Bidding for LRT 1 Ext derailed

MANILA, Philippines - The Aquino administration’s biggest infrastructure project – the P60 billion extension of the Light Rail Transit line 1 (LRT1) all the way to Bacoor, Cavite – got derailed yesterday after a lone prequalified bidder submitted what was described as a non-compliant bid.

Jose Perpetuo Lotilla, undersecretary of the Department of Transportation and Communications (DOTC), told reporters yesterday that only one pre-qualified bidder submitted a technical proposal yesterday. The three others withdrew.

Lotilla, who chairs the agency’s bids and awards committee (BAC), said the Light Rail Manila Consortium managed to beat yesterday’s deadline and submitted its technical and financial proposals.

He said three other groups that were prequalified last November –the MTD-Samsung Group, San Miguel Infrastructure Resources Inc., and DMCI Holdings Inc. – withdrew their participation.

Diversified conglomerate San Miguel Corp. through San Miguel Infra Resources Inc. leads the group composed of GS Engineering and Construction Corp. and POSCO Engineering and Construction Co Ltd.

In a statement, SMC president Ramon Ang said:

“After a thorough review of the proposed project, SMC Infra Resources Inc. has decided to withdraw from the bidding for the LRT line 1 extension.

“In as much as we previously expressed great interest, we have determined that the risk profile of the project, based on the existing terms, is such that it will not be economically viable to the company.

 â€œNevertheless, we are committed to help government push for further growth and development for the country through strategic infrastructure projects that will significantly impact the lives of many Filipinos.”

In the other group, DMCI has tied up with Marubeni Corp. and Sistema Tranporte Collectivo Metrorey; while the MTD-Samsung group is composed of MTD Capital Bhd. and Samsung C&T Corp.

The Light Rail Manila consortium, the only group that submitted its bid yesterday, is led by First Pacific’s Metro Pacific Investments Corp. (MPIC) with 33 percent followed by diversified conglomerate Ayala Corp., also with 33 percent.

However, the Ayala Group pulled out from the bidding. Ayala Corp. managing director Eric Francia informed the Philippine Stock Exchange (PSE) that its subsidiary AC Infrastructure Holdings Corp. has decided not to participate in the LRT1 bidding.

MPIC president and chief executive officer Jose Maria K. Lim said the infrastructure conglomerate would have to reassess its joint venture with the Ayala Group that is supposed to cover all the railway ventures of the tandem.

 â€œWe haven’t discussed yet. It is supposed to cover all railways. We will probably want to review with them how to proceed in the future. I can’t confirm one way or another,” Lim told reporters on the sidelines of yesterday’s bidding.

Lotilla said the BAC would evaluate the conditions set by the Light Rail Manila consortium and come up with a decision next week whether or not to declared a failed bidding.

 â€œBy early next week we will have a decision. Because it (the bid of Light Rail Manila) is conditional there is really much of an option left. As it is today it is non compliant but the BAC has yet to assess what to do about it. They have certain conditions. At this point in time let me just say that the government will have to assess the situation and perhaps reach a conclusion in the coming days as to how to proceed,” he added.

The DOTC official said the agency was not informed about the non-participation of one of the members of the Light Rail Manila consortium with the decision of the Ayala Group not to participate in the bidding.

“We have not been informed about the pullout of Ayala. We have not been given any official notice. Under the rules, it (the consortium) should be intact otherwise you have to prequalify again,” he stressed.

The official said the agency was at a losst why the three prequalified bidders withdrew from the proceedings.

“No, it is not the viability of the project. The bidders are commercial entities so their primary concern is financial. Maybe in their analysis, it does not make commercial sense for them or the risks are too great considering the amount of capital,” Lotilla said.

 PPP Center executive director Cosette Canilao told reporters that the main concern of the bidders were the financial and commercial terms.

 â€œIt appears to be a qualified bid. They bid with certain conditions so the BAC will have to assess the options available to them whether to re-tender or to take other conditions,” Canilao added.