Firms Reach Compromise on Common Road for NLEX-SLEX Toll Ways
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INFRASTRUCTURE 51 Firms reach compromise on common road for NLEX-SLEX toll ways Project proponents Metro Pacifi c and Citra fi nally reached a compromise on the common alignment for their respective road projects that would link the North and South Luzon Expressways (NLEX and SLEX). Metro Pacifi c’s NLEX-SLEX Connector Road project and Citra’s Skyway Stage 3 project share a 5-kilometer segment considered as the most profi table stretch of either road project. Under the compromise formula, Citra would advance the cost for the construction of the common road, and will later be reimbursed by Metro Pacifi c for its share in the cost. he NLEX-SLEX Connector Road project is an unsolicited proposal from Metro Pacifi c Tollways Development Corp. T(MPTDC) for the construction of a 13.4-kilometer (km), 4-lane elevated expressway from Caloocan City to Skyway- Buendia in Makati City (see box). Meanwhile, the Skyway Stage 3 involves the construction of 14-km, 6-lane extension of the Metro Manila Skyway from Skyway-Buendia to Balintawak, Quezon City; it is part of Citra Metro Manila Tollways Corporation’s (Citra) subsisting franchise to develop the Skyway. MPTDC and Citra previously contested over which fi rm has the right to construct an expressway that would link NLEX and SLEX, but eventually both their road projects were approved by the administration. The 2 road projects share a 5-kilometer alignment that starts at Buendia, Makati and runs until Sta. Mesa, Manila. The fi nancing share once its road project is constructed and is connected to and construction of the P7-billion common segment had been the common road (see table). The fi rms’ respective shares in a sticking point in the discussions of the 2 proponents. The the construction cost will be determined by traffi c volume. segment is considered as the most profi table stretch of either road Revenues would initially be split equally, but adjusted according project as it is projected to cater to the highest volume of traffi c. to traffi c volume once traffi c has stabilized. MPTDC insisted, The government had previously set a deadline for MPTDC however, that the construction should be co-fi nanced at the and Citra to come up with a unifi ed proposal on the common onset, with each fi rm paying for 50% of the construction cost. segment by December 15, but this was not met. Citra had earlier In mid-January, following months of discussion, MPTDC and proposed to advance the cost of construction of the common Citra fi nally reached a compromise. The new formula follows road, and to be reimbursed later on by the MPTDC for its The 5-km common alignment is the most profi table stretch of either road project. Philippine ANALYST February 2013 52 INFRASTRUCTURE Skyway Stage 3 / Citra-PNCC Alignment NLEX-SLEX Connector Road Proponent: Citra Metro Manila Tollways Corporation Proponent: Metro Pacifi c Tollways Development Corporation IMPLEMENTING AGENCY Department of Transportation and Communications Department of Public Works and Highways (DPWH) – Toll Regulatory Board (DOTC-TRB) MODE OF PROCUREMENT Solicited Proposal, pursuant to Citra’s franchise over Unsolicited Proposal Metro Manila Skyway PROJECT DESCRIPTION 13.4-km, 4-lane elevated expressway that would pass over the Philippine National Railway (PNR) right-of-way, and would stretch from Skyway- 14-km, 6-lane extension of the Metro Manila Skyway from Skyway-Buendia Buendia to the Manila Port District in Tondo; this would be connected to to the NLEX entry point in Balintawak, Quezon City Metro Pacifi c’s separate P10-billion Harbor Link project, which is an 8-km road that would span from the port area to the NLEX. CIVIL WORKS TIMEFRAME 2013-2016 2013-2015 PROJECT COST P25.6 billion P25.4 billion PROJECT STATUS - Approved by NEDA Board on Jan. 18 - Project approved “in principle” by the TRB - Terms for Swiss challenge expected by March Sources: PPP Center, DPWH, DOTC-TRB, Press statements Philippine ANALYST February 2013 INFRASTRUCTURE 535 FORMULA FOR THE FINANCING AND CONSTRUCTION OF THE 5-KM COMMON ROAD CITRA PROPOSAL MPTDC PROPOSAL COMPROMISE FORMULA - Citra to provide upfront (Similar to Citra) fi nancing (100% of - Citra to advance cost (100%) construction cost) - MPTDC to provide upfront of construction co-fi nancing with Citra (50%- Financing - MPTDC to reimburse share - MPTDC to reimburse share 50%) for the construction in cost once its NLEX-SLEX in cost once NLEX-SLEX Connector Road project is Connector Road project is completed and linked with completed and linked with the common road the common road To be determined based on Citra- 50% Citra- 62.5% Cost sharing traffi c volume on respective road projects MPTDC- 50% MPTDC- 37.5% Consensual contractor to build the Consensual contractor to build the Project contractor Information not available common alignment common alignment - 50%-50% sharing for the fi rst 3 years “Open system”- motorists to pay fl at rate “in whichever toll plaza Revenue sharing Information not available - To be adjusted after the the motorist chooses to exit” 3-year period according to (MPTDC or Citra toll plaza) traffi c volume Sources: DOTC-TRB, DPWH, Press statements Citra’s initial fi nancing scheme, but differs from it in terms of DOTC modifi es rules for Mactan airport cost- and revenue-sharing. Citra will initially pay for the full cost of construction, and MPTDC will later reimburse its contribution to project bidding, allows airline operators to Citra once the NLEX-SLEX Connector Road project is completed. participate Unlike Citra’s proposal, however, the compromise includes a pre-determined cost-sharing: Citra will shoulder 62.5% of the Airline operators are now eligible to bid for the Mactan-Cebu construction cost, while MPTDC will cover the remaining 37.5%. International Airport (MCIA) Passenger Terminal Building This cost-sharing formula is reportedly based on “forecasted project, after the Transport Department recently revised traffi c share”. Meanwhile, revenue-sharing will follow an “open the project’s bid criteria. The DOTC has partially lifted the system” where MPTDC and Citra will each set up its own toll restriction that previously barred airline owners from joining plazas; motorists will pay a fl at rate for the use of the common the auction. This paves the way for the participation of major road “in whichever toll plaza the motorist chooses to exit.” conglomerates in the P17.52-billion project. This is the 1st The compromise formula is still subject to the airport project to be rolled out under the PPP program. approval of Malacañang. Once approved, the agreement The MCIA Passenger Terminal Building project is a P17.52- will be included in the Supplemental Toll Operations billion undertaking that involves the construction of a new Agreement for Citra’s Skyway Stage 3 project. passenger terminal building in MCIA (see box). This is the 1st Resolving the issue on the common alignment paves the way airport project to be rolled out under the Aquino administration’s for the road projects to begin construction. But as an unsolicited Public-Private Partnership (PPP) program. The invitation to pre- proposal MPTDC’s NLEX-SLEX Connector Road project would qualify and bid for the project was published on December 21. still have to undergo Swiss challenge. While the Skyway Stage So far, 11 companies have expressed their interest to participate 3 project, by virtue of Citra’s franchise over Skyway, could in the auction. Prospective bidders include major conglomerates immediately commence construction upon fi nal approval. The with stakes in airline operations (see table of prospective bidders). Skyway Stage 3 has already been approved “in principle” by Airline operators and airline-related fi rms, i.e. fi rms with the Toll Regulatory Board, but it is still subject to approval stakes in airline companies regardless of whether direct or indirect, from the President. The terms for the NLEX-SLEX Connector were previously excluded from participating in the project auction. Road Swiss challenge are presently being prepared and are As the Department of Transportation and Communications scheduled to be published within March. Both MPTDC and Citra (DOTC) explained, the restriction was intended to prevent plan to start construction of their road projects within the year. anti-competitive behavior and confl ict of interest. “The airline- slash-airport operator may have detrimental acts against rivals… (It) can make the availability of slots, gates, counters, lounges, baggage handling more diffi cult for its competitors,” said DOTC Sec. Joseph Abaya. This provision would have automatically barred San Miguel Corp. (SMC) and JG Summit Holdings, Inc. (JGS) from bidding for the project. SMC holds an indirect minority stake in fl agship carrier Philippine Airlines, while JGS through Cebu Air, Inc. controls budget carrier Cebu Pacifi c Air. Philippine ANALYST February 2013 54 INFRASTRUCTURE Airline operators and airline-related fi rms are now allowed to have a limited stake in the companies which may bid for the project. PROSPECTIVE BIDDERS IN THE MCIA PROJECT (as of Feb. 18) FIRMS THAT BOUGHT BID DOCUMENTS AIRLINE OPERATOR / AIRLINE-RELATED PARTNERSHIP Indirect minority stake in Philippine 1. San Miguel Corp. (SMC) Airlines and Air Philippines Partnering with MPIC and undisclosed airport 2. JG Summit Holdings, Inc. (JGS) Parent company of Cebu Pacifi c Air operator Partnering with JG Summit Holdings and 3. Metro Pacifi c Investments Corp. (MPIC) undisclosed airport operator Partnering with Ayala Corp. and multinational airport operator ADC & HAS (Airport Development 4. Aboitizland Inc. Corp. and Houston Airport System) Airports Inc. (Ayala Corp. holds 100% stake in air charter provider Ayala Aviation Corp.) PAL Holdings, the parent company of Philippine Airlines, is a stakeholder in MAC. 5. MacroAsia Corp.