Government starts search for challenger to Metro Pacific Group's SCTEX proposal

The government has opened the floor to third parties wanting to challenge the Metro Pacific Group's proposal to operate and maintain the Subic-Clark-Tarlac Expressway (SCTEX).

In an invitation published in a newspaper, state-run Bases Conversion and Development Authority (BCDA) said the Office of the President had directed that the Manila North Tollways Corp's (MNTC) offer to operate and maintain SCTEX until 2043 be subjected to a price challenge in the interest of transparency and for competition.

Controlled by Metro Pacific Investments Corp (MPIC), MNTC bagged the SCTEX contract in 2011, or the final year of the Arroyo administration, but the Aquino government sought to renegotiate the terms of the deal in a bid to increase the state’s share in toll revenue.

MNTC had proposed to amend the contract terms twice to no avail. According to BCDA’s guidelines, challengers should at least:

• Pay upfront P3.5 billion in cash, including the 12 percent value added tax (VAT);
• Offer a 50-50 sharing of the gross toll revenues between BCDA and the private sector partner;
• Assumption of the operation and maintenance costs and responsibilities over SCTEX; and 
• Assumption of the ongoing integration agreement for the toll collection system of the North Luzon Expressway (NLEX) and SCTEX.

"The objective of the price challenge is the upfront cash only, which should be higher than P3.5 billion, payable upon signing of the agreement. While the other terms should be accepted by the proponents," BCDA said.

BCDA, however, said MNTC has the right to match the upfront cash proposal of the highest rated and responsive proponent (HRRP) in which case, MNTC shall be awarded the contract.

"If MNTC fails to match the upfront cash offer of the HRRP, the latter shall be awarded the contract," BCDA said.

To be eligible, challengers should satisfy the following minimum requirements:

• The proponent should meet the 60 percent Filipino ownership requirement for public utilities. In case the proponent is a joint venture/consortium it should be 60 percent Filipino owned before the signing of the agreement. 
• The proponent or any of the members of the consortium must have at least three years experience in the management, operation and maintenance of a toll road within the last 10 years.
• The proponent or any of the consortium members should have a net worth or a credit line issued by reputable commercial bank(s) in the amount of at least P5 billion as of December last year.
• The proponent should buy the terms of reference worth P500,000, which will be available on December 11. 
• The proponent should be a corporation registered with the Philippines’ Securities and Exchange Commission (SEC), or in case of a joint venture/consortium at least one member should be registered with the same agency. 

The BCDA scheduled the pre-selection conference to discuss the terms of reference and the SCTEX at 2 p.m. of January 6, 2015.

The SCTEX is a 94-kilometer fully-operational four-lane expressway traversing the provinces of Bataan, Pampanga and Tarlac. The road, which has an average daily traffic of 30,855, provides a direct link to Metro Manila through NLEX.

Sought for comment, MNTC president Rodrigo Franco said, "Generally, we are supportive of BCDA's effort to conduct a price challenge, especially that it was ordered by President Aquino as part of the process."

Franco said the company has yet to see the final terms of the price challenge.

"But our concern is that if BCDA's process is not fair there's a possibility that there will be a legal issue," he said, without providing any detail.

- Interaksyon