Philippine Infradev warns that alignment of Makati Subway no longer 'feasible' due to SC decision

Philippine Infradev Holdings [INFRA 0.52, down 10.3%; 490% avgVol] [link] disclosed that the “alignment” of its flagship infrastructure project, the Makati City Subway System, will “no longer be feasible” due to the recent Supreme Court decision on the jurisdictional border dispute between Taguig City and Makati City. In a letter to the Makati City Government, INFRA said that it is providing “Intent Notice to propose the commencement of discussions” to address the “change in law” that resulted from the Supreme Court decision. INFRA and the Makati City Government are developing the US$ 3.7-billion Makati City Subway System under a joint venture agreement. The Makati City Government said in 2018 that it expected the system to be “fully functional” by 2023, while Tony Tiu (speaking on behalf of INFRA) updated the timeline two years ago to complete in 2025. Mr. Tiu quit as INFRA’s CEO earlier this year to “focus on his agricultural business.”

MB bottom-line: Seems like Makati and INFRA have got a real problem on their hands. While pro-transport groups are calling for the joint venture to quickly pivot to include the Taguig City Government, and to negotiate expansion of the line into BGC, anyone who has been following the dispute between Taguig and Makati will know that the wounds are still fresh and the parties have yet to resolve several open questions of jurisdiction that have been raised by the ruling. The best example of this dispute is in the 14 “embo” schools that used to be in Makati but are now considered part of Taguig; the Department of Education jumped in to assume control of the schools to ensure a “peaceful and orderly reopening of classes” amid escalating tensions between the two municipal governments. While some work has already been done, it sounds like the parties are basically back to square one in terms of having a plan that can be executed into a functioning subway system. That’s concerning.

---

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.

Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.