Europe-PH News

Level Playing Field

June 06, 2012

Tito F. Hermoso

Europe-PH News

Recently we witnessed a fine example of government coordination, damage control and rapid reaction/rectification. When Home Guaranty Corp. announced that it would bid out air rights over the PNR rail right of way within Metro Manila, the NEDA, DPWH, PNR, DTI and other government agencies stepped in to abort the said bidding.

It would have unraveled the PPP’s integral packaging of the NLEx-SLEx connector, making it a tough sell for the vital cross-town elevated tollway. Moreover, the PPP’s reputation would take a beating just as it was gathering steam.

The early months of this Aquino administration showed a fair and just hand in honoring done deals, like the approved toll rate increase of the revitalized SLEx. After all the heartaches experienced by MTD -- the Malaysian SLEx rebuilder --during the previous administration, the protests of grandstanding politicians and court cases filed, the toll hike was finally implemented.

As in the case of every change of administration in this country except Erap’s, old contracts are reviewed and disbursements halted, leading to dire consequences to sustainable economic growth as UP professor Benjamin Diokno never ceases to remind us. Projects perceived to be not “clean” were scrapped or modified. Witness the aborted North Food Exchange-Northrail intermodal bus terminal between Bocaue and Balagtas, in Bulacan. What’s left is the “L. R. Tiqui Builders” flyover over the NLEx, with a half-finished ramp leading to nowhere.

Our country’s relation with Fraport, the German airport agency that assisted in building NAIA 3, remains adversarial. The last two would undoubtedly not endear us to European Union aid agencies, current euro zone troubles notwithstanding. No wonder European Chamber of Commerce of the Philippines President Hubert d’Aboville, has always, expressed concern every time the administration loses a Cabinet official.

 

To be fair, some line departments didn’t have that many future plans for projects, having been underfunded and therefore neglected by previous administrations. Some departments relied on unsolicited BOT proposals from the private sector as such did not need financing from a government in perpetual fiscal deficit. Some projects like the Skyway Stage 3 from Buendia to Balintawak and the Ausphil Tollway-Universal LRT monster project were pre-approved during the Ramos administration, waiting for final feasibility studies and financing. Both have undergone revisions in the light of changing realities.

 

Understandably, projects that got the green light were those with the backing of financially muscular partners like San Miguel Holdings. San Miguel’s entry into the TPLEx expressway undoubtedly pushed the project further and faster. Plans to upgrade the current single carriageway Lipa to Batangas section of the STAR tollway to dual carriageway also moved forward when San Miguel became a partner. The firm’s partnership with Citra Metro Manila Skyway is accelerating plans to extend the SLEx to Lucena, Skyway Stage 3 and Skyway Stage 4 C-6 expressway to Marikina. San Miguel’s participation in Ausphil tollway has already resulted in the LRT-7 component being awarded to DMCI-Marubeni. Ayala’s financial muscle, meanwhile, no doubt won it the Daang Hari expressway concession, the first PPP project.

 

But what about equally financially muscular Metro Pacific group? Its GMA-era proposal to complete/upgrade the MRT and connect to the LRT-1 was put on the back burner in 2011 when the DoTC preferred to prioritize the LRT line’s southward expansion. Moreover, the DoTC overlooks the fact that as an approved long term Build-Lease-Transfer project of MRT Holdings, a private enterprise, it does not have the power to stop the firm from investing and improving MRT service. Or worse, declare it as a PPP and just bid it out again. Such heavy handed government intervention is not unusual in Putin’s Russia, but here?

 

Just because the LBP and DBP have loans to MRT converted to equity, it doesn’t mean the company is government-owned and controlled. Moreover, the central bank wants DBP and LBP to divest from the MRT. Nevertheless to improve its chances, Metro Pacific has partnered with Ayala to bid for the LRT-1 extension and is tapping Hong Kong’s MTR to enhance MRT operations.

It would appear that many Metro Pacific plans germinated under GMA’s term -- the DMIA expansion, PLDT-Digitel merger, etc. -- have been hit by delays under the new administration. The foreign ownership structure of PLDT was also questioned. So far, Philex’s oil exploration in the Reed Bank, the TV-5 acquisition or any Meralco issue have not yet been put to the test.

For the most part of this year, the Palace has been sitting on a BCDA-MNTC agreement to integrate the operations of the SCTEx with the NLEx and the SFEx. Common sense dictates that the three tollways be integrated into one operations zone -- like Skyway-SLEx-STAR -- thus eliminating duplication of toll collection and other functions. The DPWH and the NEDA support this. MNTC, operator of the NLEx and SFEx, has been interim partners with the BCDA for the past three years, ensuring the SCTEx maintains its world class status. This dovetails nicely with congressman Jack Enrile’s proposal of making electronic tollway payments all around the country seamless, as simple as calling Sun or Smart from Globe.

 

In the course of two years the BCDA-MNTC agreement went through the wringer during GMA’s term and again when new BCDA management took over. Why this vital integration remains stuck is not transparent to all of us who could do with a few less toll plaza queues and seamless connection from the SCTEx to the TPLEx. What else needs a third vetting after the first two? In the meantime, interest payments to JBIC, financier of the SCTEx, continue to be shouldered by the BCDA, an expense that Metro Pacific would have taken over if the deal was implemented last year.

 

As for the NLEx-SLEx connector, proposed by Metro Pacific Tollways during GMA’s term, the delays could come from the DoTC’s 2011 railway project. Having cancelled the North Rail project and still enraptured with dreams of a high speed railway, the DoTC now wants a NAIA-DMIA rail link to integrate both large airports. As proposed, the link has to hurdle a couple of design constraints. Not only does the railway cramp the ramps and carriageways of the tollway, crossing the Skyway to get to NAIA means bridging into the path of planes taking off or landing. There is room for interconnection as chairman F. Payumo of the BCDA intends to build a monorail loop between Global City, Taguig, the Makati CBD, NAIA and the LRT-1. As for financiers, there are all those gaming foreign investors who are happy to finance a link all their gaming palaces.

 

History teaches us lessons. During periods of stasis in the first Aquino administration, the newly liberated “Yellow” press had a field day speculating about factions within government. The late Louie “Straight from the Shoulder” Beltran promoted the behind the scenes shenanigans as “We bulong” (we whisper). Protagonists and antagonists were identified as “Kamag-anak Inc.,” “coup-pals,” the Council of Trent, Rasputin, Rambotito, the “Peninsulares” who answered the Palace phone with “digame” and the “Insulares” who blurted “oye,” among others. Similar to what the press today calls the undue influence of the KKK -- “Kaibigan, Kaklase at Kabarilan” (friend, classmate and shooting partner), if at all true. Does history have to repeat itself?

 

 

Source: Business World; Motoring; 6 July 2012

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