Bidding for Laguna dike project fails

The bidding process for the P123-billion Laguna Lakeshore Expressway Dike project failed yesterday as bidders snubbed the public private partnership (PPP) deal, dimming prospects for its revival within the term of President Aquino.

The project, which has a 37-year concession period, was an ambitious solution to heavy flooding in the area as well as parts of Metro Manila. It combines a 47-kilometer tollroad from Taguig in Metro Manila to Los Baños in Laguna running on top of a flood control dike, which would have been the longest in the world. Its main business sweetener is a 700-hectare land reclamation project on Laguna Lake that could be developed into mixed-use communities.

Hopes to award the project before the administration ends in June 2016 were dashed yesterday after all three prequalified groups did not submit offers, citing a combination of the project’s high-risk and complexity, its lack of viability and the nearing shift in government leadership.

The three groups are Team Trident, comprised of Ayala Land Inc., SM Prime Holdings Inc., Aboitiz Equity Ventures Inc. and Megaworld Corp; San Miguel Corp., and the Alloy Pavi Hanshin LLEDP Consortium, comprised of Malaysia’s MTD Group, South Korea’s Hanshin and the family of former Sen. Manuel Villar Jr.

Representatives from each group were present at the DPWH headquarters yesterday.

“I doubt if we can do another bidding in this administration,” PPP Center Executive Director Andre Palacios told reporters. “We still believe it’s an important project.”

Public Works Secretary Rogelio Singson said they would hold internal discussions on what the next steps would be. “We still have to assess why it failed. It depends on some of the concerns of the bidders,” he said.

The final bid submission date was set on March 28, 2016, although this has been moved several times since July last year.

“The Laguna lakeshore project is just not feasible. The governmetn will have to reexamine its assumptions and redesign a mutually beneficial contractual structure best suited for a deal as large and intricate as this one,” San Miguel president and COO Ramon S. Ang said.

Román Azanza III, Aboitiz first vice president for business development, cited the lack of connectivity guarantees to the C5 and C6 projects, the expressway dike’s complex technical requirements and the seven-year time frame that the DPWH had required for the completion of the project.

“A deal of this magnitude and importance should not be rushed, it should be done correctly,” Azanza, who also acts as spokesperson for Team Trident, said.

Alloy Pavi Hanshin LLEDP, the only group with foreign partners, was also worried about implementation risks. It had sought a presidential proclamation and “tripartite” agreement between the DPWH, Philippine Reclamation Authority and Laguna Lake Development Authority before the bidding.

Isaac David, who heads MTD Philippines and is the representative of the consortium, said they would be more comfortable participating in an auction under the next administration.

“Further, the advent of the election fever and partisan politics could cast misimpression of the [Laguna Lakeshore] project as a multibillion-peso “midnight deal” Thus, prudence dictates that the bidding of the cited PPP transaction deserves to be deferred until after the new administration has taken over,” he said in a separate letter to the DPWH.