Colayco defends increase in cost of Subic-Clark-Tarlac Expressway project

Bases Conversion Development Authority (BCDA) president and chief executive officer Rufo Colayco defended yesterday the increase in the cost of the Subic-Clark-Tarlac Expressway Project (SCTEP) even as he warned that a rebidding of the highway project would result in a delay of one to two years, much longer than the four to six months Economic Planning Secretary Romulo Neri estimates.

Colayco, in a letter to Neri, pointed out that BCDA was not even provided by the National Economic and Development Authority (NEDA) the Project Evaluation Report (PER) that NEDA made on the SCTEP.

NEDA’s own PER, Colayco said, "acknowledges that the very substantial increase in project cost arose from exogenous factors: the 27-percent devaluation of the peso and the increase in steel (more than double) as well as other raw materials."

Colayco further argued that the feasibility study for the SCTEP was approved by the NEDA-Investment Coordinating Council (ICC) in 2000 at a project cost of P18.7 billion.

However, bidding, Colayco explained, "was conducted in 2003, by which time upward price adjustments as a result of exogenous factors above cited increased project cost by 36 percent."

Colayco further stated that "while we acknowledge that changes were made in design, these changes accounted for only 16 percent in the increase in project cost from the NEDA-approved project cost in the year 2000. This is well within the NEDA rule that such changes should be within 20 percent of the approved total project cost."

Colayco clarified that "the design changes had virtually been eliminated by the time the BCDA brought the project to NEDA for reevaluation last month. We did so, cognizant that significant cost increases such as the project had incurred called for reevaluation for both economic viability as well as financial feasibility."

Colayco also cited the fact that the Department of Finance in its reevaluation of the SCTEP noted that the project remains financially sound.

Furthermore, Colayco said, the NEDA PER acknowledged that rebidding would not assure lower cost and would result in significant delay for the project.

Colayco, citing the same NEDA report, warned about "possible bilateral implications between the Government of the Philippines and the Government of Japan which cannot be discounted with a decision to rebid."

Neri had recently asked the BCDA to resubmit the SCTEP for approval by the NEDA-ICC.

Neri explained that the NEDA-ICC is trying to correct "serious procedural lapses" caused by the change in the design of the project as originally approved by the NEDA-ICC.