Aquino says San Miguel can appeal road deal disqualification

Posted at 07/03/14 9:39 AM

MANILA (UPDATE) - President Benigno Aquino has unexpectedly granted San Miguel Corp. 30 days to appeal against its disqualification from bidding for a major road project worth $810 million, throwing the government's tender policy into disarray.

The country's most diversified conglomerate was barred last month from bidding for the Philippines' biggest road public-private partnership (PPP) deal to date after it submitted a standby letter of credit for the project that was shorter than the required 180 days.

The disqualification by a special committee of the Public Works department came despite San Miguel having put in the highest bid for the toll road project by far - a P20.1 billion ($460 million) offer compared to the next highest bid of P11.7 billion from Ayala Corp. and Aboitiz Equity Ventures Inc.

In an order dated June 30 and seen by Reuters, the presidential palace granted San Miguel's request for a review of its disqualification, ordering it to submit its appeal straight to Aquino's office within 30 days.

An executive at a major Philippine corporation that has participated in such tenders said Aquino may have granted the request as the gap between the bids was so large and as San Miguel's offer could substantially boost state coffers.

"It can be considered, but government has to weigh it very carefully," the official said, declining to be identified as he was not authorized to speak to the media on the matter. "It should not lead to rewriting how bidders are evaluated and how bids are assessed," he added.

The project is a 35-year state contract to finance, construct and operate a 47-kilometer four-lane toll road connecting two growth areas south of the capital, that is expected to cost P35.4 billion ($810 million).

It has been delayed by at least three months, partly due to requests from bidders for more time to complete due diligence.

Stephen Paradies, Aboitiz Equity's chief finance officer, said on Wednesday that San Miguel's move to seek the president's intervention was unfortunate as it represented a new setback for an already delayed project.

"We really need to get this project going. Our country badly needs infrastructure. We just want to point out that the integrity of the bidding process is very, very important. It should not be compromised because you send a wrong signal all around," he said in a television interview.

Aboitiz's partner in the project, Ayala Corp., also said that the bidding process needed to be respected.

The government has been keen to speed up infrastructure spending to help some provinces that were damaged by a typhoon and to underpin growth after GDP grew slower than expected in the first quarter.

Aquino's uncle, Eduardo Cojuangco, is the chairman of San Miguel although their families have had political differences in the past.