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Expressway extension to Batangas faces delay
Felipe F. Salvosa II, BusinessWorld (9 Aug 2004)

MANILA, PHILIPPINES: A major project of the Arroyo government faces delay because debt-saddled Philippine National Construction Corporation (PNCC), a state-run firm, appears to want a bigger role in it.

A source said PNCC intended to lead the connection of the South Luzon Expressway (SLEx) to the Southern Tagalog Arterial Road (STAR), but this would run counter to the government plan for a state-owned infrastructure company to handle the project. The soon-to-be-formed Philippine Infrastructure Corp. is supposed to jump-start the highway link, as earlier announced by Department of Trade and Industry (DTI) Secretary Cesar A.V. Purisima.

But PNCC has an existing joint venture with Hopewell Crown Infrastructure, Inc. to rehabilitate and extend SLEx, leaving open the possibility of a legal battle should PNCC fail to honor that commitment, the source said.

Hopewell Crown, which is 10% owned by Hopewell Holdings, Ltd. of Hong Kong tycoon Gordon Wu, signed the $480-million highway deal with the Estrada government in 1999.

Filipino-owned Crown Equities, Inc. used to control 90% of Hopewell Crown, but recently ceded 60% of its stake to Northeast Development & Acquisitions Corp.

The failed joint venture prompted state-owned National Development Company (NDC), DTI's investment arm, to take over the SLEx rehabilitation project in 2002.

Then DTI secretary and NDC chairman Manuel A. Roxas II remarked at the time that, "If we wait for them (PNCC), we will wait until kingdom come."

President Gloria Macapagal Arroyo had already placed PNCC under DTI through Executive Order No. 331, citing the need for both agencies to work together on vital road projects.

Since PNCC -- which used to be under the Public Works and Highways department -- holds the franchise to operate the North Luzon and South Luzon expressways, it was necessary to put it under DTI considering expressway development entailed a "huge investment," the President said in signing the order last July 16.

DTI and PNCC officials met last week to discuss the SLEx-STAR integration plan for the first time since the transfer. Mr. Purisima instructed PNCC, led by chairman Pastor Ramos, to prepare a timetable to show how it intended to complete the priority project. PNCC's SLEx franchise will expire in 2007.

The DTI chief said over the weekend he wanted the SLEx-STAR integration "fast-tracked" and completed within three years -- and if PNCC won't be able to fund the construction, NDC and the Philippine Infrastructure Corp. would "step in."

The Philippine Infrastructure Corp. is supposed to be a wholly owned subsidiary of NDC, which will infuse PhP20 billion in capital partly from of the proceeds of the Economic Recovery through Agricultural Productivity or ERAP bonds sold during the Estrada administration.

The new government corporation will undertake at least 10 major infrastructure projects through outsourcing, starting with the SLEx-STAR linkup.

The integration plan has three main components:

  • The first involves the construction of an eight-kilometer road connecting SLEx in Calamba, Laguna to the STAR tollway in Sto. Tomas, Batangas.
  • The second component is the long-overdue repair of the SLEx's 1.125-kilometer Alabang Viaduct.
  • And third, the STAR tollway will be extended 28 kilometers from Lipa City to Batangas City.

Earlier estimates placed the cost of the Alabang Viaduct rehabilitation at PhP400 million to PhP800 million.

A number of companies, led by Japanese investors, have been clamoring for the repair of the vital facility as cracks discovered in 2002 forced trucks 20 tons and above to use the ground level.

Construction of the road that would connect SLEx and STAR was estimated to cost around PhP2 billion.

This and the STAR extension are expected to decongest Metro Manila and redirect the flow of goods to the Port of Batangas. Currently, 60% of the country's exports pass through SLEx from industrial hubs in the Cavite-Laguna-Batangas-Rizal-Quezon corridor immediately south of Metro Manila.

The SLEx-STAR integration is the second major road project under the Arroyo administration to face potential delay. The National Economic and Development Authority earlier ordered the re-bidding of the planned Subic-Clark-Tarlac Expressway in Central Luzon because of "procedural lapses" involving changes in design and upward cost adjustments.

Copyright © 2004 BusinessWorld Online, Inc. ALL RIGHTS RESERVED.

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