Good turnout seen in LRT-1 bidding

The government is expecting a good auction turnout on May 28 for a massive railway extension deal to Cavite even as some potential bidders—while ready—remained undecided on whether they would make a concrete offer and at least one group was seeking a two-month extension.

The P65-billion Light Rail Transit Line 1 (LRT-1) extension to Bacoor, Cavite, now on its second bidding round, is the government’s biggest public private partnership  deal on offer thus far and is widely viewed as a key test of the Aquino administration’s ability to auction off complex but crucial PPP projects.

The LRT-1 PPP, which has drawn seven interested groups in the current exercise, failed in August last year as bidders said the risks were too numerous, prompting most to withdraw.

The terms, including the government’s share on real property taxes, were tweaked to make these more acceptable to the private sector, which has acknowledged “improvements” so far.

“I think we are going to get good bids now based on the discussions we’ve had with the bidders,” Cosette Canilao, executive director of the PPP Center, said in an interview.

“The project is a complex one but we have improved the terms as much as we can accommodate and absorb some of the risks, which the private sector could not bear,” she said.

With the auction days away, key bidders like Metro Pacific Investments Corp. (a partner of Ayala Corp.) and Consunji-led DMCI Holdings Inc. noted that their offers were ready, according to their respective officials.

“Ready to bid [but] final decision not yet made,” DMCI president Isidro Consunji said via text. Similar statements were made by Ferdinand Inacay, vice president for business development at Metro Pacific.

MTD Philippines, backed by Malaysian conglomerate AlloyMTD, said it was keen on bidding but more time was needed since it only recently tapped a partner, SMRT Corp. Ltd., a Singaporean state-run company that operates railways, taxis and buses. MTD faced a setback after its original partner, South Korea’s Samsung, backed out this year.

“We are now at the stage of re-engaging our consultants for the preparation of a responsive bid. We asked for two months’ extension and we sincerely hope that the [transportation department] will be able to grant it,” MTD Philippines president David Isaac said. Other interested groups are San Miguel Corp., Megawide Construction Corp., Globalvia Inversiones of Spain and Ecorail. Their officials did not immediately respond to a request for comment.

The LRT-1 extension aims to provide an affordable commuting alternative for about 4 million people living in Parañaque, Las Piñas and Cavite, according to the transportation department.

Ridership at LRT-1, which served about 470,000 passengers a day last year, is projected to hit 820,000 once the system is completed in 2019. The winning bidder will operate the entire LRT-1 system for a period of 35 years, including construction, information on the PPP Center website showed.