Government set to issue P3-billion infrastructure bonds

MANILA, Philippines - The government is set to issue P3 billion worth of infrastructure bonds within the month, Trade Secretary Peter B. Favila said yesterday.

In an interview with reporters, Favila said that they will release P3 billion of the P50-billion infrastructure bond within the first quarter.

According to Favila, the P3 billion will be given to San Miguel Corp. (SMC) and DMCI Inc. in order to bankroll the first phase of the construction of the Tarlac Pangasinan La Union Expressway Project.

Favila said that the Development Bank of the Philippines (DBP) and the Social Security System (SSS) has already agreed to subscribe to the issue.

With the P3-billion government contribution and the P1.5-billion equity from the private sector developer, the consortium now has P4.5 billion which is enough to start the 88.5 kilometer Tarlac-Pangasinan-La Union Expressway. The road is a four-lane highway that will cut travel time from Manila to Baguio by half.

Earlier, Favila said that he has spoken with SMC Corp. President Ramon Ang who asked him to first bridge the government subsidy so that they can start the construction of the expressway as soon as possible.

The government has committed to provide a P3-billion subsidy for the expressway.

In order to immediately start the construction, Favila, who is also the head of the National Development Corp. (NDC), said that NDC agreed to first bridge the government subsidy.

Favila noted that the consortium is ready to start construction for the first nine to 10 kilometers of the expressway. The construction will start where the Subic Clark Tarlac Expressway (SCTEX) ended.

Favila said that the first part of the construction will be until Tirona. He said that the group has already cleared all the right of way issues until Tirona. The rest of the area is still plagued with right of way concerns, Favila said.

The construction of the Tarlac Pangasinan La Union Expressway is being undertaken by the Private Infrastructure Development Corp. (PIDC). SMC, through Rapid Thoroughfares Inc., owns 35 percent of PIDC, making it the biggest shareholder in the company. DMCI, on the other hand, has a 32-percent stake. The two own majority or 67 percent of PIDC.

Aside from the P3-billion government subsidy, the money will come from owner’s equity and bank loans. The owner’s equity is estimated to be at P6.5 billion. The road is expected to be completed by 2013.