CITY OF SAN FERNANDO – The Bases Conversion and Development Authority (BCDA) has hailed the 33-year agreement it recently signed with the Manila North Tollways Corp. (MNTC) for the joint operation of the Subic-Clark-Tarlac Expressway (SCTEx) as “a good example of a Public-Private Partnership (PPP).”
BCDA president and chief executive officer Arnel Casanova described the agreement as a “major breakthrough towards establishing a good business model for public-private partnership (PPP) vigorously pushed by the Aquino administration as the linchpin of national economic development.”
This, even as BCDA chairman Felicito Payumo disclosed that the agreement “satisfies BCDA’s requirement to cover the state firm’s debt service obligation to Japan International Cooperation Agency ( JICA).”
“What is more significant is that government has been relieved of the debt burden of the SCTEX because it has transferred the debt servicing entirely to the private sector through revenue sharing and advances during shortfalls,” Payumo said.
Cassanova said the joint agreement “enables the MNTC to manage, operate and maintain the SCTEX for 33 years, while at the same time assuring BCDA of sufficient cashflow streams at any given year to service the repayment of the foreign loan secured to bankroll construction of the 93.7-kilometer tollway, considered as the most modern tollway in the country.”
Casanova pointed out that “BCDA, as a steward of government and public resources, has tremendously reduced its risk of possible default on the loan and thereby avoiding passing on the financial burden to the common taxpayers.”
Payumo noted that “traditionally, it is government who has responsibility to spend for the infrastructures needed by the public, the agreement we concluded with MNTC created a model for building infrastructures like SCTEX at no cost to the government.”
Payumo likewise said that “not only will BCDA not spend for the expressway, it will still earn from the project since the total revenue share of BCDA (P64 billion) during the operating period is roughly double that of the debt service (P34 billion). Plus it will get back the expressway with its potential for another round of revenues.”
“MNTC, on the other hand, will only have to contend with commercial risks associated with unmet traffic volume projections. There is no longer any construction risks,”
According to Payumo, the BCDA-MNTC model also shows the way for constructing what initially are non-viable projects but with high economic benefits.
He noted that the SCTEX project would not have been financially viable because it was an east-west missionary road and private sector proponent could only get at most a 7-15 years loan.
“What made it viable was an Official Development Assistance (ODA)— 40 year loan with a 10 year grace period at concessionary 0.95 interest. MNTC, a private company, in effect was able to avail itself of a long term loan at concessionary terms, for the public good,” Payumo pointed out.
Casanova described the inked agreement which involves revenue sharing between the BCDA and the MNTC, as a much improved contract because BCDA will have direct access to, and control of, its share of the toll revenue, compared to the previous agreement that was subjected to closer scrutiny by both parties in the run-up to the signing rite.
“This arrangement alone results in a net benefit to BCDA of about P6.8 billion over the term of the agreement,” he said.
Casanova said the agreement provides an additional guarantee that the BCDA will be able to service the loans payment to the Japanese International Cooperation Agency (JICA), even during the initial years of the agreement when the traffic revenues have not fully matured.
He clarified that MNTC committed to provide an additional P1 billion advance facility on top of the P1 billion advance facility it had agreed under the previous contract, with the option to further increase it subject to mutual agreement, as and when needed during such initial years when the SCTEx traffic has not yet peaked.
“All such advances will be paid whenever, and to the extent that, BCDA’s revenue share exceeds the JICA debt service obligation for any given year, Casanova explained, adding that “both parties are confident that the traffic revenue starting 2026 will already start giving BCDA the cash surplus, estimated to total about P30 billion up to the end of the agreement.”
As SCTEX concessionaire, the MNTC would be responsible for overall operations and management and supervision of the tollway linking Subic Freeport Zone in Zambales, Clark Special Economic Zone in Pampanga, and the Central Techno Park in Tarlac province.
The MNTC would also provide all necessary ancillary facilities and equipment, as well as appropriate resources needed to efficiently operate the SCTEX, including implementation of a traffic safety and security management program on a 24/7 basis.
This would entail the provision of an adequate patrol system, emergency response and incident management systems, as well as a continuing maintenance and landscaping of the tollroad.
SCTEX was built by BCDA using a concessional loan from the Japan International Cooperation Agency (JICA).
It links major economic and industrial zones specifically in the Clark Freeport Zone, the Subic Freeport Zone and the Central Techno Park in Tarlac.
Since its completion, progress has been significantly noted in Central and Northern Luzon with subdivisions, and a variety of businesses sprouting in once arid and uninhabitable lands.
With SCTEX, tourism has likewise earned a niche as a top dollar-earner for the government’s coffers.
The SCTEX has also contributed to the creation of another Public-Private Partnership Project called the Tarlac-Pangasinan-La Union Expressway (TPLEX). The TPLEX will link to the SCTEX and when completed, is expected to boost the economy further.
“SCTEX has given birth to another PPP project in the form of the TPLEX that is being done by a consortium of prominent Filipino contractors. When completed, it will open up the market for agriculture, fisheries and tourism in Baguio, Ilocos, Pangasinan and Cagayan Valley,” Chairman Payumo noted.
