Government to release P3 billion for Tarlac-La Union tollway

MANILA, Philippines - The government announced it will release P3 billion in order to bankroll the construction of San Miguel Corp., (SMC) and DMCI Inc.’s P19 billion Tarlac Pangasinan La Union Expressway project.

With the P3 billion government contribution and the P1.5 billion equity from the private sector developer, the consortium now has P4.5 billion which is enough to start the 88.5-kilometer Tarlac-Pangasinan-La Union Expressway. The road is a four-lane highway that will cut travel time from Manila to Baguio by half.

In an interview over the weekend, Trade Secretary Peter B. Favila said that he has spoken with SMC Corp. president Ramon Ang who asked him to first bridge the government subsidy so that they can start the construction of the expressway as soon as possible.

The government has committed to provide a P3 billion subsidy for the expressway. However, Favila explained that the Department of Budget and Management will not be able to immediately release the money because DBM needs a lot of paper work.

In order to immediately start the construction, Favila, who is also the head of the National Development Corp. (NDC), said that NDC agreed to first bridge the government subsidy.

Favila explained that the NDC will get the money from the P50 billion infrastructure bonds. He said that they will initially sell P3 billion worth of bonds in order to finance the road project. Favila said that the Development Bank of the Philippines (DBP) and the Social Security System (SSS) has already agreed to subscribe to the issue.

Favila said that they will make the P3 billion bond issue a priority in order to immediately release the fund to the consortium.

Favila noted that the consortium is ready to start construction for the first nine to 10 kilometers of the expressway. The construction will start where the Subic Clark Tarlac Expressway (SCTEX) ended.

Favila said that the first part of the construction will be until Tirona. He said that the group has already cleared all the right of way issues until Tirona. The rest of the area is still plagued with right of way concerns, Favila said.

The construction of the Tarlac Pangasinan La Union Expressway is being undertaken by the Private Infrastructure Development Corp. (PIDC). SMC, through Rapid Thoroughfares Inc., owns 35 percent of PIDC, making it the biggest shareholder in the company. DMCI, on the other hand, has a 32 percent stake. The two own majority or 67 percent of PIDC.

Aside from the P3 billion government subsidy, the money will come from owner’s equity and bank loans. The owner’s equity is estimated to be at P6.5 billion.

The road is expected to be completed by 2013.