Gov’t lowers subsidy ceiling for LRT-1 PPP

THE GOVERNMENT has lowered the subsidy ceiling for the Light Rail Transit Line 1 Cavite Extension (LRT-1 CavEx) after cutting out an obligation borne by the concessionaire.

In its latest general bid bulletin, posted last week, the Department of Transportation and Communications (DoTC) noted that it had reduced the subsidy cap for the P64.9-billion railway project to P5 billion from the original P6 billion it had set.

“The reduction of the cap on the Subsidy Amount is consistent with the deletion of the obligation of the Concessionaire to fund the relocation under Section 11.7 of the draft Concession Agreement up to the amount of Nine Hundred Million Philippine Pesos (PhP900,000,000),” the DoTC said in the notice.

It added that this includes all the taxes and the amount of value-added tax (VAT).

The DoTC previously disclosed the original P6-billion amount, which it termed Viability Gap Funding (VGF), in a previous bid bulletin issued on Feb. 10.

Public-Private Partnership Center Executive Director Cosette V. Canilao explained in a phone interview that a subsidy cap refers to the maximum amount that bidders can request from the government.

In a presentation during the project’s pre-bid conference last January, either the VGF (also called the “lowest capital subsidy”) or the highest concession fee is indicated in the bid parameter, which is part of the financial proposal.

The lowest VGF will be doled out in four separate tranches based on project completion, with the largest chunk, of 50%, to be given “upon commissioning of the section between Baclaran and Dr. Santos” stations.

The deadline for the submission of documents for the project’s single-stage bidding was supposed to have been today, but the DoTC has postponed it to May 28.

The LRT-1 CavEx project will add ten stations to the existing railway, increasing the line by 11.7 kilometers from its southern end in Baclaran, Parañaque City, to Bacoor, Cavite.

This is the second time that the government is auctioning off the project as bidding failed in August 2013, when only Pangilinan-led Metro Pacific Investments Corp. (MPIC) submitted a bid that had been conditional to boot.

Currently, potential bidders for the project include the Light Rail Manila Consortium of MPIC and Ayala Corp., and Megawide Construction Corp., which was awarded the contract for the P17.5-billion Mactan-Cebu International Airport (MCIA) project on April 4.

The department has been trying to make the PPP project more palatable to investors and recently permitted bidders to submit a design for the P1.4-billion Common Station project, to connect the LRT-1 with Metro Rail Transit Line 3 at the northern end of EDSA.

MPIC is the local unit of Hong Kong -- based First Pacific Co. Ltd., part owner of Philippine Long Distance Telephone Company. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. -- Anton Joshua M. Santos

source:  Businessworld