BCDA tells MNTC to pay 3.5B before award of SCTEX concession

State-run Bases Conversion and Development Authority (BCDA) has given Manila North Tollways Corp. (MNTC) a month to pay government

3.5- billion as a prerequisite to the firm’s takeover the Subic- Clark-Tarlac Expressway (SCTEX) concession.

In a notice of award (NOA) dated February 4, 2015, the BCDA has formally awarded to MNTC the right to manage, operate and maintain the SCTEX following the conduct of a price challenge last month. To recall, the BCDA did not receive any proposal higher than the minimum parameters set in the terms of reference of the price challenge during the deadline last January 30.

“The BCDA awards to the MNTC the management, operation and maintenance of the SCTEX subject to your unconditional acceptance of the conditions of the price challenge,” the notice signed by BCDA President Arnel Casanova reads.

“You are hereby required within 30 calendar days from receipt of this notice to discuss and enter into contract with BCDA based on the draft Business and Operating Agreement (BOA) for the price challenge and to prepare the upfront cash in the form of manager’s check, payable to the BCDA, upon signing of the contract,” the notice addressed to MNTC president Rodrigo Franco adds.

Aside from the 3.5-billion upfront cash bid, MNTC offered a 50-50 gross revenue sharing scheme with government and assumption of all cost in operating SCTEX and integrating the toll collection systems of North Luzon Expressway ( NLEX) and SCTEX. After signing the updated BOA with BCDA, MNTC will also need to sign an updated toll operating agreement with the Toll Regulatory Board.

The SCTEX concession awarding to MNTC coincides with the firm’s 10th year of operating the NLEX this month. Once the SCTEX is turned over, the MNTC will manage a total of 189-kilometers of toll road connecting Metro Manila to Central Luzon covering the 95-kilometer NLEX and 94-kilometer SCTEX.

The SCTEX connects the province of Bataan, Pampanga, and Tarlac to the NLEX, which in turn links Central Luzon to the National Capital Region and Metro Manila. The world-class toll road has 34 bridges, eight interchanges and a four- lane divided toll road to connect the Subic Bay Freeport and Special Economic Zone in Zambales, the Clark Special Economic Zone in Pampanga, and the Central Techno Park in Tarlac. Since it was opened to the motoring public in 2008, the SCTEX recorded an average daily traffic of 9,302 vehicles, which rose to 30,855 vehicles in 2014.

The SCTEX was built through a 59 billion yen ( 28-billion) loan provided by the Japanese government, through the Japan Bank for International Cooperation ( JBIC). The loan used to finance the construction of SCTEx will mature in 2041. Despite the SCTEX concession awarding to MNTC, Franco said the BCDA will “continue to take care” of the loan payment to JBIC, which reportedly costs over 1 billion annually.

MNTC’s sister company, Tollways Management Corp. already operates the NLEX and SCTEX. Metro Pacific group’s tollway unit, Metro Pacific Tollways Development Corp. (MPTC) owns 75.6 percent of MNTC and 46 percent of TMC. MPTC likewise owns 100 percent of Cavite Infrastructure Corp., which in turn operates the Manila- Cavite Toll Expressway (Cavitex).

In an earlier interview, Franco admitted that MNTC is making an initial

1-billion investment for improvement works for SCTEX, apart from the 650 million that the firm will spend for the toll collection system integration for NLEX and SCTEX. This excludes the

5 billion allocation for NLEX expansion works scheduled this year. The Metro Pacific group is set to invest almost 10 billion for the NLEX and SCTEX alone.