MVP group seen opposing ‘Swiss challenge’ on SCTEx

MANILA, Philippines—The group of businessman Manuel V. Pangilinan may oppose the government’s plan to subject its latest counter-proposal for the Subic-Clark-Tarlac Expressway (SCTEx) to a Swiss or competitive challenge, which could delay its takeover further.

Pangilinan-led Metro Pacific Investments Corp. won the 33-year concession for the 94-kilometer toll road under the previous administration prior to a series of reviews under President Aquino. It had improved its offer for the toll road, built by the Bases and Conversion Development Authority (BCDA), two times over a period of three years.

Ramoncito Fernandez, president of Metro Pacific’s subsidiary, Metro Pacific Tollways Corp., said they were previously informed that while Malacañang was satisfied with their latest offer, President Aquino “wanted it subjected to a Swiss challenge.”

This means rival groups will be allowed to bid for the project, but Metro Pacific would have the right to match the best offer to win the project.

“Our position there is that we find it grossly unfair and without legal basis,” Fernandez said at the sidelines of the Euromoney Philippines Investment Forum held this week.

He said they were informed by BCDA of Malacañang’s preference before the end of 2013, to which they have made their comments. Fernandez said they have yet to receive BCDA’s reply.

“We want to execute the contract that we have. We have been waiting for years already,” said Fernandez, noting that legal options were available but not yet being considered.

The integration of SCTEx is likewise important for Metro Pacific, which is seeking to create a seamless network of tollroads. SCTEx, for example, connects to its flagship North Luzon Expressway (NLEx) project.

It links Central Luzon’s three major economic zones—Clark freeport zone, Subic Bay freeport zone and Central Techno Park in Tarlac.

During the same forum, Metro Pacific president Jose Ma. Lim said the government should be more sensitive as the private sector members “are much weaker than they are” when it comes to exercising legal actions.

Metro Pacific is facing regulatory challenges in its businesses, most of which are highly regulated. It entered into arbitration proceedings for unit Maynilad Water Services Inc. after the water regulator opposed a planned hike in rates. It is also facing stiff opposition over a power rate increase for Manila Electric Co. and for toll roads, it has pending applications with the Toll Regulatory Board for an increase.

Lim said that while Metro Pacific was familiar with the regulatory framework in the Philippines, which he noted was more defined for certain sectors outside power and water, the company was prompted to look at close neighbors where regulations were less mature. “We just have to take higher risks, at least we put our funds to work. That is the reality in this,” Lim said.