Honor thy contract

Last Saturday, I was supposed to leave at 3:40 p.m. for my flight from Coron to Manila. Because of the traffic at NAIA that delayed the take-off of the turnaround plane, I left at 5:30 p.m. or almost two hours later.

The delayed flight was scheduled to arrive in 30-45 minutes, but guess what – I got off the plane around 7 p.m. because of traffic at the runway.

But my woes didn’t stop there. Traffic at EDSA was so bad the taxi with a fixed rate (P790 to Quezon City) decided to take a different route that passed Pasong Tamo, Quirino Avenue, España in Manila, and then Quezon Avenue. We ruled out taking C5 because of the trucks using that road.

To cut the long story short, I arrived home past 9 p.m.

The Metro Manila traffic, unfortunately, has spilled over to nearby provinces.

For commuters and vehicle owners and drivers, all hope seems lost.

It is good the private sector has taken the lead in creating a solution to the monster traffic of Metro Manila. Because unless something is done fast, Metro Manila will cease to be a liveable city in one or two years’ time.

Among those who are building new roads or improving existing ones are Metro Pacific Tollways Development Corp. (MPTC) and its subsidiaries – Manila North Tollways Corp. (MNTC), Tollways Management Corp. (TMC), and the Cavitex Infrastructure Corp. (CIC).

Already, MPTC is the largest tollway operator with 63 percent of the 320 kilometers of the country’s toll roads in its concessions.

MNTC and TMC operate the North Luzon Expressway (NLEX) and the Subic-Clark-Tarlac Expressway (SCTEX), respectively, while CIC runs the Cavite Expressway (CAVITEX). Parent MPTC, meanwhile, is the toll builder and operator of the Metro Pacific Investment Corp. (MPIC), which also has toll business interests in Vietnam and Thailand.

A number of activities of these companies bode well for the future of commuting and driving in Metro Manila.

First, the P650-million integration of NLEX and SCTEX is already 85 percent finished and is due for completion this March, or in time for the Holy Week, when vehicle volume traditionally surges by 15- to 20 percent.

Travel time is expected to be reduced by 35-40 minutes as the number of toll plazas will be reduced from four to only two. Also, motorists can start using the same contactless, short-range communication EasyTrip tags or magnetic cards on both tollroads to quickly pay their toll fees.

Second, MNTC has completed 17 percent of the civil works at the P9-billion NLEX-Harbor Link Segment 10, and hopes to complete it by next year assuming the national government delivers the right-of-way (ROW) as scheduled. Segment 10 will connect MacArthur Highway in Valenzuela City to the Circumferential Road 3 (C-3) in Caloocan City.

This alignment will decongest Metro Manila by providing access to NLEX without passing through EDSA or the Balintawak Toll Plaza, and will improve the movement of cargo from the port of Manila by providing a direct link between NLEX and Radial Road 10 (R-10) in the port area.

Once completed, Segment 10 will stretch NLEX from its current length of 95 km to 105 km.

Third, TMC is embarking on a P1.5-billion rehabilitation and expansion of SCTEX over the next three years. These include pavement works, construction of new facilities and communication systems including additional rest rooms and roadside emergency call boxes,  and closed-circuit television cameras (CCTV).

Fourth, the CIC is scheduled to start work this first quarter on the P9-billion C-5 Link, an eight-km road connecting CAVITEX and the Circumferential Road 5 (C-5).

Around P2 billion this year and P7 billion in 2017 and 2018 will be spent on C-5 Link, which will expand the 14-km CAVITEX by connecting it to the South Luzon Expressway (SLEX) flyover.

Fifth, MNTC will begin first quarter of 2017 the P6.5-billion NLEX Segment 8, a 7.85-km expressway linking C-5 Road and Commonwealth Avenue in Quezon City to NLEX. It will be completed by  2019. NLEX Segment 8 will include a roundabout connection at Congressional Avenue plus interchanges in Mindanao and Regalado Avenues, all in Quezon City.

Meanwhile, NLEX Segment 8.2 is a 7.5-km. expressway from Segment 8.1 at Mindanao Avenue to Republic Avenue and Luzon Avenue all the way to Commonwealth Avenue.

Sixth, the Department of Public Works and Highways (DPWH) has announced it will soon hold the Swiss Challenge for MPIC’s unsolicited proposal on the P23-billion NLEX-SLEX Connector Road hopefully before President Aquino steps down from office.

The DPWH hopes to bid out before the end of the Aquino presidency in June the eight-km elevated expressway which MPIC submitted as an unsolicited proposal to Malacañang in late 2010.

The NLEX-SLEX Connector Road will extend NLEX southward from the end of NLEX Segment 10 in C-3 Road, Caloocan City to the Polytechnic University of the Philippines (PUP) in Sta. Mesa. It will use the Philippine National Railways (PNR) right-of-way and is expected to cut travel time from SLEX to NLEX from two hours to just 15-20 minutes.

Unfortunately for MNTC, TMC, and CIC, while period rate adjustments are provided for in their respective concession deals or operation and management contracts with the national government, the Toll Regulatory Board (TRB) has for years suspended the toll fee increases.

NLEX has pending applications for toll fee adjustments for 2013 and 2015, while SCTEX has pending petitions for 2012, 2013, 2014 an 2016. CAVITEX has a pending application since 2011.

MNTC and CIC both explained that their failure to collect the higher rates would result to outright delay or stoppage of needed improvements, expansions or repairs of the toll facilities. Already, the MPIC Group’s foregone revenues have reached a combined P2.4 billion as a result.

Despite this though, company executives say they are on track to invest as much as P79.6 billion in the next five years for the construction of new toll road projects and expansion of the existing expressways .

The new projects include the 45-km Cavite-Laguna Expressway (CALAX) and the Cebu-Cordoba bridge which are due, respectively, to begin construction this July and sometime in 2017.

MPIC is spending P62.3 billion (inclusive of the P27.3-billion upfront payment) on CALAX, which will start from the CAVITEX exit in Kawit, Cavite and end at the SLEX-Mamplasan Interchange in Biñan, Laguna, and is expected to cut travel time between these two expressways by some 45 minutes.

Meanwhile, MPTC recently announced the signing of its joint venture with Cebu City and the municipality of Cordoba after its unsolicited proposal for the P27.9-billion Cebu-Cordoba bridge project was unchallenged following the Swiss Challenge conducted by both local governments.

The project will decongest traffic in the two existing bridges – Marcelo Fernan and Mandaue – between Cebu and Mactan islands.

MNTC has to adjust toll fees every two years to recoup its multibillion-peso investments and generate enough cash for its road expansion, improvement and maintenance. CIC, in turn, has to adjust its fees once every three years, as stated in its own concession agreement with the government.

TRB’s failure to consider such adjustments, which are guaranteed under our government’s contracts with these companies, reflects the uncertain investment environment that awaits prospective investors.

Business leaders say the penchant of the Philippine government to change business rules midstream is the type of deal breaker that has kept Manila from attracting the huge volume and value of foreign direct investments (FDIs) it deserves as Asia’s newest economic star.

Even the Supreme Court has stressed the Build-Operate-Transfer (BOT) law provides for a reasonable rate of return on investments and operating and maintenance cost.

It noted that the viability of any infrastructure project depends on the returns, which should be reasonable, of the investment coming from the private sector.

“While the interests of the public are ideally to be accorded primacy in considering government contracts, the reality on the ground is that the tollway projects may not at all be possible or would be difficult to realize without the involvement of the investing private sector, which expects its usual share of profit,” the SC said.

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