Biz Buzz: Solomonic decision
What’s a government to do when faced with two competing, similar proposals for a big-ticket infrastructure project?
Conventional wisdom says it must choose the best proposal for implementation.
But the Palace’s decision on the NLEx-SLEx connector road project proposals submitted by corporate rivals Metro Pacific Investment Corp. and San Miguel Corp. was anything but conventional.
Instead of choosing the best proposal that would make the most economic sense, the government—wanting to please everyone—approved both.
It’s not that both proposals were equal in terms of merit, though, as they have very different features.
Under San Miguel’s proposal, there will be eight entrances and exits starting in Buendia and ending in Balintawak. Metro Pacific’s version has three, ending short of the NLEx because it requires the construction of two additional NLEx stages.
The former proposal also has six lanes while the latter has four.
The government’s line, of course, is that both projects can “coexist,” given that they are on different alignments. True. But both ultimately have the same entry and exit points: NLEx and SLEx.
Both proposals were conceived and submitted with the assumption that each would be the only connector road game in business.
Having approved both proposals, the government may have sabotaged the economic prospects of both projects.
According to Biz Buzz sources, the Palace’s “Solomonic” decision was the result of intense lobbying done by a Cabinet official in favor of one proponent.
The official went as far as writing the Department of Justice, asking for a legal opinion that would boost his claim of having authority over the awarding of the project, we were told.—Daxim L. Lucas
Kiss and make up?
After turning the Ayalas from a competitor into an ally (at least in the scramble for light railway transit projects in Metro Manila), and likewise joining hands with the Gokongweis in the telecom space, can businessman Manuel V. Pangilinan, aka MVP, replicate the same kiss-and-make-up strategy with his most serious “frenemy?”
After a bitter debate on North-South Luzon Expressway connector roads, we’re now hearing proposals for the frenemies to get together in the tollroad space. This will be through a prospective cross-ownership in each other’s tollroad interests, which means Metro Pacific Investments will acquire 30 percent of San Miguel Corp.-Citra’s tollroad portfolio, and vice versa. And we’re talking here about these groups’ entire toll road portfolio, not just a token cross-ownership in the disputed connector roads (which will merge in a three-kilometer common area) linking to the Skyway in Buendia.
The idea apparently originated from MVP’s camp, as feelers were sent to the camp of SMC chief Ramon S. Ang. It has caught the fancy of some top government officials, who are now endorsing the prospective union. From what we gather, however, RSA’s group is lukewarm to the idea, likely because RSA’s group feels that it has a much better portfolio of toll roads and has no need to sleep with the frenemy.
Meanwhile, some critics who favor free market are also not too comfy with the idea of a monopoly of Luzon’s major toll roads. They say a little (or a lot of) competition among the titans is better for consumers.—Doris C. Dumlao
Resuming the campaign
With the impeachment trial of Chief Justice Renato Corona winding down, expect the heat to be turned up again on businessman Roberto Ongpin and some former officials of the Development Bank of the Philippines over the supposed “behest” loan granted by the latter to the former.
According to our sources, the present board of DBP has made a fresh attempt at getting Malacañang to join the soon-to-resume offensive against Ongpin and former DBP officials. Their goal, we’re told, is to get President Aquino to throw his full weight behind their long-running effort to pin down the businessman.
One reason for this, we hear, is that the present bank officials have been hard-pressed to show solid results on the legal front, to date.—Daxim L. Lucas
Union Bank succession
Union Bank president Victor Valdepeñas is a legend among people familiar with banks’ dealing rooms for his track record in making trading gains—which are supposed to be non-recurring items—a constant rather than a variable.
Valdepeñas has no plans to retire at the moment, but at age 65, the Aboitizes recognize that a succession plan must be in place.
The hiring of two “heavy hitters” in the banking industry is part of the succession plan, says bank chair Justo Ortiz. He is of course referring to Eugene Acevedo (former PNB president) and Jesus Roberto “Bobby” Reyes (who used to be with Security Bank). Both have strong treasury backgrounds.
The third potential successor, Ortiz says, has no treasury experience but used to teach mathematics and could easily adapt to the challenge. He must be referring to the third senior executive vice president Edwin Bautista, who currently heads commercial banking and channel management.
“Vic will definitely be difficult to replace, there’s no doubt about it. But within our group of successors, there are people who can carry on Union Bank’s treasury business,” Ortiz says.—Doris C. Dumlao
A380 in town
It came in quietly in the night—and the ground staffers are mum about it—but there’s no denying that the world’s largest airliner is now in the Philippines … and will be sitting on the ground for a while, that is.
Indeed, Lufthansa Technik Philippines has begun servicing the Airbus A380 “Superjumbo” aircraft of Australian flag carrier Qantas at its brand-new maintenance facility.
The huge new hangar of LTP, inaugurated by President Aquino a few months ago, was built especially to accommodate the double-deck wide-bodied aircraft, which eclipses the Boeing 747 in height and wingspan.
Don’t expect any publicity from either Airbus, LTP or Qantas though. Everyone wants the event to be low-key, especially since the Australian airline had to wrestle with its labor union over its decision to outsource the maintenance operations for the A380.
From all indications, though, everyone is happy with how the work at LTP is going, given that many of the Filipino maintenance workers underwent rigorous training programs for the A380 for several months in Germany (Lufthansa being a major A380 user itself).—Daxim L. Lucas
The recent Asian Development Bank meetings in Manila were an efficient venue for Citibank’s Kristine Braden to personally bid adieu to friends and clients and introduce her successor as Citi head of corporate and investment banking in the Philippines.
Braden is moving to London, having been promoted to take on the role of global subsidiaries group head for Citi in Europe.
Her successor, Usman Ahmed, has over 16 years of experience in the industry and is also a Citi veteran. Prior to this appointment, Ahmed was the Asia-Pacific head of global Islamic banking and chief operating officer for Asia-Pacific corporate banking. He will continue to head Citi’s Islamic banking business for Asia-Pacific with his new post.
Ahmed rejoined Citi last year after three years with Barclays, where he was head of corporate banking coverage and products for emerging markets in the Middle East, Africa and South Asia. Prior to joining Barclays, Ahmed was with Citi for over 12 years, based in Dubai, London, Bahrain and Pakistan.
Braden, who spent three years in Manila, contributed much to Citi’s mergers and acquisitions and capital market deals in Asia-Pacific. In the last two years, Citi has raised over $10 billion for Philippine clients from the international capital markets, according to Dealogic.—Doris C. Dumlao
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