MPIC unit threatens to sue gov’t: Transparent, fair process deemed crucial in SCTEX price challenge

MANILA, Philippines - A unit of infrastructure giant Metro Pacific Investments Corp. (MPIC) yesterday threatened to sue the government if the impending privatization of the operations and maintenance of the 94-kilometer Subic-Clark-Tarlac Expressway (SCTEX) is not conducted in a transparent and fair manner.

Rodrigo Franco, president of MPIC’s Manila North Tollways Corp. (MNTC) said in an interview with reporters that it would be forced to take legal action if the Bases Conversion and Development Authority (BCDA) fails to work out a common understanding on the terms of reference based on the business operating agreement (BOA) of the “price challenge” for the country’s longest toll road.

“If the price challenge proceeds without an agreement on the provisions of the Terms of Reference and without a common understanding that the BOA will be the basis of the contract for the Price Challenge, the validity of the exercise may be questioned and MNTC will be compelled to exercise its legal options,” Franco said.

According to Franco, the price challenge is necessarily connected to the BOA following the bidding for BCDA’s selection of a private sector partner for the privatization of the SCTEX in 2009.

 “MNTC maintains that since the price challenge was not contemplated in the BOA, it cannot be undertaken without the consent or involvement of MNTC,” he said.

Franco said the procedure should accurately reflect the terms of the BOA to be revised only to the extent necessary and that the upfront cash payment is the only subject of the Price Challenge.

 “The terms of the BOA as may be provided in the TOR are fixed for the purpose of the Price Challenge and therefore, should be completely maintained and may not be the subject of any further negotiation,” he said.

MNTC has also asked the BCDA to immediately convene to discuss the necessary amendments to the BOA as well as the terms, conditions, procedure and timetable for the Price Challenge.

The BCDA and MNTC signed a BOA on four-lane SCTEX in 2011, subject to the approval of the President. Under the agreement, MNTC would operate and manage SCTEX for 33 years. On the other hand, BCDA would be relieved of payment of the P34-billion debt to the Japan International Cooperation Agency (JICA) for the construction of the tollway.

However, Malacañang has ordered the price challenge for the SCTEX maintenance and operations management in the interest of transparency.

Interested proponents are expected to submit proposals higher than MNTC’s upfront cash offer of P3.5 billion in addition to the 50-50 sharing of gross revenues.

On the other hand, MNTC will have the right to match the highest bid for the project with the price challenge.

Diversified conglomerate San Miguel Corp. (SMC) and the MTD Alloy Group of Malaysia have expressed interest in the project while conglomerate Ayala Corp. is not keen in participating in the price challenge.