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Daang Hari project: Blow the belt

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Uh-oh. In the first ever attempt of the Aquino (Part II) administration to make a go of its much-vaunted PPP program—now three years in the making and nothing yet happening—it looks like the guys down here must take the hardest blow.

Yes, some groups are going to make an indecently large pile of money at our expense!

The PPP project of course is the short four-kilometer toll road, linking the politically famous Daang Hari with the South Luzon Expressway. The DPWH held the public bidding for the project way back in 2011. Work was supposed to start last year for completion by the middle of 2013. Not a single digging has been done so far.

In the 2011 bidding, the Ayala group beat the only other bidder, San Miguel.

Some simple-minded guys down here in my barangay always thought that, in government contracts, the lowest bid should win. How come the P900-million bid of Ayala won over San Miguel’s P600 million? Well, it turned out that the Daang Hari toll road was a “privatization” project. The government in effect sold the franchise for the toll road, well, for P900 million, based on the Ayala bid.

But then again, down here, we also have this stupid notion that building road and such is the job of the government. By asking a private group to do the Daang Hari project, the government in a way admits it cannot do its job. Unable to perform its function, the government still gets to keep the P900 million from Ayala. Go figure!

Guess how the private group would try to recover the cost of the Daang Hari project, estimated originally at P1.6 billion for the short four-kilometer road, plus the P900 million that Ayala paid to the government for doing what was supposed to be the job of the government.

The answer of course is this: The so-called toll road concessionaire (in this case Ayala) will take the money from us, amounting to the P1.6-billion project cost, on top of the P900-million concession fee to the government, plus of course some profit for the company amounting to … well, that is also up to the government.

From the looks of it, moreover, the government will have to shell out its own money, taking it out of the taxes it collected from the public.

Reports said that the winning bidder, which was Ayala, actually changed the original design of the project, and the DPWH already agreed to the changes. These are estimated to cost the government some P500 million.

On the Internet, the DPWH actually showed a drawing of the design, with a roundabout linking the SLEx with the Daang Hari toll road. The Ayala-proposed design, which the DPWH already approved, did away with the roundabout. It basically wanted to connect the Daang Hari toll road directly with the SLEx through criss-crossing ramps that would occupy part of the SLEx, taking away the space that SLEx has been reserving for expansion in the future.

By the way, the government also allowed such superimpose tactic on C-5, with a huge exit-ramp that serves exclusively the high-end Bonifacio Global City (formerly the military fort) occupying one whole lane of the already traffic-infested C-5.

But the real question is this: Why should the government shoulder the additional cost of the changes proposed by the concessionaire, with the government in effect making taxpayers take the blow? Beats me, too!

And that is just one blow; there is another. It involves even more changes in the so-called terms of reference in the bidding that the government approved two weeks before the bidding, featuring the DPWH itself, the Department of Finance and the PPP Center.

In the original terms, the government said that the concessionaire would have 25 years to collect toll from motorists using the Daang Hari-SLEx road link, at a rate of only P11 per entry.

Several groups looked into the original terms and found them wanting. While a horde of private companies at first took interest in the bidding, only Ayala and San Miguel actually participated. The others did not find the terms attractive enough.

Quietly, without any announcement to the public whatsoever, the government changed those terms, with the life of the concession stretched to 30 years and the toll rate swelling to P17 a pop—an increase of more than 50 percent, mind you.

Taken another way, we can say that the changes would mean hundreds of millions of pesos more in toll income for the concessionaire. At only 10,000 vehicles per day, those changes would raise the toll income of the concessionaire by more than P900 million. This amount, take note, is already equal to the winning bid.

That is just a volume of 10,000 vehicles per day, mind you! Based on official figures, the particular stretch of the SLEx from Alabang to Susanna Heights already has a volume of some 150,000 vehicles a day.

In other words, the changes in the terms could mean a “killing” for the concessionaire. Again, where would the bonanza come from if not the public? This newspaper in fact reported that the former director general of the NEDA, UP Economics professor Cayetano Paderanga Jr., actually noted a “fundamental flaw” in the Daang Hari-SLEx toll road bid.

He said the government should have announced the changes that could have spelled the difference between profit and loss to the bidders, chiefly because of the short contract period and the low toll fees in the original terms.

Instead, the agencies involved in the project, namely the DOF, the PPP Center and the DPWH, seemed to have rushed the changes, and they even did so quietly. To top it all, they ignored Paderanga’s warning of possible legal brouhaha over the project.

The BOT law, for one, prohibits certain changes in the project (called “contract variation” in BOT parlance), and the whole process will have to start all over again, with the Neda’s approval of the changes required.

From what I gathered, the PPP Center and the DOF took the lead in putting together the terms, although the PPP Center sort of washed its hands claiming it was only the coordinating agency.

As it is, the whole project is already behind schedule. The DPWH already spent precious months to defend its approval of the changes in the design coming from Ayala, particularly to address the complaint from the SLEx management.

To tell you frankly, I thought that the reasoning of the DPWH to justify the Ayala changes in the design, well, bordered on the comical, as the DPWH unearthed all sorts of legalities, all of them risking long and arduous court cases to be settled.

For instance, DPWH insisted that it could do whatever it wanted in the space in SLEx that from the very beginning was reserved for future expansion.

Reports, nevertheless, said, quoting the PPP Center and the DPWH, that the Ayala group and the SLEx management were close to an agreement over the changes in the design.

Just between us girls, officials of PPP Center and the DPWH held two marathon meetings in a span of one week with both companies, one on Jan. 17 and another on Jan. 25.

Those were top-level, top-secret meetings, involving the government and toll road concessionaires. Uh-oh. They are not saying how the interest of the public could figure in those meetings. I am afraid the result will only hit us below the belt.


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Tags: Daang Hari , Infrastructure , public-private partnership (PPP) , toll road

  • http://www.facebook.com/jesse.tan.52 Jesse Tan

    FILIPINOS DO YOUR MATH FIRST BEFORE YOU complain that 900 MILLIONS PESOS  IS EXPENSIVE OR TOO MUCH TSK TSK TSK   YOU GOT TO READ THE CONTRACT FINE PRINT — MEDIA DO NOT KNOW THE DETAILS OF THIS BUT USUALLY THERE IS A EXCLUSIVE YEARS INCLUDED IN CONTRACT WHICH PHILIPPINE MEDIA FAIL TO MENTION IN THIS Article

    p900 MILLIONS FOR 25 YEARS EXCLUSIVE CONTRACT THAT IS CHEAP OR 

     WHO KNOWS ITS A 30 YEARS EXCLUSIVE CONTRACT

  • http://www.facebook.com/jesse.tan.52 Jesse Tan

    AYALA WILL MAKE SOME GROSS INCOME PER MONTH THEY WILL TAKE IN 5 MILLIONS PESOS X 12 MONTHS = 60 MILLIONS PER YEAR X 25 YEARS EXCLUSIVE CONTRACT = 1.5 BILLION PESOS =============== THIS IS JUST CONSERVATIVE ESTIMATE AS POPULATION GROWS IT MIGHT GO TO 7 MILLIONS PESOS A MONTH INCOME AS TIME GOES BY

  • http://www.facebook.com/jesse.tan.52 Jesse Tan

    Private companies own toll road are COMMON IN USA so what the BIG DEAL - 

    FILIPINOS ARE FAMOUS FOR GAYA GAYA IN SHORT JUST A FOLLOWER & IMITATOR

    SO ANG TANONG WHAT THE SURPRISE ON THIS NEWS  ???? SO WHAT IF AYALA OR SAN MIGUEL OWN THIS TOLL ROAD AS LONG AS THEY WILL MAKE MONEY FOR THE NEXT 25 YEARS OF THE EXCLUSIVE CONTRACT

  • cabcog

    The changes in the terms and reference after the bid is won is unfair. If the Ayala’s bid was based on the original terms then they should no right to demand changes.  However, I have to say that this project will help ease fiscal burden to the government in investing in this types of projects.

    PPP is good for the country if implemented correctly and if well thought but we have to consider that private companies are there for the profit and may sacrifice quality over costs.

  • JLFS

    Ito na nga, ang pasimuno ng korapsyon ay private companies, pero ang galing magturo ng kamay sa goberno.

  • Diablo_III

    Baka blow under the belt or below the belt. lol..



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