Managing the Calax fallout

On second thought, P8.45 billion can really go a long, long way towards improving the lives of millions of poor Filipinos.

We’re talking here of the P20.1 billion bid of San Miguel Corp.’s Optimal Infrastructure Development Inc. (OIDI) for the construction of the proposed Cavite-Laguna Expressway (CALAX) that was disqualified due to a technicality, but which turned out later to be almost double the amount that the “winning” competitor declared.

The CALAX involves the financing, design, construction, operation, and maintenance of a four-lane, 47-kilometer closed-system toll expressway connecting the Cavite Expressway (CAVITEX) and the Southern Luzon Expressway (SLEX).

The declared winner by the Department of Public Works and Highways of the bid for the CALAX project in the amount of P11.65 billion was Team Orion, a joint venture between Ayala Corp. and Aboitiz Land Inc.

OIDI’s bid was disqualified because the validity of the its guarantee bond was four days short of the required 180 days, which SMC later explained as something like a typo error.

Interventions

Shortly after the disqualification, SMC and ANZ Bank (as the bank providing the bid bond) went directly to the DPWH and vouched for the full 180-day guarantee. They were once again turned away, which prompted the aggrieved party to seek P-Noy’s intervention.

The President recently issued a rebid order on the project, which drew protests from the business community, including yours truly, on the grounds that such action would send wrong signals to investors of projects that need crucial funding from the private sector.

We’re all aware that there’s a long list of projects in the Public-Private Partnership portfolio that still need takers, and any hint of political patronage at any stage of bidding – before, during, or after – can send negative signals especially if it involves the President who’s been espousing a corruption-free campaign.

But then again, the President can’t ignore a princely sum like P8.45 billion that could help build quite a number of schools and clinics or a few more roads and bridges without needing to seek private partners or soft loans from funding agencies.

Taking sides

On this basis, yes, a rebid would seem a conscientious decision to make, although several strong business groups like the Makati Business Club had expressed their objection. Only the Philippine Chamber of Commerce and Industry supported the President’s decision to rebid.

Team Orion, which would have to double up the ante if the rebidding procedures were to be announced, has already declared that it wasn’t interested in going through the process again, if ever.

The Ayalas are known to be diligent and extremely conservative in doing their math for projects, and their bid price of P11.65 billion could just be about the best offer possible for them without being exposed to excessive risks.

Sticky situation

With the President declaring that he would rebid CALAX because it would be in the better interest of the Filipino people, all attention must now be on managing what has turned out to be a sticky situation full of potentially damaging repercussions.

Most apparent would be a renewed wariness by investors in bidding for government projects, a situation that with had eased in the last three years and with the country’s taipans financing quite a number of the state’s big infrastructure projects.

The rebid could also stall the CALAX project if there would be no other interested parties who would want to join in the rebidding, now that it’s been revealed just how much San Miguel is willing to commit for the road construction.

Amidst all of these uncertainties, since P-Noy is steadfast in his decision to rebid CALAX, the next best thing to do now is to manage expectations and to be aware of all possible loopholes that could once again delay this much needed infrastructure project.

Let’s put an end to this issue quickly and move on to other projects with the view of managing fallouts when and where they happen. Guys, it’s been almost six months since San Miguel talked to the President.

Keppel correction

Thank you, Eva Ho, deputy general manager of Keppel Corporation Ltd.’s Group Corporate Communications, for sending this reminder correcting our column published last week. Here are excerpts of her letter:

“I refer to the report ‘Building safer ships for domestic use,’ which I believe you wrote for The Philippine STAR.

“We wish to point out an inaccurate point in your article. In the report, there was mention that ‘Korean-based Hanjin is currently operating in Subic, and has built a large part of the Malampaya offshore natural gas production platform.’

“This is not correct as it is Keppel Subic Shipyard which is currently constructing the Depletion Compression Platform for Shell for the Malampaya gas field in the Philippines.

“While we do have a shipyard in Batangas, we also have a significant shipyard presence in Subic.

“We would be grateful if you could correct the report if it is available on online media platforms.”

2014 National Collegiate Championship

The Elite Eight stage of the 2014 National Collegiate Championship ends today with the San Beda College Red Lions, Arellano U Chiefs, National U Bulldogs, and FEU Tamaraws completing their respective matches at Ynares Sports Center, Pasig City. These games are televised live by ABS-CBN Sports and Action channel starting 2 p.m.

The DLSU Green Archers, defending national collegiate champion, is on track for another title run to join Ateneo and the FEU Tamaraws as back-to-back national champions. Ateneo did it in 2010 and 2009, while FEU achieved the feat in 2005 and 2004.

Still in the mix is University of San Carlos Warriors, the top Cebu team in the Elite Eight. The USC Warriors aims to make history as the first team from Cebu to capture the prestigious crown as the best collegiate team for the season.

The Champions League 2014 National Collegiate Championship is sponsored by media partners ABS-CBN and Philippine Star, Phoenix Petroleum, Molten Balls, Fil-Oil Flying V Sports, Fog City Creamery and Foccacia. Tickets are available at SM Tickets online.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.