Ayala Corp. marked its formal entry into transport infrastructure after winning a government bid to complete a four-kilometer toll road linking the Daang Hari road in Cavite to the South Luzon Expressway (Slex).
On Thursday the Department of Public Works and Highways (DPWH) said Ayala gave the highest bid for the link-road project, the first public-private partnership (PPP) project of the Aquino administration.
Ayala submitted a bid of P902 million for the construction, operation and maintenance for the toll-road project with a 30-year concession period, a statement on Thursday showed, compared with the P608 million offered by a group led by conglomerate San Miguel Corp. (SMC). The government’s floor price was set at P371 million.
SMC’s South Expresslink Corp. is made up of Optimal Infrastructure Development Inc., Global Network Investido, Star Tollway Corp. and CLGP Philippine Holdings Inc.
Ayala tapped Spain’s Getinsa as technical partner for the Daang Hari-Slex linkage.
“This is a good initial foray in the transport infrastructure space and we believe this successful experience working within a public-private partnership framework would be helpful in pursuing future projects under the PPP program,” Ayala Corp. President and Chief Operating Officer Fernando Zobel de Ayala said in a statement.
“This road project provides significant opportunities for synergies within the Ayala group, especially our real-estate group, Ayala Land Inc., as it cuts travel time to our residential and commercial projects in this rapidly growing part of the metropolis,” he added.
The bid pertains to the compensation that the government will earn for the operation of the toll road.
The government will spend at least P288 million for the construction of the project worth around P1.95 billion. The winner of the contract will then spend for the rest of the expenses for the project but will operate and maintain the toll road for the next 30 years, Rebecca Garsuta, director of the DPWH’s PPP Center, said in a telephone interview.
The starting toll rate for this project at the opening year is P17 for Class 1 vehicles, P34 for Class 2 vehicles and P51 for Class 3 vehicles, all inclusive of value-added tax.
Public Works Undersecretary Rafael Yabut, who is also the chairman of the agency’s bids and awards committee, said Ayala’s bid will still be subject to a post-qualification process to verify the documents it had earlier submitted.
“If it passes the post-qualification process, it will be designated the winning bidder and will receive a Notice of Award” scheduled on December 22, Yabut said.
“But if Ayala Corp. fails to meet any of the requirements or conditions, it will be ‘post-disqualified’ and the [DPWH] will conduct the post-qualification on South Expresslink Corp.,” Yabut said.
The joint-venture of D. M. Consunji Inc. and C. M. Pancho Construction Inc. was also qualified to bid but did not submit a bid document; instead it submitted letter of withdrawal on the day of submission of bids early this week.
The project involves the construction of a four-kilometer, four-lane Daang Hari-Slex Link Road, providing an alternative route to and from Metro Manila to Cavite and vice versa. It is expected to decongest traffic in some parts of Cavite province, and in Las Piñas and Muntinlupa.
Construction for the project will start in February 2012 for Segment 1 and September 2012 for Segment 2.
Segment 1, with a total length of 2.3 kilometers, will start at the Daang Hari-Daang Reyna Junction I in Bacoor, Cavite, running eastward and passing through the National Bilibid Prison Reservation.
Segment II, with a total length of 1.7 kilometers, will start at the end point of Segment I, to connect with the Susana Heights interchange of the Slex.
In a separate briefing with reporters on Thursday, Ayala Corp. Managing Director John Eric Francia said the company expects to sign the concession agreement with the DPWH on December 22.
He said investments in the project are estimated “north of” P2 billion, which Ayala can fund internally.
“This is a long-term hold for us. We view investments in infrastructure as a business in and of itself,” Francia said.
Ayala said the DPWH is expected to complete all right-of–way requirements within six months of signing, while the so-called detailed design stage will be completed in four months.
Francia said Ayala is targeting to complete the toll road by the second half of 2013.
The company, one of the Philippines’s oldest conglomerates, is also eyeing at least two other toll-road projects in Metro Manila.
Apart from the Daang Hari-Slex connection, Ayala is also looking at the Naia Expressway Phase II and a connector road to link Slex with North Luzon Expressway.
Last month, Ayala Corp. Chief Financial Officer Delfin Gonzalez said the company will also bid for the right to operate the Laguindingan International Airport being built in Misamis Oriental.
The conglomerate has also been expanding steadily in power generation to add to its existing portfolio in real estate, banking, telecommunications, water infrastructure and electronics manufacturing.
Ayala Corp. shares added 1.43 percent to P297 each, giving it a market value of P171.45 billion on Thursday’s close.
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