Businessman Antonio Tiu-led Philippine Infradev Holdings Inc., lead private sector proponent of the Makati subway project, is keen on extending this mass transportation system through the city of Pasay to connect to the Ninoy Aquino International Airport (Naia).
The project cost for the 10-kilometer subway system has also gone down to $2.5 billion, from the earlier estimate of $3.5-$3.7 billion, due to the favorable results of the final soil test and cost savings from the slight tweaking of the subway alignment.
In a recent interview with the Inquirer, Tiu said instead of building the first Makati station along Ayala Avenue, the first Makati station would be built in the Mile Long property, which is now being redeveloped by the government.
Giving up the Ayala Avenue station will easily shave $500 million off the project cost, as it would have been more expensive to bore tunnels and build a station in this higher-density area, Tiu said.
At the same time, the final soil tests showed that the project might cost much less than originally estimated, Tiu said.
Furthermore, as Mile Long is only three km away from the Naia on a straight line underground, Tiu said Infradev would propose to extend the subway system to Naia, the main international gateway to the metropolis.
Tiu said he had preliminary discussions on the prospective extension of the subway system with the Calixto siblings of Pasay City. The city is ruled by Mayor Imelda Calixto-Rubiano while her brother, Antonio Calixto, is a House representative.
The Philippine Infradev president and chief executive officer has high hopes that the local government unit (LGU) of Pasay would be receptive to the proposal, adding that the City of Makati—Infradev’s joint venture partner—had an alliance with the neighboring city of Pasay.
“I was so happy when they announced the awarding of the Naia airport project,” Tiu said, referring to the recent approval of the $2-billion airport modernization project by the National Economic and Development Authority-Investment Coordination Committee. “This means I can now talk to the private sector consortium [regarding the extension].”
Members of the Naia superconsortium are Aboitiz InfraCapital Inc., the Ayalas’ AC Infrastructure Holdings Corp., tycoon Andrew Tan-led Alliance Global Group Inc., Lucio Tan-led Asia’s Emerging Dragon Corp., Gotianun-led Filinvest Development Corp., Gokongwei-led JG Summit Holdings Inc. and Metro Pacific Investments Corp. The group has teamed up with Changi Airport Consultants Pte. Ltd., a subsidiary of Changi Airports International Pte. Ltd., for this project.
By October, Tiu expects the financial closing of the funding for the $2.5-billion subway project. Hong Kong-based investment bank Redstar was mandated to raise the debt financing component of the project.
“If they can raise more, it’s okay but with the commitments from other private proponents, who agreed to top up [contribution], we have more than sufficient funding for phase one,” Tiu said.
Philippine Infradev and the Makati LGU will have majority control of the project.
Targeted for completion by 2024 or 2025, nine stations have so far been finalized. While the plan was to have 10 stations in Makati, Tiu said the proponents did not necessarily have to stick to 10.
After Mile Long, the next station will be at the current Makati fire station, which will be relocated elsewhere. The next station will be at a property owned by the Lucio Tan group near Circuit Makati, followed by another station near the Makati City Hall. The other stations will be close to Century City, Rockwell Center, Makati Bliss Housing near Pasig River, University of Makati, Cembo and the final station will be along the Ospital ng Makati.
Under Philippine Infradev’s business model, fare revenue will cover the operating expenses of the project while interest payments and depreciation will be covered by nonfare revenues that are projected to be much higher than the fare revenues.