‘The completion of the subway project holds significant importance, as it would alleviate traffic congestion in Makati’s CBD and Taguig’s BGC.’
AFTER Philippine InfraDev Holdings Inc.’s recent announcement to the Philippine Stock Exchange regarding the challenges of the multi-billion subway project, specifically the Supreme Court’s decision on the jurisdiction of certain stations, I’ve been considering the potential consequences for public shareholders.
The primary concern is whether investors who participated in InfraDev’s IPO can expect to recover their investments given these difficult times. In my view, the possibility of recouping these funds is complex and will likely depend on several key factors. These include InfraDev’s future financial performance, the current state of the market, the outcomes of any ongoing arbitration, and perhaps most importantly, the potential for a collaborative agreement between Makati and Taguig that could salvage aspects of the project for the benefit of all parties involved.
It’s important to remember that the public, including some individuals I know, holds approximately 15.53% of InfraDev’s shares, which is estimated to be worth P203.44 million based on the company’s market capitalization of P1.31 billion. The subway project, initially valued at $3.5 billion, had already secured $332 million in initial funding through equity investments and credit facilities from Hui Gao Investments Development Ltd. and Shanghai Mintu Investments Ltd.
Wouldn’t it be beneficial for InfraDev Chairman Ren Youmin and InfraDev President Georgina Monsod to proactively engage in discussions with Taguig Mayor Lani Cayetano and Makati Mayor Nancy Binay? A series of dialogues could potentially lead to a mutually agreeable solution that allows the multi-billion-peso subway project to move forward.
To that end, methinks that several key elements should be considered in discussing jointly by InfraDev with Mayor Binay and Mayor Cayetano, these are:
1. Collaborative Agreement: Both cities could form a new joint venture agreement that includes Taguig as a partner, ensuring both have a vested interest in the project’s success and can share its benefits.
2. Shared Infrastructure and Benefits: The subway project could be redesigned to serve key areas in both Makati and Taguig, ensuring that the infrastructure benefits residents of both cities. This might involve extending the subway line to include important locations in Taguig, such as Bonifacio Global City (BGC).
3. Revenue Sharing: Implementing a revenue-sharing model where both cities receive a portion of the income generated from the subway operations would provide financial incentives for both to support the project.
4. Legal and Administrative Coordination: Establishing a joint committee to oversee the project’s implementation, ensuring that legal and administrative issues are addressed collaboratively. This committee could include representatives from both city governments and InfraDev.
5. Community Engagement: Both cities could actively engage with their respective communities to garner support for the project through public consultations and information campaigns to address concerns and foster a sense of shared ownership.
6. Government Support: Seeking the support of the national government to mediate and facilitate collaboration between the two cities could help streamline regulatory approvals and potentially provide additional funding if needed.
By focusing on these areas, Makati LGU and Taguig LGU might find common ground and work together to ensure the successful implementation of the subway project with InfraDev.
InfraDev, previously known as IRC Properties, entered into a Joint Venture Agreement with the Makati City Government in October 2018 with the anticipation that the subway project would be completed by 2025. However, the Supreme Court’s 2021 decision, upheld in 2023, placed the jurisdiction of ten barangays and Fort Bonifacio under Taguig, leading to the suspension of construction activities.
The completion of the subway project holds significant importance, as it would alleviate traffic congestion in Makati’s Commercial Business District (Ayala Land) and Taguig’s Commercial District (Bonifacio Global City). More importantly, it has the potential to restore our country’s reputation and credibility among foreign investors.
Studies suggest that this infrastructure could serve as an alternative transportation option for up to 700,000 commuters daily. This could lead to a substantial reduction in vehicle traffic in Makati, potentially by as many as 270,000 vehicles each day, with similar benefits likely extending to Taguig.
