MPIC unit shelves $600-M Vietnam toll road project

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METRO Pacific Tollways Corp. (MPTC), the tollways unit of the Manny Pangilinan-led conglomerate Metro Pacific Investments Corp. (MPIC), is no longer pursuing a $600-million investment to build toll roads in Ho Chi Minh City, Vietnam.

In a press briefing Monday, MPTC President and Chief Executive Officer Ramoncito
Fernandez said that the company has dropped plans to invest in a previously announced venture in Vietnam as the group wants in order to focus on solidifying the partnership with CII Bridges and Roads Investment Joint Stock Co. (CII B&R).

“The $600-million project ̶ we opted not to go with that investment… The strategy in Vietnam is that we wanted to be more comfortable with the partner. This is only the third month of our relationship with them. We wanted to know more how they do their projects. Once we’re more comfortable, maybe it’s time to invest again,” Fernandez said.

The 55-kilometer (km) toll road project of CII B&R is designed to link Ho Chi Minh with the outskirts of Vietnam, amid the growing and robust Vietnam economy. MPIC was tapped as an investor to infuse additional capital into the project.


As of last May, about 20 to 30 km of the 56-km toll road was completed, and the rest was still in under preliminary negotiations.

The $600-million investment would have given MPIC a 45-percent interest in the project which meets the 49-percent foreign ownership limitations in Vietnam. Should the Pangilinan-led firm decide to invest later on, MPIC via MPTC is expected to place $270 million in the project.

In the same briefing, MPIC Chief Financial Officer David J. Nicol told reporters MPIC estimates it will lose another P2 billion in net income this year as the government continues to deny the tariff rate hike of subsidiary Maynilad Water Services Inc.

“We have not been given the tariff that are due to us… Our estimate is roughly P2 billion in net income this year because of the accumulating drag in the tariff progression,” Nicol said.

The rate adjustment dispute was elevated before the International Chamber of Commerce for arbitration proceedings in 2013. The arbitration panel mandated that Maynilad was entitled to increase its basic water charges by 9.8 percent or P3.06 per cubic meter from the average rate of P31.28 per cubic meter as of 2013.

The net income guidance this year may reach P12 billion from the target of P10 billion the tariff rate increases were allowed by the Philippine regulator, Nicole noted.

MPIC also announced a 31-percent increase in net income to P5.56 billion during the first half of the year from P4.24 billion a year earlier, largely from the contributions of its tollways, water and power subsidiaries.

Core net income also rose by 27 percent to P5.88 billion from P4.64 billion.

“All of our operating companies reported strong growth in profitability for the first half of the year. We anticipate continued strong volume growth for the rest of 2015 for all our subsidiaries in light of the continuing economic expansion,” said Jose Ma. K. Lim, MPIC president and CEO.

“Regrettably, against this positive economic backdrop, we continue to encounter regulatory challenges on tariff setting in water, toll roads and rail, as well as further delays in the expansion of our roads network,” he added.

The Manila Electric Co. accounts for 43 percent of the conglomerate’s earnings, with Maynilad contributing 35 percent, MPTC at 19 percent, and Hospital Group at 3 percent.

The company is issuing a cash dividend of P0.032 per share to stockholders on record as of September 1 and payable on September 23.

MPIC has earmarked P58.6 billion for capital spending this year, while Hong Kong-based parent First Pacific Company Limited programmed P101.82 billion in capital expenditures.

The P58.6-billion capex was revised from the P53.7 billion announced last year, and reflects a 66-percent increase from P35 billion last year mainly due to the LRT Line 1 Extension Project.

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