SM to appeal award of LRT-MRT ticketing project

Posted at 02/02/14 2:26 PM

MANILA -- The SM Consortium said it will appeal the decision of the Department of Transportation and Communications (DOTC) to award the Automated Fare Collection System (AFCS) project to the AF Consortium of Ayala Corp. and Metro Pacific Investment Corp. (MPIC).

“We believe the SM Consortium submitted the superior bid, which was an unconditional offer to pay the government the full bid amount of P1.008 billion upfront,” SM Prime Holding, Inc. president Hans Sy said in a statement, noting that the Ayala-MPIC consortium bested SM’s bid by just over P100,000.

Sy pointed out that the AF Consortium’s bid involved an initial payment of P279 million. The balance of P800 million will then be paid in transaction fees when ridership volume reaches 750 million transactions per quarter.

“Under the terms of the AF Consortium bid, 72% of the total amount will only be paid to the government in 2024 or 2025, and only if the conditional volume is met. Otherwise, the government will not be able to collect anything at all,” Sy explained.

He also said the bid of the rival group violated the Bids and Awards Committee’s requirement for an unconditional and unqualified bid, which the SM Consortium already raised in letters to the DOTC on January 22 and January 29.

In a letter dated January 27, Undersecretary Jose Perpetuo Lotilla interpreted “unconditional and unqualified” as accepting the terms and conditions of the bidding documents and the concession agreement “to prevent a bidder from submitting a bid proposal that modifies the terms of the public bidding by introducing additional conditions or qualifications in their submitted bid proposal.”

As such, SM said its bid is unconditional “in the fullest sense of the word, as it is not dependent on any external factors, such as volume of ridership or users or the length of time. Needless to say, an upfront, unconditional payment involves no risk to the government, not being dependent on the happening of any future event to which the payment is conditioned on.”

SM also highlighted the ongoing arbitration between the government and the Metro Rail Transit Corp. over equity rental payments.

Sy said: “This dispute puts the government at a disadvantage because it can be leveraged against them at any point of the project’s implementation.”

MPIC controls 48% of MRTC voting shares, while Ayala Corp. owns 19%.

SM also blasted the announcement of the award without prior advice to the stakeholders.

Sy said the DOTC has yet to respond to questions the consortium has raised.