Tuesday, 8 April 2008

Neda rules key to Shimao case

By Cai U. Ordinario and Max V. de Leon
The Business Mirror

THE much-awaited joint-venture (JV) guidelines to cover the government’s negotiated projects with private investors like Chinese real-estate giant Shimao Property Holdings Ltd., which is keen on developing former baselands for $2 billion, may yet get timely approval, after all.

The National Economic and Development Authority (Neda) Board is set to decide the fate of the guidelines at today’s joint Neda Board-Cabinet meeting, a week after President Arroyo gave the Shimao Group the virtual go-ahead to develop a 7-hectare prime parcel in North Bonifacio for an integrated commercial complex.

Following Tuesday’s Neda Board meeting, the Bases Conversion and Development Authority (BCDA) will come out with an announcement by Wednesday or Thursday on whether it has decided to reconsider its earlier decision to reject Shimao’s unsolicited proposal and just bid out the property to the public instead.

Neda Assistant Director-General for Infrastructure Ruben Reinoso told the BusinessMirror that the JV guidelines approved earlier by the Infrastructure Committee (InfraCom), and to be taken up by the Neda Board Tuesday, will also include a provision allowing the government to undertake a Swiss challenge for “all negotiated proposals.”

The InfraCom is the interagency committee that advises the President and the Neda Board on policies and programs related to infrastructure development.

Reinoso said “all negotiated proposals” will be taken to mean that all unsolicited proposals, including failed biddings, may be subjected to a Swiss challenge.

The provision on Swiss Challenge will give the BCDA a legal basis to undertake such a Swiss Challenge on Shimao Holding’s unsolicited proposal.

In an earlier interview, Neda director general Augusto Santos said the JV guidelines will enhance the government’s ability to undertake private-public-partnerships (PPPs).

Possible projects under PPPs include the unsolicited proposal of Shimao, submitted to the BCDA, to put up two five-star hotels and a commercial complex in Bonifacio Global City.

The BCDA, which is authorized to privatize the former military base, rejected the proposal because of the lack of guidelines for joint-venture projects with the government.

BCDA officials declined to say what the Wednesday or Thursday pronouncement would say; this will be the first time the BCDA will give a definite comment on the issue since President Arroyo welcomed Shimao in Hong Kong last week—right after it joined the list of multibillion-dollar investors in the Philippines with its proposed $2-billion high-end mixed-development project.

Aileen Zosa, BCDA vice president, refused to give any hint on what the agency’s official statement will contain, aside from saying “isn’t it good that Shimao is investing in the Philippines?”

“I don’t want to preempt it,” she told the The BCDA had keenly awaited the Neda Guidelines on Joint Ventures, which would have included a prescribed Swiss challenge process for unsolicited proposals.

“BCDA did not have solid legal basis to undertake a Swiss Challenge on Shimao’s unsolicited proposal. Thus, BCDA is now opting to simply bid out the North Bonifacio property this year,” Zosa told BusinessMirror three weeks ago.

The Chinese developer, Zosa said then, can still get hold of the property by winning the bidding for it.

Meanwhile, Zosa said the BCDA will open on Wednesday the eligibility documents to be submitted by prospective bidders for the 1.2-hectare Delta Lots in the Bonifacio Global City, considered the “primest” in the area.

Although the BCDA has yet to receive a single eligibility document at this time, it is confident that at least two companies will submit their papers in time for Wednesday’s deadline, said Zosa.

This will be the third time that the BCDA is bidding out the property and it has decided to relax the terms of reference (TOR) to avoid another failure.

Zosa said they will determine which bidders will make it to the next stage by evaluating their track record, development plans, tax clearance and other documents

“Their final proposals will then be evaluated solely on the bid price,” she said.

Meanwhile, Neda’s Santos said that with the joint-venture guidelines, the government may enter into a 50-50 venture where the private sector and the government will put in the same amount of equity.

However, he said this equity mix will be decided on by both parties and will not necessarily be fixed on a 50-50 basis.

Neda’s Reinoso added that if the present version of the JV is approved by the Neda Board, it will mandate all government-owned and -controlled-corporations (GOCCs) to submit their JV proposals to the finance department instead of the Neda InfraCom.

The Neda official also said the guidelines approved by InfraCom will allow all GOCCs to enter into JVs. Prior to the meeting of the InfraCom, the Neda Secretariat’s version of the guidelines will only allow GOCCs in good standing to enter into JVs.

Reinoso said this may be a better provision, considering that GOCCs, which are not financially viable, may have a chance to be viable by undertaking a JV.

The government had recently bared its plans to offer up to 10 infrastructure projects for funding from the private sector, in an effort to control government spending on infrastructure projects and encourage the private sector to participate in national development.

Santos said the 10 projects will amount to at least P63.35 billion. On the list are the P3.01-billion North Luzon East Expressway (NLEE) Project, the P38.87- billion Metro Manila Tollway (Nlex-Slex Connection via C6), P11.52-billion MRT Line 2 East Extension to Masinag, Antipolo, and the P2.80-billion Panguil Bay Bridge.

The list also included the Operation & Maintenance (O&M) of the Subic-Clark-Tarlac Expressway (SCTEx); P5.20 billion worth 300 million liters water per day (MLD) Metropolitan Waterworks and Sewerage System (MWSS) Bulk Water Supply Project; P1.95 billion worth 50 MLD Wawa River Project; and the Department of Energy’s Power Capacity Requirements for the Luzon Grid of 1,950 megawatts (MW) from 2010-2014, Visayas Grid of 820 MW from 2011-2014, and Mindanao Grid, 850 MW from 2009-2014.

The 10 projects are now included in the updated P2.06 trillion worth Comprehensive Infrastructure Investment Program which identifies the government’s major infrastructure projects to be implemented from 2007 until beyond 2010. The projects will be financed through various sources.

Santos said in a statement that 28 percent, or P575 billion, will come from the private sector, 59 percent or around P1.2 trillion from the national government, and 6 percent or P114 billion from GOCCs.

Government financial institutions (GFIs) will shoulder 1.3 percent or P27 billion; local government units, 0.38 percent or P8 billion; other sources such as grants, Universal Charge for Missionary Electrification and Energy Regulation 1-94 will be tapped for 6 percent, or P131 billion, of the total investments.

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