THE P95.4-billion, 19.4-kilometer Pasig River Expressway (Parex) and the P152-billion, 40.65-kilometer Southern Access Link Expressway (Salex) are attracting considerable public opposition due to their profound negative impacts. Several of my previous columns have listed the significant harms and risks associated with the Parex, which were never considered in the project approval decision. Recently, similar alarms were raised about the Salex, for which at least 600 mature shade trees along Quirino Avenue would be sacrificed. It is therefore useful to recount the questionable approval process of the Toll Regulatory Board (TRB) for these projects.
The TRB grants tollway extensions (adding kilometers to an existing tollway) using supplemental toll operation agreements (STOAs). This, however, is subject to abuse. While the stated intention is to grant an “extension, linkage or stretch” to an existing tollway, the effect is the same as issuing a new tollway concession.
What we see today are STOA issuances without limit by the TRB, circumventing the careful project review procedures of the Department of Economy, Planning and Development (DEPDev). The use of STOA also bypasses requirements for project evaluation, due diligence and competitive selection procedures under the Build, Operate and Transfer Law.
As simple “extensions” of existing tollways, these massive projects escape the normal scrutiny of the DEPDev’s Investment Coordination Committee; they are “exempted” from the mandatory rigorous review process for infrastructure projects costing over P5 billion. In my view, the TRB’s scanty approval process is negligent and exposes our country to many risks. It is also likely inconsistent with, and in possible violation of, existing laws that require healthy competition in an industry or sector.
Multiple and successive STOAs were granted (and continue to be granted) as extensions to the Manila North Expressway (NLEx), Manila South Expressway (SLEx) and the Metro Manila Expressway many decades after the original franchise covering these tollways was granted to the Philippine National Construction Corp. (PNCC), and long after the expiration of that franchise in May 2007.
Within the last five years, the TRB granted the following tollway extensions using STOAs: the Parex as an extension of the SLEx; the 417-km SLEx-Toll Road 5 (Lucena-Matnog) Project; the Salex — another extension of the SLEx covering four segments (C3-R10, shoreline, Quirino and Buendia extensions); and the 136-km Northern Access Link Expressway (Nalex). In each of these cases, the government could have bid out new tollway concessions using competitive selection processes, as it did ifor other tollways such as Tarlac-Pangasinan-La Union Expressway, NAIA Expressway, Muntinlupa-Cavite Expressway and Cavite-Laguna Expressway.
Every proposed urban tollway needs to be evaluated comprehensively in order to determine whether the projected economic gains are outweighed by potentially significant negative impacts such as: the disruption caused when families and businesses are forced to relocate by right-of-way acquisition; the urban blight and economic decline suffered by adjacent neighborhoods; local environment impacts such as the loss of trees and greenery; health impacts on households affected by the increased heat, noise and air pollution; and the additional road congestion and diminished mobility as a result of induced demand. When an urban expressway encourages greater motor vehicle use and increased carbon emissions, it also contributes to climate change. These impacts are not assessed under STOA procedures. This is a huge oversight and should constitute gross negligence.
The TRB’s STOA processing steps require only relatively simple technical and financial assessments prior to board approval. The proponent presents how the tollway extension will be built, its projected costs and how toll revenues will enable cost recovery. STOAs therefore enable project proponents to dispense with the normal competitive selection procedures, comprehensive project economic, social and environmental evaluation and other due diligence applied to major infrastructure projects.
It is clearly anomalous for projects as significant as the Parex, Nalex, Salex and SLEx-Toll Road 5 to be approved without any determination of whether their benefits outweigh their costs. Decisions are being made with little or no understanding, estimation or quantification of the negative project impacts. This is obviously irresponsible and wasteful and exposes all Filipinos to considerable risk.
There is also the strong likelihood that STOAs could be regarded as anti-competitive. By considering a new tollway segment as an extension, linkage or stretch of an existing tollway, a STOA enables tollway operators to place a claim on lucrative opportunities for tollway development. By giving a few tollway operators a convenient and low-effort, low-cost way to extend their tollways without limit, the effect of the STOA is to curtail competition. It could also be interpreted as giving existing tollway operators undue advantage. This deprives the government of the opportunity to subject such projects to competitive selection, which can attract better designs, pricing and environmental practices. The biggest losers are the Filipino people.
Accordingly, the uncontrolled use of STOA is likely out of line with Sections 11 and 19, Article XII of the Constitution that favor free and open competition. The rampant use of STOAs could also be considered as inconsistent with Section 1, Rule 3 of the rules and regulations implementing the Philippine Competition Act, which bars: “agreements... which have the object or effect of substantially preventing, restricting, or lessening competition shall also be prohibited.” At a time when the government is trying very hard to attract interest in public-private partnership opportunities, the issuance of STOAs that reduce competition and bypass standard PPP procedures delivers a different message to potential investors.
We need to do the right thing. Because the Parex, Salex and similar tollway “extensions” were approved without careful evaluation and due diligence, their approvals should be rescinded; they should all be subjected to the normal DepDEV- procedures. At the same time, the government should suspend the use of STOAs until clear limits are established on the TRB’s power to issue such.
Robert Y. Siy is a development economist, city and regional planner, and public transport advocate.
