MANILA, Philippines - Listed San Miguel Corp. (SMC) yesterday said the deal breaker in the decision of the diversified conglomerate to withdraw from the bidding of the P65 billion Light Rail Transit Line 1 (LRT 1) Cavite extension was the viability of the public private partnership (PPP) project.
SMC president and chief operating officer Ramon S. Ang said the company was all set to submit a bid for the Aquino administration’s largest PPP project last Wednesday but decided on the last minute to back out.
“We were really serious in joining. In the last minute while running the computation, the figures did not pass our hurdle rate,†Ang said.
According to Ang, the documents of SMC were complete including the insurance as well as cash bonds together with the technical and financial proposals.
Based on the company’s computations, Ang pointed out that the return on investments would likely be after the 20th year even with the P5-billion subsidy to be extended by the government.
SMC representative brought five big boxes to the venue of the bidding but instead decided to submit a letter informing the DOTC that it regrets not joining the bidding process.
Aside from SMC’s SMC Infrastructure Resources Inc., other companies that did not submit their bids last Wednesday to the Department of Transportation and Communications (DOTC) included Filipino-owned Megawide Construction Corp., Spanish-owned Globalvia Inversiones SAU, Eco Rail Services Inc. of businessman Reghis Romero II, and Malaysian-owned MTD Philippines Inc.
The DOTC pushed through with the bidding Wednesday despite receiving a lone bid from the tandem of infrastructure giant Metro Pacific Investments Corp. (MPIC) and conglomerate Ayala Corp. - Light Rail Manila Consortium.
The lead member of the group is MPIC Light Rail Corp. with 55 percent while other members include Ayala’s AC Infrastructure Holdings Corp. with 35 percent and Macquaire Infrastructure Holdings (Philippines) Pte Ltd. with 10 percent.
After a failed bidding, the National Economic and Development Authority (NEDA) board chaired by President Aquino approved last Nov. 21 the revised terms for the project including the payment of real property taxes (RPT) by the government.
The government also ensured the integrity of the facility’s structure for a two-year period, approved a five-percent fare increase upon completion of the project, and allowed the submission of negative bids.
However, the agency has slashed the P6-billion subsidy down to P5 billion to be extended to the winning bidder consistent with the deletion of the obligation of the concessionaire to fund the relocation under Section 11.7 of the draft Concession Agreement up to the amount of P900 million.
Last Feb. 10, the DOTC announced through GBB 06-2014 that the cap of the subsidy amount (including all taxes) and value-added tax (VAT) as stated under Section 5.2.a of the ITB is subject to the cap of P6 billion.
The agency also highlighted the impending tender for the construction of the P1.4 billion common station to connect LRT-1 with the Metro Rail Transit (MRT) Line 3 (MRT3), and the future MRT7 in the EDSA-North Avenue area.