SMC wins Naia expressway project with P11-B bid


Conglomerate San Miguel Corp. (SMC) has bested rival Metro Pacific Investments Corp. over a new 7.15-kilometer expressway project that will connect Metro Manila’s main airport terminals to the Entertainment City casino complex with an “aggressive” bid.

The financial proposals for the P15.52-billion Naia Expressway Phase II project, the third public private partnership (PPP) project to be successfully bid out, were opened yesterday at the headquarters of the Department of Public Works and Highways (DPWH).

SMC unit Optimal Infrastructure Development Inc. offered an upfront cash of P11 billion, far superior to the P305 million offered by Metro Pacific’s  Manila North Tollways Corp., to build the expressway and operate it for 30 years.

Both groups offered to pay up front cash, which will be on top of the construction cost.

The cash offered will have to be be paid by Optimal Infrastructure in 30 days, saving the four casino operators in Entertainment City  a combined P6.5 billion in “subsidy” or support fund that they would have provided for the project had the two companies opted to submit proposals with subsidy component.”

“We gave the bidders the option to submit with subsidy or no subsidy. The two felt there was no need for the subsidy so they offered up front payments,” Public Works and Highways Secretary Rogelio Singson told reporters after the bids were opened.

Singson said he was surprised with the SMC’s offer but added that the government  and the licensees in Entertainment City “came out the winners on Monday.”

The department, according to Singson, is now preparing the documents that will formalize the award of the project to the SMC unit.  The notice of award will be received by the winning bidder within seven days after the opening of the bids.

Market observers, meanwhile, were mixed on the big discrepancy between the two bids, saying SMC’s offer was “very aggressive” even as they described Metro Pacific’s proposal as too small.

“It is clear that MPIC does not like to bid very high. For San Miguel, they are not involved in a lot of government bidding so it seems they are really in this to win,” Joseph Roxas, president of stock brokerage firm Eagle Equities Inc., said.

The toll fees have been initially set at a range of P35 to P45 for two years, and will be adjusted every two years, said Francis Chua, investment banking manager of Development Bank of the Philippines, the transaction adviser of DPWH.

In the meantime, SMC is moving to raise additional funds via borrowings, the reason for which was not immediately known. It said on Monday it was establishing a medium-term note program that would allow it to raise up to $2 billion. SMC said the notes would be listed on the Singapore Exchange Securities Trading Ltd. With a report from Jerry Esplanada

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  • OFW_Investor

    The bidding of PP’s should be structured to encourage bidders submit lowest bid on a best value basis to construct,operate,maitnain these vital infra projects. An excessively high bid will surely saddle the motorists with the corresponding high toll fees. It does not make sense for the govt to make money out of these transactions ,its the motorists who will shoulder these fees after all.

  • kentjohn

    por airport is bad road is good, 11 billion is overexpensive it can build a tunnel linking naaia and casino,,mas matuwid pa na daan kay sakay pnoy..

  • OFW_Investor

    This will cost SMC 2Billion and change per Kilometer. The math does not add up.

  • darsmith

    Hoping there will be no legal impediments that will prevent the implementation of this project

  • tanga_hanga_ni_abnoy

    byebye clark..cge, siksikan kayo dyan sa metro manila

    • GustoKoHappyKa

      dapat nga ilipat na yan airport… clark or cavite basta wag na dyan sa naia…

  • digital link

    Glad SMC won, with their partnership with Citra this would be an excellent piece of infrastructure at par with the world standards … unfortunately with MPIC, their NLEX had much to be desired compared with the skyways and SCTEX …

  • Roland_F

    Spending 15.5 Billion PHP on a dead cow like NAIA , which will be downgraded soon to push up Clark or closed down and relocated to a new airport which SMC will build from the announced fund raising.

  • Iyen Dev

    SMC doesn’t have to bribe this current admin, that is their advantage to other bidders!MVP group supported ESTRADA last 2010 elections, bad investment.

  • go88

    Of course … welcome to the San Miguel Corporation banana republic of the Philippines where public funds are given to kamaganaks construction firms in order to bring customers to the kaibigans casinos.

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