Delay in toll rate decision means losses for MPTC

MANILA, Philippines - The government’s delay in making decisions regarding two toll road projects as well as requests for toll rate adjustments is not only expected to slow down capital investments but also inflict financial losses for the company, Metro Pacific Tollways Corp. (MPTC) said.

MPTC president Ramon Fernandez said he is hoping that the government would immediately act on the firm’s application for rate increase to prevent the company from incurring further losses.

For this year, MPTC expects revenue losses to reach P1.12 billion owing to the delay in toll rate adjustments.  The amount is higher than the P990 million losses incurred last year.

Fernandez said immediate action is also needed with respect to the group’s revised proposal for the operation and maintenance of the Subic-Clark-Tarlac Expressway as well as the P18 billion connector road that would link Metro Pacific Tollways’ NOrth Luzon Expressway with the South Luzon Expressway.

The decision for the connector road project to be implemented under a joint venture with Philippine National Construction Corp was shot down by the Department of Justice, causing further delays to the project.

MNTC, a unit of MPTC, had proposed a 50 percent revenue sharing scheme with the government, which was was endorsed by the Department of Finance to President Aquino for approval last year.    

“We’re just waiting for the President’s approval. We’re optimistic that the President will approve it.   We feel that it would be unfair after negotiating with us twice and us increasing the offer, it would still be subject to a price challenge,” Fernandez said.

The Swiss challenge system involves an unsolicited proposal for a government project but third parties are allowed to challenge the proposal during a designated period. The original proponent then has the right to counter-match such offers.

MNTC bagged the SCTEX contract during the Arroyo administration, but the Aquino government suspended the deal on concerns over revenue sharing.

Under the terms of the contract, state-run Bases Conversion Development Program (BCDA) is supposed to assign to MNTC the management, operations and maintenance of SCTEX as well as the government agency’s rights in the Toll Operations Agreement, including the right to collect toll revenues for 25 years, renewable for another eight years.

Fernandez said the company may conduct a private placement next year that would allow foreign investors to own 20 percent of MPTC.

The entry of foreign investors would boost the company’s financial muscle as MPTC sets its sights on other projects offered under the government’s Public-Private Partnership program.

MPTC has bought bid documents for the P123 billion Laguna Lakeshore Expressway project and the P2.5-billion Integrated Transport System (ITS) – Southwest Terminal Project.