San Miguel to bid for LRT-1 under revised terms
MANILA, Philippines – San Miguel will be back in the running for the government's Light Rail Transit line 1 (LRT-1) expansion project, now that the terms are being changed after a failed auction in August.
"Yes, SMC will bid," San Miguel President Ramon Ang said in a text message.
Transport Secretary Jun Abaya yesterday said the government was practically "starting from scratch" with five revisions:
- Government will pay the real property taxes, a key demand of bidders afraid of excessive assessments by any or several of the municipalities the LRT will pass through
- Government will cover sudden spikes in power rates
- 5 percent increase in the per kilometer fare once the extension is completed
- Two-year warranty against physical defects in the original line
Fifth, the government also plans to allow "negative bids", or bids where the bidder doesn't promise to pay the government but rather requires the government to pay the builder-operator. All the changes need NEDA approval.
"If granted by the government, they (revisions) should credit enhance the transaction for sure," said Sol Castro, managing director of CFP, a Manila-based deal advisor which advised potential bidder Samsung. "The real test though is how these credit enhancements will be provided for and written in the concession agreement."
San Miguel, the Malaysian-Korean partnership MTD-Samsung, and DMCI Holdings were all expected to bid in August but didn't.
San Miguel's withdrawal surprised observers given the company's appetite for infrastructure and energy assets in the last few years. In April, it won the NAIA Expressway project with an P11 billion bid, dwarfing the only other bid of P305 million from Manuel Pangilinan's Metro Pacific.
Metro Pacific submitted the only bid in August, but the financial part of the bid wasn't revealed because the company imposed some conditions, which the government disallowed. That resulted in the failed bidding, another black eye for the government's much-delayed Public-Private Partnership program.
At P30 billion, the 12-kilometer extension from Baclaran to Bacoor, Cavite is one of the biggest PPP projects, not even counting a separate P30 billion the government will spend on new trains.
Metro Pacific was supposed to partner with Ayala Corp. but Ayala didn't join in the conditional bid. Metro Pacific declined to comment on the changes or on whether they would revive the partnership with Ayala until they could study the terms. Ayala didn't reply to requests for their comment.
DMCI also declined to comment until they could study the revisions.