Unsolicited infra projects mount

Filipino tycoons are betting big on infrastructure through unsolicited offers, responding to a change in policy under President Duterte and the need to fill in project gaps given the dearth of public-private partnership (PPP) deals favored by the previous administration.

Since Mr. Duterte assumed office in July last year, unsolicited projects aiming to resolve air, land and sea transportation bottlenecks valued at more than P2.6 trillion have emerged.

The Aquino administration, suspicious of unsolicited deals, preferred an all-solicited route, which mainly involved an ambitious PPP pipeline that gave Filipinos the first steps toward a modernized Cebu International Airport, two new expressways in Metro Manila and more public classrooms.

The pace of PPPs, previously criticized as not moving fast enough, has slowed to a trickle with the government signaling it wanted to do more overseas development assistance (ODA) deals while opening the door to unsolicited projects.

Local conglomerates, buoyed by the more than 6-percent growth under President Aquino and their experience in bidding and winning PPP projects, are rapidly shifting gears in this new environment.

“We are hoping to help the government’s infrastructure drive by submitting these unsolicited proposals,” Jose Rene Almendras, CEO of Ayala Corp. unit AC Infrastructure Holdings, said in response to a query on the lack of PPP opportunities.

The Zobel family’s Ayala and SM Investments Corp., led by the country’s richest man Henry Sy Sr., proposed on Friday a P25-billion, 8.6-kilometer elevated toll road. The project would move cars away from main thoroughfare Edsa while linking their two biggest property assets in Metro Manila: SM Mall of Asia in Pasay City and Makati City. (See related story on page B3-3.)

These tailor-made projects made sense for the private sector. But the government should also pursue its push for development outside Metro Manila, which would help promote inclusive growth, said Jose Mari B. Lacson, equities research head at ATR Asset Management.

“For the private sector, it enhances their assets, which is good for their value, from a market perspective,” Lacson said, adding it could be different from an overall economic perspective. “It may not be of the interest of private sector to support projects that push growth outside Metro Manila if they don’t have assets in those places.”

The new unsolicited offers, which would require bidding via a Swiss challenge, are located mainly in Metro Manila or in support of the capital district.

For the air sector, San Miguel offered to build a P700-billion international air gateway in Bulacan province while a Belle Corp.-Solar Group venture is looking at a P1.3-trillion airport-seaport reclamation project in Sangley, Cavite.

Last year, Megawide Construction Corp. and India’s GMR offered to spend P250 billion to develop Clark International Airport, rivaling a P187-billion offer by the Gokongwei family’s JG Summit Holdings Inc. and Filinvest Development Corp.

Enrique Razon Jr.’s International Container Terminal Services Inc. offered to spend P1.5 billion for a common-user barge and Roll-on/Roll-off terminal in Cavite. With a unit of Manuel V. Pangilinan-led Manila Electric Co., it offered to revive a P10-billion Manila-Laguna cargo railway line.

Pangilinan-led Metro Pacific Investments Corp. is also poised to submit a P50-billion offer for an overhead expressway near C-5 road. Two other expressway projects, the P41 billion Manila-Taguig Expressway and P67-billion Manila-Quezon Expressway, have been offered to the government in the second half of 2016.