Group wavers on $2.7-B dike project

A CONSORTIUM consisting of the Ayala, Aboitiz, SM and Megaworld groups is rethinking its participation in the $2.7-billion Laguna Lakeshore expressway and dike project, the biggest undertaking to be offered by the Aquino administration under its flagship public-private partnership (PPP) framework.

One source from the consortium said work on the project bidding has been put on hold in the last two months while another said the group has not yet pulled the plug pending the resolution of issues dimming the prospects of the project. This indicated the big dilemma of the group, which calls itself Trident consortium, ahead of the bidding scheduled early next year.

The project, which seeks to develop a 47-kilometer, six-lane expressway with a 45-kilometer control dike and reclaim 700 hectares of land, is envisioned to ease traffic flow and mitigate flooding in the western coastal communities along the Laguna Lake.

Trident spokesperson Roman Azanza III, first vice president for business development at Aboitiz Equity Ventures, said Laguna Lakeshore “remains a highly complex and challenging project.”

“The government and the private sector are still working intensively to find solutions to both viability and risk concerns,” Azanza said. “We believe this is a game changer, but because of its size and complexity, to be fair to both public and private sector, it’s got to be done right. It’s a tough idea but it’s important.”

Azanza said the bidders were still analyzing the impact of a recent bid bulletin issued by the government for this PPP project.

The proposed highway will run from Taguig in Metro Manila through the towns of Calamba to the Los Baños-Bay boundary in Laguna. The project will include the construction of interchanges, bridges, floodgates and pumps from Taguig to Los Baños and the reclamation of land adjoining the expressway-dike.

Other industry sources explained that as currently structured, the project appeared “unbankable” due to uncertainties on its future connectivity to other major throughfares—particularly the C5 and C6 projects—as well as the perceived mismatch between the large front-loaded costs of building the dike and the back-ended returns.

On the connectivity to the C5 and C6 projects, the government could not guarantee linkage to these road networks, which are undertaken by private concessionaires.

But while the project is three times the size of Bonifacio Global City, which thus required the partnership among some of the country’s biggest firms, the government wants to complete the dike and road within a seven- to eight-year timeframe.

“For a project of this nature, it will take much longer for anyone to be able to sell that amount of land. Clearly there’s a large imbalance in terms of heavy cost upfront and back-ended revenues,” another Inquirer source said. “To be able to plug that gap of heavy cost and cash flow way at the end, we have to allow flexibility in terms of construction timeframe.”