Wednesday, 3 March 2010

San Miguel bags huge NLEE toll road project

By Daxim Lucas
Philippine Daily Inquirer
http://business.inquirer.net/money/topstories/view/20100302-256321/San-Miguel-bags-huge-Luzon-toll-road-project

MANILA, Philippines--San Miguel Corp. has turned up the heat in the ongoing battle for dominance of the country’s lucrative network of toll road systems by taking control of a little-known but strategically important highway project.

According to Inquirer sources, the publicly listed conglomerate has acquired a majority stake in Ausphil Tollways Corp.—a Filipino-Australian consortium and the main project proponent for the North Luzon East Expressway (NLEE).

Once completed, the NLEE will extend from Commonwealth Ave. in Quezon City to as far north as Tuguegarao City in Cagayan province, on Luzon’s eastern seaboard.

More importantly, however, the NLEE is expected to have adverse implications for vehicle traffic that uses the North Luzon Expressway (NLEx), which is owned and operated by Metro Pacific Investments Corp.—SMC’s rival for dominance in the toll road business.

At present, the bulk of vehicular traffic between Manila and northern Luzon goes through NLEx. The completion of NLEE will allow vehicles traveling between Manila and central and northeastern Luzon—potentially as much as half of NLEx’s existing volume—to bypass the MPIC-run highway altogether.

The NLEE project is an unsolicited built-transfer-operate project for the development, financing, operation and maintenance of the toll concession corridor. NLEE has been designated as an official toll road project by the Toll Regulatory Board (TRB), the government agency in charge of supervising toll highways nationwide.

The cost of San Miguel’s acquisition of Ausphil remains a closely guarded secret, although an industry source familiar with the project said that phase one of the NLEE project would cost as much as P9.3 billion.

According to the source, phase one of NLEE involves the construction of an 18.9-kilometer, four-lane toll road from Commonwealth Ave. in La Mesa, Quezon City, to Norzagaray, Bulacan.

The SMC-led consortium will secure the land for the expressway with the help of the right-of-way privileges of the Metropolitan Waterworks and Sewerage System (MWSS), which supervises the land around its watersheds.

The source added that phase one of NLEE would take about 16 months to construct, within which the consortium will also secure its concession agreement from the TRB.

Phase two of the NLEE project calls for the construction of a 36.9-kilometer, four-lane toll road from Norzagaray, Bulacan, to Cabanatuan City (in Nueva Ecija) via Angat, San Ildefonso and San Miguel, Bulacan, along the periphery of the Angat watershed.

This phase will take about 24 months to construct and is expected to be put through the Swiss challenge process for unsolicited bids over the next few weeks.

Upon completion, both phases of the NLEE are expected to generate an average daily traffic of about 65,000 vehicles and reduce travel time and transportation costs between cities and municipalities along its route.

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