SINGAPORE—Manuel V. Pangilinan’s Metro Pacific Tollways Corp. (MPTC) may have to renegotiate again with the government its concession contract for the Subic-Clark-Tarlac Expressway (SCTEx), which the company won three years ago.
Top MPTC officials said the government rejected the second improved proposal submitted by the toll road operator, citing concerns that the state’s share in revenues would not be enough to cover debt payments.
“The government is still not convinced that the proposal is beneficial to them,” said Jose Ma. K. Lim, president of MPTC’s parent firm, Metro Pacific Investments Corp. (MPIC).
Lim, in a briefing here, said the company was bent on negotiating for a new version of a 33-year concession contract that would make a rebidding of the deal unnecessary.
“We want to make it clearer to the government that in the course of taking over the debt service, we will be contributing a specified amount of equity that will be comparable to the government’s investment,” Lim said.
“We will allow the (government) to start earning to demonstrate that the proposal is profitable to both (government and concessionaire),” he said.
The original deal between state-run Bases Conversion and Development Administration (BCDA) and the MPIC group revolved around a revenue-sharing scheme that were based on traffic projections that the SCTEx had fallen short off—translating to lower earnings.
The deal was later revised to include a provision that MPIC would assume all market risks by providing advances to the government. The advances will cover the shortfall in the state’s revenue share to allow the BCDA to cover loan payments to the Japan International Cooperation Agency (JICA), which funded the construction of SCTEx.
Malacañang refused to sign the proposed revised deal, which increased the advances from a minimum of P1 billion, as promised earlier, to P2 billion, and an option to provide more to account for shortfalls that might be brought about by a lower-than-projected traffic at SCTEx.
“We have submitted a proposal to the government in 2010. It’s been revised twice but I think a third one is in order,” Lim said.
Last year, the average traffic at SCTEx reached 25,546 vehicles per day, below the 30,000 cars a day needed for the road to be profitable.
MPTC, through Manila North Tollways Corp. subsidiary Tollways Management Corp. (TMC), operates the SCTEx but toll revenues still go the BCDA.
Apart from operating the SCTEx, MNTC also owns the concession for the North Luzon Expressway (NLEx), the country’s oldest and most profitable tollroad.