LRT-1 Cavite extension bidding failed?

DOTC Usec Jose Lotilla says the lone bidder - the Pangilinan-led Light Rail Manila Consortium - submitted an 'unacceptable' proposal

MANILA, Philippines – After delays in the bidding of the P60-billion LRT-1 Cavite Extension project, the Department of Transportation and Communications (DOTC) Special Bids and Awards Committee (SBAC) may declare a failure of bidding after all.

The railway project is the biggest infrastructure project under the Aquino administration’s public-private partnership (PPP) scheme. 

In the Submission of Proposals and Opening of Envelopes on Thursday, August 15, SBAC announced that lone bidder Light Rail Manila Consortium of Pangilinan-led Metro Pacific Investments Corp. (MPIC) failed to meet the requirements of the bidding.

Four groups were prequalified to join the bidding, but 3 of them withdrew from the race.

Unacceptable proposal

The consortium’s offer, DOTC Undersecretary Jose Perpetuo Lotilla said, is unacceptable and non-compliant to bidding terms because it laid out conditions.

“It has conditions. The terms of the bidding is such that it is required that the offer must accept all of the terms of the government,“ said Lotilla, who chairs the SBAC.

He explained that “in the invitation to bid, the government says here are the terms. In order to make a compliant bid, you have to say you accept all of these terms.”

The committee, however, cannot declare a failure of bidding yet despite the withdrawal of the 3 other bidders, and the unacceptable offer of the lone bidder, Lotilla noted.

“Failure of bidding is a process that must be reached at some point. At this point we are not ruling yet.”

Lotilla noted that the SBAC will evaluate and decide whether to declare a failure of bidding by next week.

PPP Center executive director Cosette Canilao, for her part, said the government has to re-evaluate its options including re-bidding the project.

“The government can re-tender, evaluate more thoroughly. Rebid is one of the options, but the SBAC still yet has to meet, “Canilao said.

Lone bidder

Four pre-qualified bidders were expected to submit their technical proposals for the project.

But the 3 of them — San Miguel Corp.-led SMC Infra Resources Inc., Consunji-owned DMCI Holdings Inc. and MTD-Samsung Group — withdrew their participation in the bidding process.

Ayala Corp. also dropped out of the Light Rail Manila Consortium, leaving MPIC as the lone bidder.

Lotilla said the groups probably withdrew on account of financial considerations.

“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.

San Miguel president and COO Ramon Ang said in a statement: “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.”

MPIC to evaluate tie-up with Ayala

On the sidelines of the bidding, MPIC president and CEO Jose Maria Lim said the firm will have to evaluate its partnership with the Ayala group.

Ayala and MPIC formed a consortium after they agreed to jointly bid for rail projects to be auctioned off by government under the PPP program.

“We haven’t discussed [it] 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 said.

Lotilla said Light Rail Manila Consortium cannot be outright disqualified from the bidding due to Ayala’s pullout.

May rules din eh (There are rules), you can substitute or you can change numbers of the consortium with the consent of the committee,” he added.

The rail project

The railway project will extend the existing 20.7-kilometer (km) LRT Line 1 system by 11.7 km with a new south endpoint in Bacoor, Cavite.

The new line is expected to increase the ridership of LRT1 from 500,000 to 700,000 passengers per day and to provide faster and more convenient alternative to residents of Cavite, Las Piñas and Parañaque. –