Proposed SLEX subsidy to cost government P15.7 billion

MANILA, Philippines - The government would have to spend a total of P15.7 billion in the next six years if it would grant operators of the South Luzon Expressway (SLEX) subsidy equivalent to 50 percent of the tollway’s estimated revenues from 2011 to 2016.

Providing subsidies to SLEX is among the options the government is looking to cushion motorists from exorbitant increases in toll. The subsidy is necessary for the government to settle its obligations to the Malaysian partner of the South Luzon Tollways Corp. (SLTC), the operator of SLEX.

The Philippine National Construction Corp. (PNCC) and MTD Capital Berhad are the SLTC partners in SLEX, the tollway that connects Manila with various provinces in the South.

The toll road’s operations should have been taken over by the Malaysian firm, which won the concession contract for the road in 2006.

However, MTD Capital Berhad which owns 80 percent of SLTC, was unable to take over on time,which paved the way for the entry of PNCC as the interim operator of the tollway.

Data from the Toll Regulatory Board (TRB) showed that a 50 percent subsidy would amounts to P2.2 billion in 2011, P2.3 billion in 2012, P2.4 billion in 2013, P2.8 billion in 2014, P2.9 billion in 2015 and P3.1 billion in 2016.

This translates to a total of P15.7 billion in subsidies from 2011 to 2016.

In terms of revenues, data showed that in 2011, SLEX is projected to generate P4.3 billion; P4.6 billion in 2012; P4.8 billion in 2013; P5.5 billion in 2014; P5.7 billion in 2015 and P6.1 billion in 2016. 

This is projected to translate to a total of P31 billion, according to data from the TRB.

SLEX is seeking a 277 percent increase in toll rates but the Supreme Court issued a temporary restraining order against this. On the part of the Bureau of Internal Revenue (BIR), the government had wanted to impose a value added tax on toll to including SLEX to raise revenues, but the Supreme Court also issued a temporary restraining order against this.