NDC to lease SLEX extension to PNCC

The National Development Co. (NDC) will lease the extended portion of the South Luzon Expressway (SLEX) to the Philippine National Construction Co. (PNCC), a deal that is expected to boost the latter’s shareholder value when it is privatized sometime this year.

The Department of Finance (DOF) said the plan is for NDC to issue bonds to finance the project and when completed, it will be leased to the PNCC.

"It’s actually going to be a lease-to-own arrangement," according to Finance Undersecretary Eric Recto. "NDC will have an exit because it will be paid back and payments are structured like a long-term lease-to-own arrangement, although we have to finalize the letter of the deal," he added.

According to Recto, the one prerequisite is the approval of the proposed toll structure that will apply once the project is in place.

"There will be a toll rate regime that will factor the new segment so of course this would require approval since it would have an impact on the whole system."

The SLEX has been partly rehabilitated under the franchise of PNCC and its joint venture for the Metro Manila Skyway (MMS) Project

The Southern Tagalog Arterial Road (STAR), is a 42-km expressway stretching from Sto. Tomas to Batangas City with a total construction cost of P1.7 billion.

According to Recto, connecting SLEX to the STAR is critical to the operation of the billion-dollar Batangas Port which was developed with the assumption that this particular road network would also be constructed.

"It’s an international seaport," Recto pointed out. "It will be virtually useless without this highway system that’s why this project is being rushed."

Recto is overseeing the privatization of the government’s remaining assets and he said the SLEX expansion would boost PNCC’s cashflow and make it even more attractive when it is finally privatized.

"PNCC already has a very good cash flow, this will improve it even further," Recto said. "Obviously, we want PNCC to look as good as possible for when we eventually sell government’s interest in this company."

Despite PNCC’s good cashflow, however, Recto said NDC’s participation was necessary since PNCC has a huge debt burden that has consistently eaten into its revenues over the last few decades.

The NDC will be taking over the SLEX expansion which is estimated to cost at least P4 billion, including the construction of the long-planned Alabang viaduct.

The SLEX construction project will replace, rehabilitate and reinforce the Alabang viaduct which had been closed to heavy traffic for over five years.

Trucks and vehicles weighing over 20 tons and above have been forced to use the ground level access road that passes through the busy Alabang-Muntinlupa intersection.

At present, the SLEX ends in Calamba and the extension, according to Recto, would connect the highway to the STAR which extends up to Batangas City.

The Philippines has a total road network of more than 160,000 km in length, of which 17 percent or nearly 27,000 km are national roads administered by the Department of Public Works and Highways (DPWH). The remaining public roads are administered by the local government units (LGUs).

There are about 140 km of toll roads in operation at present. These toll roads are being supervised and regulated by the Toll Regulatory Board (TRB), a government agency attached to the Department of Public Works and Highways.