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PHILIPPINE PUBLIC-PRIVATE PARTNERSHIP PROJECTS SHOWCASED IN NEW YORK

Philippine Consulate General, New York

22 October 2014

 

PHILIPPINE PUBLIC-PRIVATE PARTNERSHIP PROJECTS SHOWCASED IN NEW YORK

Consul General Mario De Leon, Jr., PPP Center Executive Director Cosette Canilao and Deputy Consul General Zaldy Patron, together with the officers of the Philippine American Chamber of Commerce of New York and the executives of EisnerAmper LLC, during the PPP Forum at the Philippine Center on 16 October.

 

NEW YORK – The Philippine Consulate General in New York recently organized a forum highlighting the various infrastructure projects in the Philippines that will be undertaken under the public-private partnership (PPP) program.

The forum, held on 16 October at the Philippine Center, featured Cosette Canilao, Executive Director of the Philippine PPP Center, as the main speaker. She talked about the PPP program and its objectives, legal framework, policies and bidding process.

Ms. Canilao gave a list of eight PPP projects in the Philippines that have already been awarded to various groups, two projects that are for implementation, and 47 projects that are still in the pipeline. Together, these projects have combined project cost of $20.822 billion.

Consul General Mario De Leon, Jr., PPP Center Executive Director Cosette Canilao and Deputy Consul General Zaldy Patron, together with the officers of the Philippine American Chamber of Commerce of New York and the executives of EisnerAmper LLC, during the PPP Forum at the Philippine Center on 16 October. She gave more detailed presentation on the five PPP projects that are under procurement and the 15 projects that are still for roll-out.

She encouraged U.S. investors to consider participating in these projects, namely:

A. Under Procurement
• Bulacan Bulk Water Supply Project (estimated project cost – $542.2M)
• Integrated Transport System Project – South Terminal ($100M)
• Laguna Lakeshore Expressway Dike Project ($2,728.9M)
• O&M of Light Rail Transit (LRT) Line 2
• New Centennial Water Supply Source ($416M)

B. For Roll-Out
• Operation & Maintenance (O&M) of New Bohol (Panglao) Airport ($52M)
• O&M of Laguindingan Airport ($353.8M)
• O&M of Puerto Princesa Airport ($116.2M)
• O&M of Davao Airport ($901.6M)
• O&M of Bacolod Airport ($450.2M)
• O&M of Iloilo Airport ($675.6M)
• San Fernando Airport ($180M)
• Davao Sasa Port ($388M)
• Regional Prison Facilities ($1,115.1M)
• Motor Vehicle Inspection System ($428.9M)
• North-South Railway Project: South Line ($3,702.9M)
• Mass Transit System Loop ($3,000M)
• LRT Line-1 Dasmariñas Extension
• Batangas-Manila Natural Gas Pipeline
• Manila Bay-Pasig River-Laguna Lake Ferry System

About 40 executives and business people attended the forum, which was co-hosted by the Philippine American Chamber of Commerce of New York and EisnerAmper LLC.

After the forum, Ms. Canilao had one-on-one meetings with five groups that are seriously considering to invest in the Philippines.

In his welcome remarks, Consul General Mario De Leon said, “This PPP forum is taking place during an exciting time for the Philippines, now an investment grade country and is one of the fastest growing economies in Asia.” He underscored that the Philippines will need to build and upgrade its infrastructure to sustain its long-term economic growth.

Companies that are interested to participate in the PPP projects in the Philippines may get more information from the PPP Center’s website: www.ppp.gov.ph.

Business chambers buck proposal to rebid CALAX

The Philippine Star, 29 October 2014
By Czeriza Valencia
 
MANILA, Philippines – Business chambers oppose a rebidding of the Cavite-Laguna Expressway (CALAX), saying this would have a negative impact on the country’s effort in improving its standing in the investor community.

In a joint statement issued yesterday, the Makati Business Club (MBC) and various chambers of commerce, said the Department of Public Works and Highways (DPWH) conducted a fair bidding for the project, in full compliance with the Build-Operate-Transfer (BOT) law.

“The proposed rebidding of the Cavite-Laguna Expressway (CALAX) would be an inopportune and ill-advised decision that would surely have a negative impact in our improving standing in the investor community,” said the chambers. “As such, we believe there is no legal basis for rebidding the project. We share the concern of our colleagues in the private sector that a disregard of the present rules through a rebid will adversely impact investor confidence in the PPP (Public-Private-Partnership) Program and in our bidding procedures, which the DPWH and the PPP Center have been painstakingly reforming for the better, and consequently promoting here and abroad,” the statement added.

The chambers urged the government to remain consistent with the provisions of the BOT law.

“Not just in this particular case, but for the other projects in the pipeline,” said the MBC. “Consistency and predictability in policy and adherence to rules, among other factors, form the bedrock of investor confidence in any economy,” the groups said.

The statement was issued by the MBC along with the American Chamber of Commerce of the Philippines (AmCham); Australian-New Zealand Chamber of Commerce Philippines (ANZCham); Canadian Chamber of Commerce of the Philippines (CanCham); Employers Confederation of the Philippines (ECOP); European Chamber of Commerce of the Philippines (ECCP); Japanese Chamber of Commerce of the Philippines, Inc. (JCCIPI); Management Association of the Philippines (MAP).

Under the BOT law, a rebid of a project would only be done if there is a pronouncement of failure of bidding.

President Aquino recently said he favors a rebidding of the P35.4 billion CALAX project “to get the best deal for the people.”

During the bidding for the project conducted in June, Team Orion, a joint venture between Ayala Corporation and Aboitiz Land Inc., emerged with the highest bid of P11.66 billion, higher than the offer of P11.33 billion submitted by MP CALA Holdings Inc. of infrastructure conglomerate Metro Pacific Investments Corp. (MPIC), and the P922 million bid of Malaysian-owned Alloy.

San Miguel Corporation’s (SMC) Optimal Infrastructure Development Inc. was disqualified from bidding due to a defect in its bid security. Following its disqualification, OIDI revealed in a news conference that it offered P20 billion for the project.

SMC had appealed its case to the Office of the President, asking the government to reconsider its disqualification. Team Orion, on the other had, has filed a motion urging President Aquino make a to decision if it would accept or dismiss SMC’s appeal.

Fund managers and think tanks have warned that a rebid of the project could derail the momentum of the Aquino administration’s PPP program.
 

Business groups see no legal basis for CALAX rebid

ABS-CBN News, 29 October 2014
 
MANILA – Several local and foreign business groups on Tuesday said government has no legal basis to conduct a rebidding of the Cavite-Laguna Expressway (CALAX) project.

In a joint statement, the Makati Business Club (MBC), American Chamber of Commerce of the Philippines (AmCham), Australian-New Zealand Chamber of Commerce Philippines (ANZCham), Canadian Chamber of Commerce of the Philippines (CanCham), Employers Confederation of the Philippines (ECOP), European Chamber of Commerce of the Philippines (ECCP), Japanese Chamber of Commerce of the Philippines, Inc. (JCCIPI), and Management Association of the Philippines (MAP) said there will be no need for a do-over because the bidding process was done in full compliance with the BOT Law.

“It is our strong belief that the Department of Public Works and Highways conducted the bidding of the Cavite-Laguna Expressway with complete transparency and fairness, and in full compliance with the BOT Law. As such, we believe that there is no legal basis for rebidding the project,” the groups said.

The groups also expressed concern that not honoring the concluded bidding process may affect the trust of investors in the government’s public-private partnership (PPP) program.

“We share the concern of our colleagues in the private sector that a disregard of the present rules through a rebid will adversely impact investor confidence in the PPP Program and in our bidding procedures, which the DPWH and the PPP Center have been painstakingly reforming for the better, and consequently promoting here and abroad,” they said.

The groups also urged the government to enact amendments to the BOT Law “that will institutionalize the PPP Center and its processes, and which we believe will further strengthen our PPP framework and prevent hindrances to the implementation of critical public projects.”

“Consistency and predictability in policy and adherence to rules, among other factors, form the bedrock of investor confidence in any economy. In light of the significant attention that the Philippines has been gaining from the international and domestic investing community, it is our firm belief that the country must hold fast to these principles in order to sustain the gains that the country has achieved in the past four years,” they added.

President Aquino earlier said the government is inclined to conduct a rebidding of the controversial P35 billion project following San Miguel Corp.’s appeal on its disqualification from the bidding.

Malacañang has said that any rebidding for the project would have factual and legal basis.

Ayala and Aboitiz group’s Team Orion submitted the highest bid of P11 billion while San Miguel’s Optimal Infrastructure Development Inc. was disqualified because of errors in its bid security.

San Miguel said its bid, which wasn’t opened by the DPWH, was P20 billion.
 

Aquino: Invest in the Philippines – and in Filipinos

Rappler, 28 October 2014
 
While reporting $4 billion in foreign direct investments as of August, the Aquino government says it is making sure that Filipino workers acquire the talents and skills needed by foreign investors
 
MANILA, Philippines – President Benigno Aquino III called on investors to invest not just in the Philippines but, more importantly, in its people.
During an open forum at the 13th CEO forum of the Semiconductor and Electronics Industries in the Philippines Incorporated (SEIPI) on Tuesday, October 28, the President stressed that the greatest single resource of the country is the people.
“Obviously we were ignored for the longest period of time and it’s been in the last few years that we’ve suddenly gotten back into the limelight, and we do intend to maximize our exposure by really proving to all investors that it is really worth their while and a very sound decision to invest not just in the country but more importantly in the people,” Aquino said.

Aquino shared that during his recent trip to the United States, his delegation talked to a consumer appliance manufacturer who was exploring the potentials of moving his operations to the Philippines. The manufacturer said he sub-contracts projects to employ about 600,000 workers in a single country.

“He stated during our meeting that he saw a report on the Philippines, perhaps a CNN program, and because of this he was encouraged to seek us out and to start exploring the potential of moving his operations from that particular country to the Philippines. He was that gung-ho,” Aquino said.

Aquino added that the company is not only looking for contractors for their products, but also promised to provide engineering scholarships for the continued research and development efforts of that company.

Trade Secretary Gregory Domingo said that creating a better business environment for investments to come in the Philippines has been the thrust of the Aquino administration.

He said that in the last 4 years, the country has received a huge increase in Foreign Direct Investments (FDI) – from $1 billion in 2010; $2 billion in 2011; about $3 billion in 2012; and $3.8 billion for 2013.

“As of the latest figure writing up to August, it’s already $4 billion FDI this year,” Domingo said.

Domingo added that the good governance agenda of the Aquino administration is paying off, resulting in dividends.

“We continue to work on improving the business environment and continue the discussions with the private sector so we go hand-in-hand,” he said.

Roadmaps for sectors, like the electronics industry, are also under development, Domingo added.

‘Never be satisfied’

Asked how the country’s growth will be sustained and prepared for the Association of Southeast Asian Nations (ASEAN) integration in 2015, Aquino cited what he learned from his parents: never be satisfied.

Thus, “I keep pushing everybody if they have reached [their goals].”

The liberalization of the banking industry has made the country more attractive to foreign investors, Aquino said. He cited as example the preference of Japanese firms to deal with Japanese banks here.

“Congress has enacted a law that has opened up our banking sector, which will redound to, again, more competition in the financial sector, more competitive products for all of you, and, again, it redounds to greater efficiencies for the economy,” Aquino said.

Aquino also stressed that the government, through the Department of Trade and Industry, is doing all steps necessary to reduce requirements to a minimum when setting up businesses here, but still faithfully compliant with the laws.

The President added that they were trying to tackle all of the problems – from the bureaucratic red tape, necessary infrastructure support, to education concerns in terms of investing in our people.

“We also want to make sure that if it’s the talent that they need, that the talent does exist or, if it doesn’t exist, that we are developing that talent toward that goal, our mutual goals of increased growth,” Aquino said. – Rappler.com

Trade groups join Calax debate

Business Mirror, 28 October 2014
 
Local and foreign business groups are contesting the proposed rebidding of the Cavite-Laguna Expressway (Calax) project, labeling it as an “ill-advised decision” that will damage investors’ confidence in the administration’s Public-Private Partnership (PPP) Program.

This came as Malacañang said the government has yet to fix a new date for the rebidding of the P35.2-billion toll-road project, even as both the winning and disqualified bidders indicated they would not go to court if plans for a new bidding pushes through, as earlier announced by President Aquino.

The Makati Business Club, American Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce Philippines, Canadian Chamber of Commerce of the Philippines, Employers Confederation of the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc. and the Management Association of the Philippines, released a joint statement on Tuesday, dissuading President Aquino from pursuing his plan to reopen the bidding process for the huge PPP deal.

“While the PPP Program encountered some difficulties in its initial stages, it has since begun to catch up, with high-impact projects being steadily rolled out, catching the attention of domestic and international investors. It is imperative that this pipeline be clear of any blockages and inconsistencies if we are to protect the credibility of this program and our procurement system as a whole. In light of this, the proposed rebidding of the Cavite-Laguna Expressway would be an inopportune and ill-advised decision that would surely have a negative impact on our improving standing in the investor community,” the joint statement read.

Moreover, the groups said in their statement that they believe the Department of Public Works and Highways (DPWH) conducted the bidding of the Calax with “complete transparency and fairness” and in full compliance with the build-operate-transfer (BOT) law, thus rebidding the project would have no legal basis.

“We share the concern of our colleagues in the private sector that a disregard of the present rules through a rebid will adversely impact investor confidence in the PPP Program and in our bidding procedures… Thus, we call on the government to remain consistent with the provisions of the BOT law, not just in this particular case but also for the other projects in the pipeline,” the groups further said in their statement.

The tandem of Ayala Corp. and Aboitiz Land Corp., Team Orion, submitted the winning bid for the expressway project with an P11.6-billion premium payment on top of the project cost.

A P20.105-billion premium payment, on the other hand, was offered by San Miguel Corp.’s infrastructure arm, Optimal Infrastructure Development Inc., which was disqualified from the auction due to its alleged defective bid security, which was a few days short of the required cover period.

The diversified conglomerate then filed a petition before Malacañang to reconsider its offer. It has been four months since the Executive said it will review a petition of SMC, chaired by Eduardo Cojuangco Jr., the uncle of President Aquino.

The President explained his decision to welcome the petition, citing the foregone revenues from SMC’s offer of P20 billion if the winning bid of P11 billion from Team Orion is accepted.

“Wala pa [none yet],” Palace Spokesman Edwin Lacierda told the BusinessMirror on Tuesday after checking with DPWH officials tasked to set the ground rules for a likely re-bid of the multibillion-peso Calax project.

President Aquino, fielding questions at a forum of the Foreign Correspondents Association of the Philippines on October 22, disclosed he was inclined to back a rebidding.

“Anyway, ’yung Calax, what is the fundamental issue there? In the bid documents submitted and the portion, which is more or less a template, SMC [position] is… there was a typographical error of parang a lack of four days in the bid security document. The DPWH asked for a clarification—a clarification by the ANZ Bank [Australia and New Zealand Banking Group]—and San Miguel itself stated that their bid security was good for 180 days as opposed to 176,” Mr. Aquino recalled.

He added that “allegedly… and allegedly because the bid documents were returned to SMC and they opened it up before the media. They said that their bid would have been over P20 billion, if I remember it correctly, versus the winning bid of about P11 billion. Now, if we accept the winning bid at this time when there is an allegation that there was a much superior bid, then we will have to explain to the people the P9-billion difference that we forego. We get the infrastructure; we get a premium of P20 billion allegedly from one bid, or an P11-billion premium from another bid. Now, at the end of the day, we have to protect the people’s interests.”

President Mr. Aquino admitted that there was another proposal for government to actually undertake the project; but he ruled out this option, saying it “defeats the whole purpose of the PPP project wherein we free our resources for other infrastructure needs.”

According to Aquino, “there are private-sector individuals or companies that are willing to provide us the infrastructure we need and to deliver a premium to us. So how do we meet the attainment of the goal of getting the best deal for our people? So, I am inclined to think that a rebid will be the proper course of action on this particular issue.”

But Communications Secretary Herminio B. Coloma Jr., in a separate interview late last week, quoted Executive Secretary Francisco Ochoa as saying that the planned rebidding of the Calax project “is pending consideration.” Ochoa assured, however, that “whatever the final decision will be, such decision shall definitely have legal and factual basis.”

The business chambers also asked the government to swiftly enact the amendments to the BOT law that will institutionalize the PPP Center and its processes. It will further strengthen the country’s PPP framework and prevent hindrances to the implementation of critical public projects.

“Consistency and predictability in policy and adherence to rules, among other factors, form the bedrock of investor confidence in any economy. In light of the significant attention that the Philippines has been gaining from the international and domestic investing community, it is our firm belief that the country must hold fast to these principles in order to sustain the gains that the country has achieved in the past four years,” the foreign chambers and business groups said.

The deal has been in limbo for four months now due to a petition for reconsideration filed by a disqualified bidder.

Sore loser

The seemingly too long a decision of the President on the issue left an independent investments-management company based in Hong Kong “wondering.”

“Why listen to noise produced by a sore loser? How credible is a bid by a party who is unable to submit the requested documents and fails to lodge an orderly appeal?” HSZ Group Chairman Hansrudolf Schmid asked.

He said if President Aquino “protects the outcome of the orderly bidding, he builds trust in rules-based governance.”

“But, if the President reaches for the extra P8 billion, he does the opposite. He undermines the rule of law. Potential investors, in particular foreign ones, take note,” Schmid warned. “The extra P8 billion is a small amount compared to the damage caused by not moving the process forward in a principled way.”

“Mr. President, the longer you remain stuck, the more we wonder,” he said.

The project is a 47-kilometer thoroughfare that would start from the Manila-Cavite Expressway in Kawit, Cavite, and end at the South Luzon Expressway (Slex)-Mamplasan Interchange in Biñan, Laguna. It would conssist of nine interchanges and a toll barrier before the Slex.

The third PPP project under the DPWH, the expressway is seen to decongest traffic along the Cavite-Laguna road network.

Construction of the multibillion-peso expressway is seen to start by October next year. It is expected to be completed by September 2017.

Since the infrastructure program’s inception in 2010, the government has awarded eight contracts so far.

(Lorenz S. Marasigan, Catherine N. Pillas & Butch Fernandez)
 

Calax re-bidding to lower investors’ confidence in PPP, PH, warn business groups

Philippine Daily Inquirer, 28 October 2014
By Amy R. Remo
 
MANILA, Philippines—Eight business groups slammed on Tuesday the proposed re-bidding of the P35.4-billion Cavite Laguna Expressway (Calax) deal, stressing that such a move would be an “inopportune” and ill-advised decision that would once again put to question the credibility of the government’s Public-Private Partnership (PPP) program.

At the same time, a re-bidding would have a negative impact on the country’s improving standing in the investor community, the business groups said in a statement issued Tuesday.

The statement was issued by Makati Business Club (MBC), American Chamber of Commerce of the Philippines (AmCham), Australian-New Zealand Chamber of Commerce Philippines (ANZCham), Canadian Chamber of Commerce of the Philippines (CanCham), Employers Confederation of the Philippines (ECOP), European Chamber of Commerce of the Philippines (ECCP), Japanese Chamber of Commerce of the Philippines, Inc. (JCCIPI), and the Management Association of the Philippines (MAP).

“While the PPP Program encountered some difficulties in its initial stages, it has since begun to catch up, with high-impact projects being steadily rolled out, catching the attention of domestic and international investors. It is imperative that this pipeline be clear of any blockages and inconsistencies if we are to protect the credibility of this program and our procurement system as a whole,” the statement read.

The business community pointed out that the Department of Public Works and Highways conducted the bidding of the Cavite-Laguna Expressway with complete transparency and fairness, and in full compliance with the Build-Operate-Transfer Law.

“As such, we believe that there is no legal basis for re-bidding the project. We share the concern of our colleagues in the private sector that a disregard of the present rules through a re-bid will adversely impact investor confidence in the PPP Program and in our bidding procedures, which the DPWH and the PPP Center have been painstakingly reforming for the better, and consequently promoting here and abroad,” the groups explained.

“Thus, we call on government to remain consistent with the provisions of the BOT Law, not just in this particular case but also for the other projects in the pipeline. We also call on government to swiftly enact the amendments to the BOT Law that will institutionalize the PPP Center and its processes, and which we believe will further strengthen our PPP framework and prevent hindrances to the implementation of critical public projects,” they further stressed.

The eight business groups further noted that consistency and predictability in policy and adherence to rules, among other factors, would form the bedrock of investor confidence in any economy.

“In light of the significant attention that the Philippines has been gaining from the international and domestic investing community, it is our firm belief that the country must hold fast to these principles in order to sustain the gains that the country has achieved in the past four years,” they added.

On Monday, the consortium backed by Ayala Corp. and Aboitiz Land Inc. that topped the “qualified” bids last June urged President Benigno Aquino III to just choose a winner.

It was reported that the Ayala-Aboitiz’s Team Orion filed a motion at the Office of the President to restate its view that it should be awarded the public private partnership (PPP) deal, which involves the construction and operation of a 45-kilometer toll road south of Metro Manila, where Ayala owns wide swaths of land.

The move was also aimed at heading off a re-bidding exercise, deemed costly both in time and resources, which Aquino last week said he was “inclined” to do. This was after disqualified San Miguel Corp. unit Optimal Infrastructure Development Inc. sought Malacañang’s intervention to reverse its removal from the competition and also be awarded the PPP deal.

 

12 firms keen on LRT 2 contract

Manila Standard Today, 28 October 2014
By Jeniffer Ambanta
 
Twelve companies have obtained pre-qualification documents to bid for the right to operate and maintain the Light Rail Transit Line 2 project, including its extension to Masinag, Antipolo City for a period of 10 to 15 years.

The PPP Center, which is in charge of monitoring the public-private infrastructure projects, said a dozen of companies showed up at the pre-qualification conference for the Manila LRT Line 2 operations and maintenance contract Tuesday.

The project will include operating and maintaining the existing 13.8-km line, a 4.19-km extension with two stations to Masinag, Antipolo City and other future extensions.

About 200,000 passengers use LRT Line 2, a 13.8-km rail line with 11 stations, from C.M. Recto Ave. in Manila to Santolan, Pasig City each day.

The PPP Center said foreign and local companies such as RATP Dev of France, TUV Rheinland of Germany, Hyundai Rotem Company of South Korea, MTR Corp. Ltd. of Hong Kong, Marubeni Corp. of Japan, SMRT Corp. of Singapore, Miescorrail Inc. of Manila Electric Co., Aboitiz Equity Ventures, DMCI Holdings Inc. and AC Infrastructure Holdings Corp. of Ayala Corp. sent representatives to the pre-qualification conference.

The Transportation Department invited the companies to raise questions and clarify matters before the project’s bids and awards committee.

Transportation Undersecretary and PBAC chairman Jose Perpetuo Lotilla cited the importance of the PPP project during the conference. “In line with the government’s objective to make everything more efficient, more nimble and address the needs of the people in Metro Manila—this project was conceived and being offered to the private sector to do the operation and maintenance,” he said.

The Transportation Department gave prospective bidders until Nov. 20, 2014 to submit their qualification documents. It said it expected to give the notice for pre-qualified bidders on Dec. 20, 2014 while the submission of final bid documents would be in May or June next year.

The department earlier awarded the LRT Line 1 Cavite extension, operation and maintenance contract to Light Rail Manila Consortium, composed of Ayala Corp. and Metro Pacific Investments Corp.
 

LRT2 operations, extension project draws interest from 12 companies

InterAksyon, 28 October 2014
By Rain Castro
 

MANILA – A dozen companies are interested in bidding for the operations and maintenance (O&M) contract of the LRT2.

The 12 companies showed up during the pre-qualification conference for the LRT2 O&M, which is one of the public-private partnership (PPP) projects of the Aquino administration.

The PPP Center identified the 12 as follows:

  • Miescorrail (Philippines),
  • Hyundai Rotem Co (South Korea),
  • TUV Rheinland (Germany),
  • Aboitiz Equity Ventures (Philippines),
  • RATPDEV (France),
  • Metro Pacific Investments Corp (Philippines),
  • San Miguel Corp (Philippines),
  • MTR Hong Kong,
  • Marubeni Corp (Japan),
  • SMRT (Singapore),
  • DMCI (Philippines), and
  • AC Infrastructure Holdings (Philippines).

The project involves not only the O&M, but also the eastward extension of the LRT2 to Masinag in Antipolo City. The government however will retain ownership of the train service.

Transport Undersecretary Jose Perpetuo Lotilla, who chairs the bids and awards committee, said the project is in line with the government’s objective of making transportation in Metro Manila efficient and convenient.

Prospective bidders have until November 20 to submit their qualification documents, with the Department of Transportation and Communications set to inform pre-qualified bidders by December 20.

They will be given until May or June next year to submit their offers.

 

Aquino urged to choose Calax winner

Philippine Daily Inquirer, 28 October 2014
By Miguel R. Camus
 
AYALA, SMC SAY THEY WON’T CONTEST DECISION
 
The controversy over the P35.4-billion Cavite Laguna Expressway (Calax) deal took another twist Monday as the consortium backed by Ayala Corp. and Aboitiz Land Inc. that topped the “qualified” bids last June removed from the table the threat of any legal challenge and urged President Benigno Aquino III to just choose a winner.

The Ayala-Aboitiz’s Team Orion filed a motion at the Office of the President to restate its view that it should be awarded the public private partnership (PPP) deal, which involves the construction and operation of a 45-kilometer tollroad south of Metro Manila, where Ayala owns wide swaths of land.

The move was also aimed at heading off a rebidding exercise, deemed costly both in time and resources, which Aquino last week said he was “inclined” to do. This was after disqualified San Miguel Corp. unit Optimal Infrastructure Development Inc. sought Malacañang’s intervention to reverse its removal from the competition and also be awarded the PPP deal.

Team Orion’s filing Monday was the latest development in an unfolding issue that started four months ago, when OIDI decided to challenge its disqualification over a technicality—the date on its bid bond validity came up four days short of the required 180 days.

The matter, which has since stalled the Calax deal, became complicated because OIDI’s offer, while not opened by the Department of Public Works and Highways but by San Miguel before the media last June 13, turned out to be the biggest at P20.1 billion.

This compares to Team Orion’s P11.659 billion, considered as the “highest complying bid” that edged out two other groups.

Government sources noted that Aquino’s inclination was being influenced by the wide gap between Team Orion’s offer and that of OIDI, amounting to P8.4 billion, despite the fact that the latter was disqualified.

Team Orion, in its motion Monday, acknowledged that the government could choose to declare a failed bid and re-auction the Calax project but it urged Aquino not to exercise this “unprecedented resort to the fine print” because it had submitted a complying offer.

“Team Orion reiterates its position that OIDI’s appeal be dismissed and that the DPWH decision disqualifying OIDI from the Calax bid must be upheld on the grounds that OIDI’s bid was not only deficient but was also not reviewed for technical compliance,” Team Orion said in a separate statement also Monday.

“However, should the President decide to grant OIDI’s appeal, Team Orion will respect such decision and commits to abide by it without legal recourse,” it said. “Team Orion hopes that OIDI also extend the same courtesy to the President should the President decide to reject its appeal and uphold the DPWH decision.”

OIDI, in a statement Monday, said it would respect any decision handed out by President Aquino.

“We vow to undertake the project if government decides to award it to OIDI and participate in case of a rebid—whether the original terms of reference are altered or retained,” said OIDI, which noted that it stood by its appeal that it should be recognized as the highest bidder for the Calax project.

Both OIDI and Team Orion were playing a high-stakes business game, with a very uncertain outcome now that Malacañang is involved, said Jose Mari Lacson, head of research at stockbrokerage firm Campos Lanuza and Co.

“They are now under game theory— but what is the most optimal move of the government? That is to reject all bids and do a rebid,” Lacson said in an interview Monday.

Nevertheless, in the days after Aquino’s announcement last week, various business groups and fund managers—both foreign and local—aired their worries over a rebidding. They said the move could scare away investors, especially the big foreign groups that are deemed crucial in sustaining the administration’s PPP program.

The PPP Center in recent weeks has launched investor marketing campaigns in Europe, United States, Canada, Japan and Singapore for the sole purpose of luring more participants to invest in a pipeline of about 50 projects, including railways and airports valued at more than $20 billion.

Meanwhile, Team Orion and the two other losing “qualified bidders,” a unit of Manuel V. Pangilinan-led Metro Pacific Investments Corp. and Malaysia’s MTD Group, will not or are unlikely to participate in any rebidding, they said. SMC president Ramon Ang said they would bid for all government projects up for auction.

Some of the reluctance is mainly due to the fact that in case of a Calax rebid, and assuming the same or similar terms are kept, there would already be a perceived floor price, which is OIDI’s P20.1 billion offer.

“Re-bidding Calax sets a dangerous precedent for future public bids. It undermines the very foundation of the PPP program. This is potentially a precedent that will give the next disqualified bidder reason and credence to take its appeal to Malacañang and hope for a similar outcome,” former finance secretary Roberto de Ocampo said in an e-mail Monday.

Ayala-Aboitiz won’t take legal action on planned CALAX rebid

The Philippine Star, 28 October 2014
By Lawrence Agcaoili
 
MANILA, Philippines – The tandem of conglomerate Ayala Corp. and listed Aboitiz Land Inc. yesterday said it would not take any legal action if Malaca§ang decides to rebid the P35.4 Cavite – Laguna expressway being undertaken by the Department of Public Works and Highways (DPWH).

Team Orion, a 50-50 joint venture between Ayala?s AC Infrastructure Holdings Inc. and Aboitiz Land, has filed a motion urging President Aquino to decide if it would accept or dismiss the appeal of diversified conglomerate San Miguel Corp. regarding the disqualification of Optimal Infrastructure Development Inc. (OIDI) from the bidding of the public private partnership (PPP) project.

“However, should the President decide to grant OIDI’s appeal, Team Orion will respect such decision and commits to abide by it without legal recourse. Team Orion hopes that OIDI also extends the same courtesy to the President should the President decide to reject its appeal and uphold the DPWH decision,” Team Orion said in a statement.

The three-page motion was filed by the Gatmaytan Yap Patacsil Gutierrez & Protacio law office on behalf of Team Orion after President Aquino made a pronouncement last week that Malaca§ang was inclined on rebidding project due to the appeal filed by SMC.

“It is respectfully prayed that this Honorable Office resolve this appeal, either by accepting judicial notice appellant?s alleged bid that was purportedly opened in Manila Hotel or by dismissing the appeal,” Team Orion stated in the three-page motion.

It would be recalled that Team Orion submitted the highest bid of P11.659 billion followed by MP CALA Holdings Inc. of infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) with P11.33 billion, and Malaysian-owned Alloy MTD Philippines with P922 million.

On the other hand, OIDI was disqualified through a June 11 resolution issued by the Bids and Awards Committee of the DPWH due to a defect in its bid as its bid security was short of the 180-day validity period requirement as its security was valid only until Nov. 25, 2014 instead of the required Nov. 29, 2014.

The DPWH did not open the bid of OIDI as it was disqualified from the bidding process. The diversified conglomerate opened its financial bid of P20.105 billion for the PPP project in the presence of the media in Manila Hotel.

SMC filed a 37-page Notice of Appeal before the Office of the President last June 27 docketed under OP Case No. 14-G129. Malaca§ang issued a “Stay Order” last June 30 stopping the DPWH from implementing a June 11 resolution disqualifying Optimal Infrastructure from the bidding of the public.

Team Orion reiterated that OIDI?s appeal should be dismissed and the decision of DPWH to disqualify the SMC unit should be upheld on the grounds that its bid was not only deficient, but was also not reviewed for technical compliance.

Moreover, it argued that OIDI broke the chain of custody by removing its bid from DPWH, ultimately spoiling its own bid.

Team Orion said the resolution of the long-drawn impasse would allow the vital infrastructure initiative to proceed.

“Cognizant of the critical state of the country’s infrastructure, Team Orion seeks to prioritize the roll-out of key infrastructure projects in line with its own objective of being a partner in Philippine economic development,” it added.

John Eric Francia, managing director of Ayala, earlier said the conglomerate would continue to participate in the bidding of PPP projects and is currently evaluating three major infrastructure projects.

Francia pointed out that the conglomerate is looking at the P123 billion Laguna Lakeshore expressway dike project through property giant Ayala Land Inc., the P24.4 billion Bulacan Bulk Water Supply Project through Manila Water Company Inc., as well as the operation and maintenance of the Light Rail Transit line 2 (LRT-2) system.

Ayala has interest in three of the eight PPP projects worth P133 billion awarded by the Aquino administration. Ayala, together with MPIC and Macquarie Infrastructure Holdings Philippines through Light Rail

Manila Consortium, has signed a concession agreement with the DOTC for the P65 billion LRT-1 Cavite expansion project.

It also bagged the P2.01 billion Daang Hari – South Luzon expressway (SLEX) link road as well as the P1.72 billion Automated Fare Collection System (AFCS) project through a joint venture with MPIC.

In a separate statement, SMC’s OIDI reiterated its appeal to Malacañang to accept its P20.1 billion bid for the PPP project.

“We reiterate our stance to respect whatever decision handed by the Office of the President, even as we stand by our pending appeal for Malacañang to accept and declare our P20.1 billion bid as compliant and award the project to OIDI as the highest bidder,” the SMC unit said.

“We vow to undertake the project if government decides to award it to OIDI and participate in case of a rebid – whether the original terms of reference are altered or retained,” it added.

The SMC Group said it would continue to support the major infrastructure projects being undertaken by the Aquino administration.

“OIDI will continue to join government biddings for vital infrastructure projects in line with the San Miguel Group’s commitment to nation building,” it said.