SM Group bags 300-ha Pasay reclamation project

MANILA, Philippines—Tycoon Henry Sy’s SM group has bagged a 300-hectare Manila Bay reclamation project offered for public-private partnership (PPP) by the Pasay City government in the absence of any counter-proposal from rival companies, which are now still questioning the selection process.

In a statement announcing the awarding of the joint venture (JV) deal, the Pasay City government refuted criticisms on the awarding of this major reclamation project, which is expected to be completed in seven years at a project cost of P54.5 billion.

Meanwhile, rival property developer Ayala Land Inc., which had wanted to submit a counter-proposal but cited insufficient leeway given by the Pasay City government, lamented this action.

“It is unfortunate that Pasay City proceeded with the award despite questions on the process that it followed. The 2013 NEDA (National Economic Development Authority) JV guidelines would have allowed for a higher level of transparency, attracted more bidders and therefore serve the best interests of Pasay City and the country. Since all reclamation projects will have to be approved by the NEDA, we expect it to follow the said guidelines and consider the questions we earlier raised on the process. Should an open and competitive bid be conducted for the project, ALI will participate,” ALI chief operating officer Bobby Dy said in a statement on Friday, reacting to news about the awarding of the project.

The local government unit of Pasay, for its part, said the procedure it followed in selecting a joint venture partner for the proposed reclamation was “legal and above board.”

Severo Madrona, Pasay City legal officer and vice chair of the PPP Selection Committee, said that in the absence of any competing proposal from any qualified bidder, the city government then proceeded to sign the joint venture agreement with SM Land which was subsequently ratified by the city council.

“SM Land Inc. has the sufficient and relevant experience to undertake the 300-hectare reclamation project. Being the joint venture partner of the city in implementing this project, it is a requirement that the would-be partner for the said endeavor has the necessary experience and expertise which SM has,” Madrona said.

For its part, the SM group said: “We confirm that we have been issued a notice of award and signed a JVA (joint venture agreement) with Pasay City. We wish to stress that we are committed to abide by all government laws, regulations and processes.”

Madrona added that the proposed project was compatible with and subject to the Philippine Reclamation Authority’s government center reclamation project. He thus said Ayala Land’s concern that the project did not have PRA approval was “unfounded.”

The project involves the reclamation and development of foreshore and offshore areas of Manila Bay located at the western part of the jurisdiction of the city. Based on the deal, SM will undertake and fully finance the project, including all the costs of all the necessary permits and clearances from government agencies and the expenses to comply with all the government and legal requirements.

The city is not expected to incur any expense on the project, contributing to the joint venture only its authority, rights and privileges to undertake reclamation project in its jurisdiction under existing laws, its official statement said. Pasay City government/PRA will be given at least 153 hectares or 51 percent of the area to be reclaimed, including roads and open spaces. It will be completed within seven years from the issuance by the city of the notice to proceed.

Madrona reiterated the city’s position that appropriate laws, rules, and regulations in connection with the unsolicited proposal of SM Land were followed. SM’s proposal was subjected to “competitive or Swiss challenge,” which however did not generate any concrete counter-proposal, he said.

“In the first place, there’s nothing illegal when it comes to the processes or procedures followed by the PPP Selection Committee,” he said. He stated that the city council had approved the procedures followed by the committee, approved a resolution authorizing city mayor Antonino Calixto to sign the contractual agreement with SM Land and subsequently ratified this through another resolution.

ALI’s contention during a public hearing held by the city council that the 2013 NEDA JV guidelines should be followed was misplaced, Madrona said, noting that the committee was guided by a legal opinion from the Department of Interior and Local Government which recognized the discretion of local government units to implement JV guidelines based on its own determination of appropriate rules. Madrona thus similarly refuted the complaints aired by S&P Construction Technology.

Based on Executive Order 146 cited by ALI, all reclamation projects should be approved by the NEDA and “shall undergo competitive public bidding consistent with the government’s thrust to promote transparency and competitiveness.”

On ALI’s concern on the limited time to submit a counter-proposal, Madrona said the selection committee could not unilaterally extend the 30-day deadline since it would be tantamount to changing the rules in midstream and would expose the city to charges of violating or bending the rules to favor a particular company.

ALI, however, reiterated that Pasay City and the country would benefit from a “transparent and competitive” bid process. “A project involving reclamation of such scale should be subjected to an open, public and competitive bidding which encourages transparency,” Dy said.