Subway is the most expensive PPP project so far



MANILA – Manila's first subway, along with five other public private partnership projects, has been approved by the Cabinet level NEDA-Investment Coordinating Committee, paving the way for final approval by President Benigno Aquino.

NEDA deputy-director general Ronaldo Tungpalan said the projects were approved with some conditions but should be presented to the NEDA Board, which is chaired by the President, by early February.

The 6 projects approved by NEDA-ICC are:

1. Fort Bonifacio-Makati-SM Moa subway

2. Manila-Legazpi-Calamba railway

3. Tarlac-Pangasinan-La Union expressway (TPLEX)

4. Motor Vehicle Inspection project

5. Bureau of Fire project

6. Civil Registry project

The subway from Fort Bonifacio to Makati to SM Mall of Asia is the government's biggest PPP project at P374 billion.

Tungpalan said the subway will be a build-transfer-operate (BTO) project, rather than the usual build-operate-transfer (BOT).

This means the concessionaire will transfer ownership to the government before the 31-year concession agreement is over. This will allow the concessionaire to secure shorter, cheaper funding, helping government draw more bidders.

Manila's first subway

Manila's first subway will run from Market Market and St. Luke's hospital in The Fort, to the EDSA-MRT stations on Buendia and Ayala, to Ayala Triangle, the Makati post office and the PNR station on Buendia, then to the LRT-1 station on Buendia and Taft, then across Roxas Boulevard to the World Trade Center and SM Mall of Asia, then back to the EDSA-MRT station on Taft.

The estimated cost for a mere 12 kilometers is P370 billion—the government's most expensive PPP project.

Subways are more expensive than elevated rails—at least double the price per kilometer, but government says there was no choice given the areas where the line is passing.

These areas include EDSA, from Buendia to Ayala, which already has flyovers and the MRT.

But it also includes parts of The Fort and Makati Central Business District, where influential property owners and developers may appreciate a hidden underground line rather than an above-ground eyesore.

Most of Ayala Avenue, the street, is actually owned by Ayala Land.

The government has come under some criticism for allegedly favoring the Ayala group with alleged changes in its Daang Hari PPP, and the alleged moving of the MRT-LRT common station to Ayala's Trinoma mall.

Government and Ayala have denied these allegations.

On Wednesday, Ayala Land President Bobby Dy said there was no favor in this case either and that discussions regarding Ayala Avenue didn't get far before government decided on another route.

"We only had preliminary discussions on the commuter line," Dy said in a text message.

Transport Secretary Jun Abaya and PPP Center executive director Cosette Canilao echoed that statement.

"I don't recall any mention of an Ayala objection that line goes through Ayala Avenue," Abaya said. "Also don't recall any mention of an Ayala objection if it was elevated along Ayala Avenue."

"Ayala did not oppose running an elevated railway along Ayala Avenue," Canilao said.

The size of this project argues for making it a PPP—at P370 billion it's 14 percent of this year's P2.6 trillion budget. It's also bigger than the biggest departmental budget, education at P341 billion. In a PPP, it's the private sector that will spend that.

The risk is that it's so big that fewer than the usual number of companies will bid.



Chances are Ayala will, because the project passes through Makati and The Fort, which they developed and large parts of which they still own. Metro Pacific, its partner in LRT-1 and the MRT-LRT fare card system, may team up with it again. San Miguel always bids.

Manila-Bicol-Laguna rail

As the administration enters its homestretch, the PPPs seem to be getting bigger.

The so-called North-South Rail project, more than 700 kilometers linking Manila to Bicol and to Calamba, Laguna, was also approved by the NEDA-ICC.

Dante Canlas, economic planning secretary in the previous administration of Gloria Arroyo, said the project has been on the table since the Ramos administration in the 1990s.

He said right of way issues involving informal settlers had to be worked out or faster trains couldn't be installed.

Now that they have been worked out, the project will help not just Metro Manila workers who live in Southern Luzon and but also farmers in Bicol, and even various industries in the Visayas.

"The priority has risen with the fast economic growth of the last two to three years," Canlas said in a phone interview. "We need additional capacity whether land, sea or air. Region 4 is one of the fastest growing in the country. And the demands of inclusive growth require linking Region 5 and connectivity to the Visayas."

"The southern Bicol rail should be a boon to that region," Gerardo Sicat, NEDA chief under Ferdinand Marcos, said in an e-mail. "That would accelerate the entry of the Bicol region into our Luzon growth system. Unfortunately this was neglected and allowed essentially to die." - With report from Coco Alcuaz.