PNCC set to turn over SLEX operations to Malaysian partner

MANILA, Philippines - After a bitter and fiercely fought legal battle with its Malaysian partners, state-led Philippine National Construction Corp. (PNCC) said it is set to turn over to the Manila Tollway Expressway Systems Inc. (MATES) on Sunday the operations and maintenance of the South Luzon Expressway (SLEX).

This was after the Toll Regulatory Board (TRB) approved and issued a toll operation permit to South Luzon Tollway Corp. (SLTC) authorizing its tollway operation and management company MATES to take over the operation and maintenance of project toll roads 1 and 2 of SLEX.

PNCC owns a 20 percent stake in SLTC while the remainder is owned by MTD Capital Bhd. of Malaysia. MTD Capital also owns 30 percent of MATES while PNCC has a 40 percent stake.

SLTC holds the right to rehabilitate, expand, operate and maintain SLEX under a concession obtained in 2006.

The project has three components — the rehabilitation and widening of the 1.2-kilometer Alabang Viaduct, which was completed in 2007; the rehabilitation and widening of the 27.3-km expressway linking Alabang to Calamba in Laguna province; and the construction of a 7.6-km extension from Calamba to Sto. Tomas in Batangas province.

PNCC recently had a falling out with its Malaysian partner after the former refused to hand over the operations of the tollway to MATES. The issue reached the courts.

The government owns about 45.5 percent of PNCC, followed by the Government Service Insurance System (GSIS) with 27 percent, and Universal Holdings Corp. with 14 percent, according to data submitted to the Philippine Stock Exchange (PSE) as of March 31, 2010.

The TRB first formally served notice to the PNCC to turn over the operation and maintenance of SLEX to SLTC and its tollway operation company MATES last Dec. 4. The board then served a second notice on Dec. 1, giving the company until Dec. 14 to comply with the directive. In response, PNCC applied for a restraining order.

The TRB had granted SLTC the authority to operate the SLEX through a toll operation certificate (TOC) dated Nov. 27, 2009.

PNCC earlier received an unsolicited offer from Metro Pacific Tollways Corp. (MPTC) for the acquisition of its 20 percent stake in SLTC but according to PNCC president and CEO Ma. Theresa Defensor, they must first offer the stake to its Malaysian partner which has the right of first refusal. MTD was also the sole funder of the SLEX rehabilitation that started in 2005.

Defensor also said the sale of the PNCC’s 20-percent stake in SLTC would come in a package, where the buyer must also buy the PNCC’s 40-percent stake in MATES.

“If and when the Malaysians say that they are not interested and if the Department of Finance said the PNCC has to bid out our stake, then we have to bid it out. But as of now, Metro Pacific is the only one that has signified its interest,” Defensor said.

PNCC plans to use the money from the sale to build the road that will connect the SLEX near the Susana Heights interchange to the southern end of the Daang Hari road in Cavite; help the government with its budget deficit; and pay part of its P5-billion debt to the government.