What happened to the Daang Hari-SLEx project?

By Conrado Banal
Philippine Daily Inquirer

 

Instead of serving as a model venture in the Aquino (Part II) administration’s infrastructure program, the P1.6-billion Daang Hari-SLEx road seems to stumble on a heap of blunders, needing major cover-ups by top government officials.

Officially known as the Muntinlupa-Cavite Expressway, or MCEx, the Daang-Hari-SLEx project aims to connect the South Luzon Expressway (SLEx), from somewhere at the Susana Heights interchange, to Cavite.

While it is a relatively short road at only about four-kilometer long, the business community watches it closely, mainly because it is the first project under the much-vaunted PPP of our dear leader, Benigno Simeon (aka BS).

That is the Public Private Partnership program of the administration, patterned after successful programs in Great Britain, Australia and Canada, which relied on private investments to fund big-ticket infrastructure projects.

For some reason, the prototype project, the Daang Hari-SLEx link, is taking too long to start construction and the boys of our dear leader, BS, seem to be hiding from him the real reasons behind the delay.

We all know that back in 2011, the DPWH (Department of Public Works an Highway) awarded the contract to the winner in the bidding—the Ayala group.

Based on the DPWH timetable at that time, the project should be completed by this time, or the middle of 2013. As things now stand, the Ayala group has hardly done actual construction in the project.

The problem has something to do with the usual “change order” that the winning bidder Ayala group sneaked into the project, which the DPWH under Secretary Rogelio Singson accepted rather expeditiously.

Before actual construction could begin, the Ayala group wanted to change the original design of the DPWH. Never mind that the DPWH design was the main cost factor in the bidding, the one won by the Ayala group’s with a P900-million bid.

From what I gathered, the DPWH boss worked hard to rally his entire department behind the Ayala group’s proposal to re-design the connector road, as some career guys at the department frowned upon the new plan.

The original plan of the DPWH, crafted by its experienced engineers, centers on a roundabout design. The Ayala group’s  “re-design” uses ramps and tunnels as direct passages into and out of the SLEx, doing away with the rotunda.

The Ayala group submitted its “re-design” proposal to the DPWH shortly after the bidding, and without much ado,  the DPWH accepted it.

Now, the problem is that the “re-design” desired by the adjudged winning bidder brings up the cost of the project. For one, the construction cost increases. More significant nevertheless is the so-called ROW. That is the right of way, which naturally costs more in the “re-design” of the Ayala group, because it uses certain portions of the SLEx, for instance, which is operated by another private company, the SMC-Citra group.

Thus, the DPWH, winning bidder Ayala group and the SMC-Citra group must sit down to thresh out the details in the “re-design.” And the DPWH never fails to blame the negotiations for the delay of the project, particularly when the DPWH boss, Singson, reports to our dear leader, BS.

Thus, the bad guy is the SMC-Citra group. In no way is the delay the fault of the Ayala group, which wants the costly “re-design,” to begin with, receiving the unequivocal approval of the DPWH—muy pronto.

What the DPWH hides from the public is, the “re-design” entails huge additional costs, something that the DPWH never talks about. Do you think it is about time, after about a year of delay, the DPWH discloses the actual additional cost of the “re-design?”

In media statements, Cosette Canilao, executive director of the PPP Center, which oversees the PPP projects, attributes the delay in the Ayala group portion of the MCEx project to the additional costs in the “re-design.”

At the same time, talk goes around the construction industry that some bright guys at the DPWH are still trying to implement accounting schemes to sanitize the figures on the project, particularly the additional costs of the “re-design.”

One of them aims to tuck the additional costs into several phases of the whole MCEx project, masking the total amount of the portion belonging to the Ayala group.

According to news reports, the DPWH insists that the additional cost is only P250 million. Word has it that some technical guys in DPWH, plus financial experts in the PPP Center, put the additional cost at P500 million—at least.

Here is the heart of the issue: What entity now shoulders the P500 million additional cost, is it the winning bidder Ayala group that changed the design of the project, or is it the DPWH that accepted the re-design without any thought to its legal implications?

The government outfits that formulated the contract for the project, which only happened to be the prototype-venture in the PPP program of our dear leader, BS, were the PPP Center, the DPWH and the Department of Finance.

It now seems to be a flawed contract, needing a major cover-up. The guys in those three government outfits must keep quiet. They continue to avoid the issue. Meanwhile, the project is already delayed by about a year.

You can do the math: The Ayala group pays P900 million to the government for the “privatization” of the road project, while its “re-design” costs at least P500 million, slashing the government proceeds from the privatization by more than half.

In other words, if the DPWH pushes through with the contract with the Ayala group, including the P500-million additional cost of the “re-design,” the first PPP project will surely be caught in legal issues.

You know—another controversy similar to the MRT-3 extortion scandal.

Such a scenario can only damage the infrastructure program of our dear leader, BS. To begin with, the Daang Hari-SLEx (aka DMEx) project already created controversies in the bidding, when the government changed the terms from out of the blue.

Only two weeks before the bidding, the government—courtesy of the DPWH, the DOF and the PPP Center—lengthened the contract from 25 years to 30 years, and the toll rate from P11 to P17 per entry.

Those changes would give the winning bidder (which turned out to be the Ayala group) five more years to collect toll from motorists using the link at even higher toll rates. The additional income, due to the changes in the terms, was estimated at about P1 billion.

The bidding terms became controversial because the government did the changes quietly, without the interested bidders even getting to know about them. Unaware of the changes, several groups in fact backed out of the bidding.

The former director general of the Neda, UP economics professor Cayetano Paderanga Jr., called the secret changes as “fundamental flaws” in the bidding.

Now, after the bidding controversy, it seems certain regents of the administration must cover up the flaws in the contract resulting from the “re-design” of the winning entity, the Ayala group, in that similarly flawed bidding.

Again, we are talking here about the first-ever PPP infrastructure project of our dear leader BS.