Business World
Felipe F. Salvosa and Emilia Narni J. David

STATE-LED Philippine National Construction Corp. (PNCC) no longer has authority to directly operate the South Luzon Expressway (SLEx), as far as regulators are concerned.

The Toll Regulatory Board (TRB) said yesterday the group of private incestors that upgraded the tollway was given a Toll Operation Certificate (TOC) last Nov, 27.

"This effectively invalidates and revokes the TOC given to PNCC, sometime in 2007," said Julius G. Corpuz, TRB spokesman.

PNCC is original holder of the concession for the North and South Luzon expressways, but its congressional franchise expired two years ago.

With the state-led firm's legal hold on tollway operations in question, regulators resorted to TOCs, giving one each to private firms operating the North Luzon Expressway and the Metro Manila Skyway under joint ventures with the PNCC.

Amid construction at the SLEx, the TOC was given to PNCC directly.

South Luzon Tollways Corp. or SLTC is PNCC's joint venture with Malaysia Investors to upgrade the major tollway at the cost of P8.5 billion.

Under a 30-year Supplemental Toll Operation Agreement or STOA approved by Malacanang in 2006, in which PNCC agreed to lend its franchise to the SLTC joint venture, SLTC must take over after completing the tollway rehabilitation.

SLTC has widened the 1.2 kilometer stretch of the SLEx from Alabang to Calamba, Laguna.

But the PNCC want more time to be able to retrench some 1,000 workers and has in fact obtained a temporary restraining order from Pasig court. The PNCC also claims the SLEx project has yet to be finished.

The new TOC was issued to Manila Toll Expressway System, Inc (MATES), an entity meant to serve as the operations and management or O&M firm for SLEx. While MATES is 60% owned by private investors led by Malaysia's MTD Capital Bhd, PNCC is not entirely out of teh picture as it hold 40% of the O&M.

Issac S. David, MATES and SLTC president, claimed private investors have already lost P1.5 billion in revenues as a result of delays in project completion.

SLTC, through, claims the SLEx is already 99% complete, save for toll plazas, the construction of which was proposedly being blocked by PNCC.

"We should have finished the project in March this year and we should have been collecting revenue from the project since then. But we have not been allowed to build our plazas by PNCC," said Mr. David.

Mr. David said the MATES board has agreed to defer the transfer of operations from PNCC last year to allow the latter more time to secure a franchise from Congress. Lawmaker, however, did not approve PNCC's application.

Mr. David said PNCC wouls still able to get some revenues from SLEx, "bur not 100%," because it is no longer the direct operator and toll collector.

PNCC president Ma Theresa T. Defensor insisted that the agreement was to hand over the operations of the expressway once the project completed.

Ms. Defensor previously said the company was only requesting for an extension to provide the necessary 30-day notice of retrenchment to workers.

Mr. David however said SLTC and MATES would be able to absorb employees of the PNCC.

"Forty-five percent of our work force is composed of former PNCC employees and we would still be able to absorb those who would lose their jobs. We also have P110 million available funds for payment to those employees that would be retrenched," said Mr. David.

Questionable TOCs?
The TRB, through, admits that the legality of TOC's it had issued to various tollway operator is in question, noting various court cases filed by lawmakers and private groups since the PNCC franchise expired in 2007.

But Mr. Corpuz said the TRB is allowed to issue TOCs in lieu of a franchise from Congress under the agency's charter, Marcos-era Presidential Decree 1112.

"The court have not decided on weather or not a TOC is a valid grant of authorization," he added.

Executive Secretary Eduardo R. Ermita ordered the issuance of the TOC to MATES, he said.

As a result of TOCs, doomsday scenarios made by PNCC officials who had lobbied fiercely for the franchise extension did not materialize. Without the franchise, PNCC officials had claimed, all tollway under the state firm's jurisdiction would become freeway, as supplemental toll operation agreements of STOAs given to concessionaires no longer have legal basis.

Regulators have approved STOAs with the operator of the North Luzon Expressway from Balintawak to Pampanga, the Manila North Tollways Corp., and Citra Metro Manila Tollway Corp. which runs the evelated Skyway from the Magallanes Interchange to Bicutan.

The government entered into a STOA with the Malaysian in February 2006, paving the way for long-delayed repair of the SLEx.

Disclosures by MTD Capital Bhd to the Malaysia stock exchanges showed that in mid-2005, the PNCC committed to "cause the legislative extension of its franchise over the SLEx" to allow SLTC to enjoy all rights, benefits, and privileges of operating the tollway. In case another government entity secures the franchise from Congress, the PNCC must also work to get it in favor of the joint venture with the Malaysian.

The bid to extend the PNCC franchise died in the Senate over objections to a P6.2 billion debt settlement with an offshore firm, Radstock Securities Ltd.

The Supreme Court declared the debt settlement illegal early this month for being disadvantageous to the government, as PNCC would practically give away various assets to a little-known firm to repay questionable loans.

The court said the government now owns the assets, including the toll fees collected by PNCC, following the expiration of its franchise in 2007.

Mr. Corpuz said SLTC could be allowed to raise toll fees after completing the Alabang Viaduct and the SLEx widening from Alabang to Calamba. Under STOA, SLTC committed to extend the tollway to Sto. Tomas, Batangas and all the way to Lucena, Quezon.