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Philippines: One highway down, five airports to go

The country has awarded the CALAX project ahead of schedule and promised to deliver on its $2.4bn airport auction programme as it gears up for presidential elections next year.

Six months after the 35-year Cavite-Laguna Expressway (CALAX) public private partnership (PPP) bidding process fell through, the Aquino administration is attempting to reclaim investor confidence via the early award yesterday of the project to Metro Pacific Investments Corporation (MPIC) as well as reassurances from the country's Transport Department over the timely procurement of its five airport concession programme. 

MPIC’s successful offer of a P27.3 billion (€545.5 million; $605.3 million) premium ranks as the highest-ever premium payment tendered for a PPP project in the Philippines, yielding a 23 percent profit margin for public coffers – over the P22.2-billion bid of San Miguel Corporation subsidiary Optimal Infrastructure Development (Optimal) – and a 26.3 percent increase from the first tender’s results.

The Department of Public Works and Highways (DPWH) had set a P20.1-billion floor premium for this tender, which corresponded to Optimal’s bid during the first auction in June last year. President Benigno Aquino then ordered a re-bidding of the project on the back of San Miguel’s disqualification on technical grounds.

Two of the previous competitors – a consortium comprising Macquarie Holdings, Ayala’s AC Infrastructure and Aboitiz Land, which was the highest bidder in the first tender, and MTD Philippines – declined to participate in the new auction.

The CALAX project involves a 35-year contract to finance, build and operate a 47-kilometre four-lane toll road between Cavite Expressway in Kawit, Cavite and the South Luzon Expressway-Mamplasan Interchange in Biñan, Laguna to decongest the southern region of the capital.

Contract signing is scheduled for July 28, when the winning bidder will deposit 20 percent of the premium. The balance will be paid over 10 years.

According to reports, detailed engineering design will be prepared from July 2015 to July 2016, construction will be undertaken from July 2016 to July 2020, while operation and maintenance period will take place from July 2020 to July 2050.

Manuel Pangilinan, MPIC chairman, has announced the group would bid for the P108.19 billion worth of contracts to develop, operate and maintain five regional airports. He was also reported to have said the group would likely team up with a major airport operator from Europe.

The Department of Transportation and Communications was expected to release last week the final bidding terms for the regional airport auction, according to announcements made by PPP Center executive director Cosette Canilao on May 30, and industry observers have been wondering whether the presidential elections due for May 2016 would delay the projects’ tendering processes. However, in a bid bulletin, the Transport Department’s pre-qualification bids and awards committee said the 2016 presidential elections would not push back the schedule of the five provincial airports' privatisation.

The five regional airports up for auction are grouped into two bundles: the first being Bacolod-Silay Airport (P20.26 billion) and Iloilo Airport (P30.40 billion); and the second package consisting of the New Bohol (Panglao) Airport (P2.34 billion), Laguindingan Airport (P14.62 billion), and Davao Airport (P40.57 billion).

A two-stage bidding process has been set for the regional airport auction, with qualification documents to be submitted separately from financial and technical proposals.

The four other participants to the process are San Miguel Corporation, Aboitiz Equity Ventures, Philippine Skylanders and a group comprising Megawide Construction Corporation and GMR Infrastructure.