Philippines to award road PPP to Metro Pacific after no competitive proposals submitted
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The Department of Public Works and Highways (DPWH) of Philippines is set to award the contract for the North Luzon Expressway - South Luzon Expressway (NLEX-SLEX) connector road PPP to a unit of Metro Pacific Investments Corp. (MPIC), after no other company submitted a competitive proposal.
In May 2010 MPIC submitted an unsolicited proposal to the DPWH, and the agency granted MPIC an “Original Proponent” status for the project, which was later tendered on April 1, 2016.
In late June we reported that three developers acquired the tender documents for the project, namely San Miguel Corp (SMC), Obrascon Huarte Lain SA (OHL) and Hunan Road and Bridge. However, none of them finally submitted a proposal for the project.
The project involves the construction of a 13.4 km 4-lane elevated expressway over the Philippine National Railway (PNR) right of way, which starts at Caloocan City and ends in Buendia, Makati City. It will connect North Luzon Expressway (NLEX) and South Luzon Expressway (SLEX) to decongest traffic in Metro Manila. The total investment of the project is expected to reach PHP23.3 billion (US$493 million) and it will be awarded under a 37-year concession contract.
Since the MPIC proposal was unsolicited, government rules required the offer to be subject to a Swiss challenge.
In January, we informed that the Philippine's National Economic and Development Authority (NEDA) Board approved to move forward with the Swiss challenge. The approval was however, conditional on the proponent to agreeing to the lower project internal rate of return (IRR) of 10.87 percent instead of 12.09 percent, by lowering the opening tariff from PHP100 to PHP87.
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