LRT 1 extension viable, but risky

By Lorenz S. Marasigan, BusinessMirror

Posted at May 28 2014 07:42 AM | Updated as of May 28 2014 08:58 PM

MANILA - At least one bidder will not join today’s (Wednesday) auction for the largest public-private partnership project of the government due to lack of time to finalize its offer.

MTD Philippines President Isaac S. David told the BusinessMirror that his team may not be able to place its bid for the P64.9-billion Light Rail Transit Line (LRT) 1 Cavite Extension as they still need more time to review the project’s risks.

“We might not be able to finish our bid because we don’t have enough time. But I think the project is commercially viable but with risks,” David said in a text message, refusing to elaborate.

Representatives of other groups which earlier expressed interest in the scheduled auction failed to respond to the BusinessMirror’s queries.

Meanwhile, the government is still hopeful of substantial bidder participation on Tuesday’s bidding. However, it does not expect to see all bidders to submit their offers for the multibillion-peso contract.

“We expect the serious bidders to participate today, as we have given them sufficient time to prepare their proposals. Improvements from the failed bid have been made, and no issues remain. We have even added a component on the Common Station to optimize the project’s terms, making them as attractive as possible to the bidders,” Transportation Spokesman Michael Arthur C. Sagcal said in a text message.

“We hope for a substantial turnout, as we always do for our big-ticket infrastructure projects,” he added, referring to the successful auction for the P17.5-billion Mactan-Cebu International Airport and the P1.72-billion Automatic Fare Collection System deals.

Transportation Secretary Joseph Emilio A. Abaya said he is content to award the project at a competitive amount, adding that he is much more focused on seeing the infrastructure built.

“I’ll just be happy to award the deal at a good price and get this project off the ground,” he told the BusinessMirror via text.

This is the second time that the government will try to auction off the project. Bidding for the original P60-billion Cavite Extension contract was met with complaints from bidders who expressed fears that the project was not commercially viable.

This left Metro Pacific Investments Corp. as the lone bidder during the August tender with partner Ayala Corp. and three other prequalified parties —San Miguel Corp., DMCI Holdings Inc. and Samsung-MTD Capital joint venture—backing out.

The government has since sweetened the terms of the deal, adding a viability gap funding to the project’s contract.

The Transportation department also gave the winning bidder the right to design the facility of the P1.4-billion LRT North Extension Project, which will be auctioned off in the third quarter of the year.

The new and improved Cavite Extension contract has since attracted new players: SMC Infra Resources Inc., Spanish firm Globalvia Inversiones S.A.U., MTD Philippines Inc., DMCI Holdings, Megawide Construction Corp., Ecorail Transport Services Inc. and Light Rail Manila Consortium led by Metro Pacific and Ayala.

The project aims to extend the existing line by 11.7 kilometers (km), adding eight new stations, where approximately 10.5 km of the extension will be elevated and 1.2 km will be at grade. The winning bidder will also serve as the operator and the maintenance provider of the railway line.

The project is expected to be completed by December 2018.

The government has awarded seven public-private partnerships contracts since the flagship infrastructure program was launched in late-2010.