MANILA, Philippines - The consortium local contractors behind the Tarlac-La Union Expressway is ready to increase its risk exposure to the project by putting up more equity to make up for the non-release of state subsidy and bank loans.

DMCI Holdings, Inc. and San Miguel Corp. will infuse more than its P1.5-billion share in the meantime if its partner-bank and the government refuse to hasten the release of promised funds, DMCI President and Chief Executive Officer Jorge A. Consunji told reporters in a briefing.

The government had promised a P2.9-billion subsidy for the construction of the 88.5-kilometer expressway while BDO Capital and Investment Corp. will raise P10 billion.

But the government subsidy will only come in once the second phase of tollway construction starts, covering Urdaneta to Rosario in Pangasinan province, Mr. Consunji explained.

The Private Infrastructure Development Corp. (PIDC) consortium’s partner-bank, meanwhile, wants right of way acquisition to be completed first, Mr. Consunji said.

The consortium, however, is ready to start construction on a 30-kilometer stretch between La Paz and Carmen in Tarlac where the government has already secured right of way.

“We’ll just put in additional capital. San Miguel is also willing,” Mr. Consunji said.

San Miguel officials could not be immediately reached to confirm this.
The portion ready for construction constitutes 60% of the 50-kilometer first phase and will entail P4 billion in funding, Mr. Consunji said.

This amount should be covered by the P1.5-billion PIDC equity and a P2.9-billion loan it hopes to tap from the state-run National Development Co.

PIDC, is in effect, shouldering the P2.9-billion promised state subsidy in the meantime. The private sector and the government have put up with this complicated arrangement, Mr. Consunji said, to ensure the road’s completion.

“This is a precedent setting build-operate-transfer project. Everyone is watching how it will go. After this, it (investors’ confidence in the BOT process) will be better,” Mr. Consunji said.

He went on to prescribe improvements to BOT policies. Government would do well to amend rules to expedite right of way acquisitions by setting time limits to negotiations between the state and the land owner, Mr. Consunji said.

DMCI share prices dipped by 1.96% to P12.50 apiece yesterday while San Miguel share prices were unchanged at P74.00.