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