Is the Palace allergic to MVP?

I am beginning to suspect that MVP must have slighted the Palace, knowingly or not, because despite his enthusiasm for investing in some of the more problematic big ticket infra projects, he seems to be getting the cold shoulder. In fact, a business source told me that MVP had once expressed impatience in a speech before a meeting of the Management Association of the Philippines. He is being kept hanging.

MVP is unable to formally consummate even a done deal like the operations and maintenance of the SCTEX. It will be recalled that last year, BCDA re-negotiated an O and M deal with MVP’s Metro Pac group on SCTEX that would link it smoothly with NLEX.

The done deal almost got cancelled in the waning days of the Arroyo administration as the BCDA tried to belatedly extract more benefits even after it signed off on the terms and sent MetroPac a notice of termination. The new BCDA board under Tong Payumo saved the deal and government’s reputation with investors that is essential for a credible PPP program.

Last October, BCDA sent the signed document to Malacanang for final signature of the President but got word around December that the document was lost. Now it turns out that it wasn’t really lost but that some Cabinet members prevailed upon the President to try to extract more juice from Metro Pac.

But by holding the agreement up, government had to be responsible for paying P1.27B, the cost of debt service to JICA this year. The amount would have been paid by MetroPac if the agreement had been signed before the end of the first quarter.

From what I know of such toll road concessions, one of the key assumptions has to do with projected vehicle traffic. Last year, the traffic volume was lower than forecast because of the fuel price increase and EVAT on toll fees. It seems certain they will not be able to meet original traffic forecasts given that oil prices are rising again.

Then, there is the widening of the San Fernando-Olongapo Road to four lanes and the construction of the by-pass road in Sta Cruz, Lubao, Pampanga which have both reduced traffic on SCTEX. Now more people pass through the toll free public roads because these are closer to populated areas and they save on toll fees. The traffic count for at least the next few years will likely be less than anticipated and MetroPac, not the government, should bear that risk.

That makes me wonder why government is trying to belatedly squeeze more out of a done deal. I suspect that the pretext of trying to squeeze some more is being used to just make MVP sweat a bit longer and realize his proper place in the national pecking order. In other words, teach MVP some humility.

Maybe it is still possible to squeeze some more from MetroPac but is it worth the risk of breaking the deal? And what effect will it have on the investor community? Remember, MVP was ready to either walk out or go to Court when the previous Board sent the notice of intent to terminate the negotiations. Can government still walk away and not sacrifice its credibility to PPP investors? I doubt it.

On the MetroPac proposal for the MRT 3, a source told me that Sec. Mar Roxas at one point changed his preference for direct investment by DoTC in favor of the Metro Pac option so that it was presented to Malacanang. But he was half-hearted about it, and quickly withdrew when P-Noy commented it seems too profitable for MetroPac.

Now, they will have to sort out pretty complicated legal and financial matters because MetroPac has bought out the investors in MRTC, the original entity that won the right to undertake the MRT 3 project. There is probably no way of getting out of dealing with MetroPac, whatever options they decide to take. DBP and LandBank were also given by the BSP until June 2012 to divest all its equity and preference shares in the MRTC.

The MetroPac proposal seems the most cost effective approach to the MRT 3 conundrum and the one which avoids a long legal battle that will further delay much needed improvement in the MRT 3 equipment and operations. But the proposal had been pending for quite a long while and may remain so for a while more.

As for the NLEX-SLEX connector road project, it seems the MetroPac proposal will be waylaid not so much by a rival proposal from San Miguel-Citra but by a planned auction of the “air rights” to the PNR right of way. Last Saturday, the Home Guarantee Corporation published an invitation for proposals for negotiated sale of this “PNR Airspace.” The advertisement noted that the subject for negotiated sale had been “identified for development as an elevated tollway/skyway project.”

That puts the MetroPac project in jeopardy or at the very least, there will be an adverse impact on costs. MetroPac did not reckon on paying for this right of way, which was precisely why it wants to use the PNR right of way for the project. The air rights over the PNR right of way were sold by a previous PNR administration. Even if the party who now owns it is a government entity, there are now costs to be reckoned with.

One other MetroPac proposal still to be acted upon is the Clark Airport Terminal. But in this case, the future of Clark is yet to be determined by the feasibility of a fast train to Manila so anything about Clark appears to be on hold. I understand from an official of AirAsia Philippines that the Clark Airport Authority does not even have a board of directors, months after Sec Roxas sought for and got control over the facility. AirAsia is anxious to have a bigger terminal in place soonest.

It does seem the Palace is allergic to MVP for some reason even if he is an Atenean. MVP has been unable to get a single project involving government approved. And if the Gokongweis were not involved in that PLDT/Digitel merger, I guess that would also still be hanging today. Maybe, MVP is the wrong person to take up the cudgels for the mining sector if they want a positive outcome.

Hopefully, there is nothing personal between MVP and P-Noy himself. I however heard that in the case of DPWH’s Babes Singson, he does have a “hinanakit” with MVP with the way he was supposedly treated on his way out of the MetroPac empire via Maynilad.

Apparently, MVP was not inclined to give him his full benefits for some reason until DMCI, the Maynilad partner, intervened for Singson. My sources surmised that past history with the failure in Metro Pac’s unfortunate Fort Bonifacio experience may have colored MVP’s attitude towards Singson. But it doesn’t sound reasonable for someone as savvy as MVP to shabbily treat a senior executive who is leaving to become a cabinet member with powers over his future projects. I can’t believe this.

But things may finally start moving. At long last, P-Noy’s speech at the Euromoney conference last Tuesday expressed impatience and called on his officials to act quickly on PPP proposals. “I have instructed the economic cluster… There has to be more speed in terms of giving a thumbs up or a thumbs down to all the various projects that are under consideration. We cannot afford to think of decades upon decades. We are missing the opportunities that are already extant,” P-Noy stressed.

Indeed, it is only fair for government to give a thumbs up or thumbs down quickly. Even if some investors could be rather prickly, that’s no reason to be allergic to them and keep them hanging. After all, there aren’t too many folks like MVP or Ramon Ang who are gung-ho in investing big money on big ticket items the country badly needs.

We cannot take MVP or Ramon Ang for granted just because they are Filipinos. It would be too embarrassing if they go to Myanmar where they are likely to be more appreciated. As it is, Ramon Ang has already invested quite a bit of money in Malaysia. I am sure even now, MVP must be having serious discussions with his Indonesian principals why to invest here rather than in Indonesia.

What do we really want ba?

Facebook era

Jose Villaescusa sent this one.

They say pretty soon wedding ceremonies will be conducted like this:

 PRIEST: Do you agree to change your FACEBOOK status from *single* to *married*?

GROOM: I do!

BRIDE: I do!

PRIEST: then I now pronounce you man and wife.. Congratulations! You may now POKE the bride… and don’t forget to TAG me in the wedding pics!

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco