheapest way to finance the project. Applying it for Obuchi funding would necessitate Ayala's removal as original proponent since the project would no longer be private sector-led.

According to Aventajado, Ayala has to withdraw its original unsolicited proposal. This after the company had already spent time and money conducting a pre-feasibility study.

Since government is going to change the funding scheme from BOO to the so-called initiate-operate-maintain (IOM) scheme, Ayala's withdrawal of its unsolicited proposal effectively wipes the slate clean.

Under the IOM scheme, private sector participation would be in the form of supply, operation and maintenance. In the case of MCEx, the private participant would also have to come up with the counterpart fund to advance government's end of the funding agreement with the Obuchi Fund.

However, Aventajado said Ayala would not be taken completely out of the picture. "Government doesn't have the money to fill up the counter part fund requirement and Ayala said it was willing to advance this amount provided it was assured that it would get the contract to supply, operate and maintain," he said.

Under the Obuchi Fund, government will be required to provide counterpart financing equivalent to 15 percent of the total project cost estimated at $85 million.

Counterpart financing has been the government's problem for all ODA-funded projects and the proposal to allow a private group to advance the money was itself a deviation from normal procedure.

"But since Ayala is willing to advance this amount, we are looking for a legal and transparent way of making sure that they would still be the operator," Aventajado pointed out. "After all, why would they agree to make the advance if they won't be assured that they will get the IOM contract?

However, Aventajado said government was looking at the legal angles to make sure that it could be done with transparency. "We don't want to appear like favoring anyone," he said.

Despite the overhaul in the financial mode, however, Aventajado said that as far as government is concerned, Ayala is still at the forefront of the project although Fil Estate had signified its interest.

"Fil Estate has to make its own offer which it hasn't done so yet," he said. He added that should the project fall through, other private sector group would have an equal crack at the contract. --