"On April 4, 2016, Manila North Tollways Corp. (MNTC) issued a Notice of Arbitration and Statement of Claim to the Republic of the Philippines, acting by and through the Toll Regulatory Board (TRB)," Metro Pacific Investments Corp. (MPIC) told the stock exchange yesterday.
MNTC wants to "obtain compensation in the amount of about P3 billion (as of 31 December 2015) for TRB's inaction on lawful toll rate adjustments which were due since January 1, 2013."
"That's already the commencement of the process. Once we notified them, the arbitration process has already started," Rodrigo E. Franco, president and chief executive officer of MNTC's parent firm, Metro Pacific Tollways Corp. (MPTC), said in a telephone interview yesterday.
He clarified that yesterday's filing covers only the 90-kilometer NLEx and that another unit, Cavitex Infrastructure Corp. (CIC), has been "seeking internal approvals" to file a separate case for the 14-kilometer CAVITEx.
"We'll know in a matter of days whether they (CIC) secured approvals," Mr. Franco said.
The CAVITEx case is expected to be worth "P700 million to P800 million," covering foregone revenue from 2012 up to the end of 2015.
The group is seeking a 15% toll increase for NLEx, as well as 16% and 25% rate hikes for CAVITEx Radial Road 1 and 2 extensions, respectively.
"Despite compliance with applicable legal requirements and submission of proper petitions, and even acceding to TRB's requests to extend the amicable settlement period by more than 90 days, MNTC has not received any feasible settlement offer from the TRB," the disclosure read.
"In view of this, MNTC was compelled to deliver the Notice to preserve its rights under the STOA (Supplemental Toll Operation Agreement)."
Sought for comment, TRB Consultant Alberto H. Suansing said in a mobile phone reply yesterday: "TRB respects the decision of MNTC and Cavitex to resort to arbitration proceedings as a remedy to address their pending toll fee petitions."
He said the once the regulator receives the notice, he will refer it to the Office of the Solicitor General "for proper disposition."
Mr. Franco said the arbitration cases will be lodged at the United Nations Commission on International Trade Law (UNCITRAL) which will hear the case in Geneva, Switzerland.
Under UNCITRAL rules, a three-member arbitral panel will be formed. "We nominated a former Supreme Court justice, Justice Jose C. Vitug. Government will also nominate one member, and these two nominees will nominate the third member," Mr. Franco explained, adding that arbitration will likely take a year to complete.
He also clarified that "the calculation of foregone revenues is only as of December 2015. The amount will continue to accrue until the case is settled."
MPIC's consolidated reported net income attributable to owners of the parent company rose by 20% year-on-year to P9.6 billion in 2015, supported by solid growth across its toll road, power, water, and hospital businesses. Net income increased by 22% to P10.3 billion, while revenues rose 10% to P37.2 billion.
MPTC's core net income rose by an annual 19% to P2.6 billion on the back of increased traffic volume, higher shareholding in NLEx, as well as profit contribution from Subic-Clark-Tarlac Expressway as well as CII Bridges and Roads Investment Joint Stock Co.
MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
Source: Bworld Online