PRA Criticizes Cavitex Buyout Offer as Detrimental to Government Interests

MANILA — The Philippine Reclamation Authority (PRA) has declared a PHP2.5 billion offer by Cavitex Infrastructure Co. (CIC) to buy out the government's stake in the Manila-Cavite Expressway (Cavitex) as "unfair" and harmful to government interests. This statement was issued on Monday following scrutiny of the proposal submitted by CIC, which is managed by the Metro Pacific Tollways Corp., led by Manny Pangilinan.

According to Philippines News Agency, the offer, made prior to the expiration of the operating and maintenance agreement on August 25, 2021, was found to be "egregiously unfair, unreasonable, and morally objectionable" upon initial review. Accepting this offer could potentially expose the PRA Board of Directors to legal challenges, including charges of corruption and actions detrimental to state interests.

The PRA highlighted that the acceptance of CIC's proposal would also lead to the dissolution of the Public Estates Authority Tollways Corp. (PEATC), a government-owned corporation established for the operation, maintenance, and toll collection of Cavitex. The PRA has advised CIC to thoroughly review legal and regulatory frameworks, considering the special obligations and constraints in transactions involving government-owned corporations.

The dispute centers on the revised revenue sharing terms that were supposed to take effect following the expiration of CIC's operating agreement. Since January 1, 2022, operations should have transitioned to PEATC with a new revenue sharing agreement, favoring the government 60-40 instead of the previous 90-10 in favor of CIC. The PRA Board has repeatedly called for this change, which CIC has resisted, claiming it has yet to recoup its PHP11 billion investment in the project.

The PRA argued that CIC's failure to recover its investment does not affect the revised revenue sharing terms of Cavitex. According to the terms of the Joint Venture Agreement, the transition to a more equitable 60-40 revenue share is conditioned solely on the completion of Phase 1 of the project, which includes segments that were opened in 1998 and 2019, with another segment due to complete by 2025.

Recently, PEATC demanded the turnover of Cavitex from CIC, asserting that the expressway is government property, and the operation and maintenance agreement with CIC had expired in 2021. A writ of mandamus was filed in February before the Court of Appeals to assist in the turnover of the expressway to the government.