Why delays in LRT-1-Cavite bidding process matter

MANILA, Philippines – The Aquino government’s “largest single infrastructure project” — the P60-billion extension of the Light Rail Transit (LRT) Line 1 to Cavite — faces another round of delays.

After pushing the deadline for submission of qualification documents from August 22 to September 28, the Department of Transportation and Communications (DOTC) rolled back the deadline another month to October 22.

“Yes, it was moved by a month,” Transportation Undersecretary Rene Limcaoco said in a text reply to Rappler when asked about the new deadline.

The delay in the bidding process comes as the Transportation Department expects changes at the top by mid-October. Taking over as DOTC chief is Cavite Rep Joseph Emilio Abaya whose constituents south of Manila will benefit the most from the infrastructure project.

The rail project is eyed by the country’s biggest business groups — Metro Pacific Investments Corp, Ayala Corp, San Miguel Corp, Sy-led Banco de Oro, among dozens more.  

The LRT-1 Cavite project was supposed to have been the first public-private partnership (PPP) bid out by the government, but former DOTC Secretary Manuel Roxas decided to shelve it for review in early 2012 to see if it would be more beneficial for the government to hold onto it.

It was one of many projects Roxas put through a lengthy review process, ostensibly to ensure the government was getting the best and fairest deal possible.

Moving the target dates for LRT-1 Cavite project means the other targets — award of the project to the winning bidder by April 2013 and start of construction by January 2014 — will likely to be delayed as well.

Still in traffic

Roxas once described the LRT-1 Cavite extension project as the “largest single ticket in [the] infrastructure portfolio of President Benigno Aquino,” who in turn dangled the completion of LRT-1 in a recent political event in Cavite.

The delay in the major project means halted investments and more traffic as Filipinos wait for new lines of track to decrease the passenger load on existing roads.

The existing 20.7-kilometer railway, which runs from Roosevelt in Quezon City to Baclaran in Pasay City, is supposed to be extended 11.7 kilometers to Cavite, one of the most densely-populated provinces in the country.

Once the tracks are laid, the extension is expected to cater to an additional 500,000 daily commuters from the province as well as the neighboring cities of Las Piñas and Parañaque. Currently, the existing line carries around 500,000 passengers everyday.

“Of course it will decongest traffic, the more roads, the more rail you have.  If you have rail, people from roads move to rail, so there’s less cars,”  Limcaoco explained at the sidelines of an infrastructure briefing.

The rail extension project was meant to cut hours-long ordeal between Cavite and the capital to just a one-hour-10-minute ride. 

In 2011 traffic in Metro Manila cost the government nearly 1.4% of gross domestic product according to calculations made by Rappler from a National Center for Transportation Studies report. Traffic is expected to keep piling up in the coming years.

Filipinos are not only losing productive hours in the traffic but the country is missing out on investments that are waiting to flow in.

Investors

At a high-level infrastructure conference on September 24, days before the deadline for one of the processes in bidding out LRT-1 Cavite, many financial movers and shakers, like BDO Unibank Inc Chairperson Teresita Sy-Coson, were in attendance.

Top fund managers, bankers and government leaders watched eagerly as the government’s big-ticket infrastructure projects were flashed in front of them on large projector screens.

Still, empty seats littered the room. The host candidly explained that several who had earlier meant to attend, opted out so they could further polish their bid documents for the September 18 deadline.

In anticipation of projects like the LRT 1 extension, Michael De Guzman’s global investment group Macquarie prepared its first infrastructure fund for a Southeast Asian country worth a whopping $625 million. Sy-Coson spoke of an even larger $1 billion fund she and other bankers would be willing to put up to finance the infrastructure projects.

“[PPPs] generate a lot of investment, of investment interest. I just hope that it will come to us sooner,” shared Sy-Coson at the infrastructure meeting.

Effective, efficient

Michael De Guzman, the managing director of Macquarie’s Manila office, shared his hopes of a more effective and efficient bidding process.

“Hopefully, now that they have a few projects, they will just use that model and expand it so that the time to delivery will be much faster as we go. And as we keep doing more project, (we hope) they are more effective and more efficient,” he said.

With a burgeoning population and near certain demand for new transportation structures, projects like the LRT-1 are too promising to pass up on.

“I think we’re taking a bet on infrastructure in general because infrastructure tends to move with GDP in a lot of cases. You know, traffic demand and patronage tends to move with economic growth,” he said.

“As everyone has seen recently, the Philippines seems to be in a golden period…where lots of factors are actually aligned: OFW (remittances), GDP growth, demographics, the state of our foreign reserves, low inflation, an imminent investment (rating) upgrade. So there’s a lot of these factors that seem to be going well for the Philippines,” added De Guzman.

How fast and efficient these capital-intensive infrastructure projects under incoming Transportation Secretary Abaya could be rolled out so they could also contribute to the Philippines’ “golden period” are yet to be seen – Rappler.com