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Ayala Land pulling out of Pasay reclamation

Posted on November 04, 2013 11:05:50 PM [ BusinessWorld Online ]

PROPERTY DEVELOPER Ayala Land, Inc. has informed Pasay City that it will not submit a counterproposal to SM Group’s P54.5-billion reclamation plan even as it urged the local government to resolve “critical issues” before proceeding with the project.

This, after the city government last Oct. 29 denied Ayala Land’s request for a 60-day extension to the Nov. 4 deadline for a counter proposal, citing the 2008 National Economic and Development Authority Joint Venture (NEDA JV) Guidelines.

In a letter to Pasay City Mayor Antonino G. Calixto, dated Nov. 4 and promptly e-mailed to media, Ayala Land Chief Operating Officer Bernard Vincent O. Dy asked the city government to address questions hounding the project to reclaim 300 hectares of land from Manila Bay “before proceeding with the bid process and awarding the project to any party.”

Mr. Dy acknowledged the Pasay government’s decision to adopt the 2008 NEDA JV Guidelines, but pointed out that the Nov. 4 deadline for the submission of competing bids does not comply with the newer 2013 NEDA JV Guidelines which took effect just last May that give interested parties 120 calendar days to submit their proposal.

“Assuming that Pasay City validly adopted such guidelines as its bidding rules via an ordinance, we would just like to point out that said guidelines have already been superseded by a 2013 version,” Mr. Dy said in the letter.

“The 2013 NEDA JV Guidelines give competing companies at least 120 calendar days to submit a counterproposal. Bidders will also undergo a modified competitive challenge which does not give then original proponent the right to match,” he added, noting that “[t]he updated guidelines promote further the transparent facilitation and processing of such projects for bidding.”

Ayala Land also cited a paid advertisement of the Philippine Reclamation Authority (PRA) last Nov. 1 “where it made it clear that no approval has been given for the Pasay reclamation project.”

“Moreover, the PRA disclosed that as early as August 2013, it informed Pasay City of a ‘proposed government center project’ which pertains to the same area in their jurisdiction,” the letter read.

“Given the above reasons, we regret that we cannot submit a counterproposal, and we urge you to resolve such critical issues before proceeding with the bid process and awarding the project to any party.”

Pasay City government officials were not immediately available for comment.

Ayala Land Corporate Secretary Solomon M. Hermosura on Oct. 23 wrote to Mr. Calixto, saying that Ayala Land was keen on challenging SM Land, Inc.’s unsolicited proposal for a joint venture with the city government “to undertake the raw land reclamation and horizontal development of 300 hectares.”

SM Land, in its proposal, said it would complete the project within seven years from issuance of the notice to proceed. SM Land will also reserve 153 hectares or 51% of the area for the Pasay City government or the Philippine Reclamation Authority.

Mr. Hermosura, in his letter to Mr. Calixto, questioned bidding terms set by Pasay City’s public-private partnership office, which required interested entities to have undertaken a similar reclamation project with an area measuring at least 120 hectares, “preferably within the Manila Bay area,” and to have at least P50 billion in capital.

In his response, Mr. Madrona said the reclamation experience requirement “is intended to ensure that the proponent… has sufficient relevant experience to undertake the 300-hectare reclamation project.”

Ayala Land ended the first half with a net income of P6.62 billion, up 23.28% from P5.37 billion a year ago. Revenues rose 35.67% to P36.63 billion from P27.0 billion, while cost and expenses increased by 39.00% to P27.51 billion from P19.79 billion.

Its shares gained five centavos or 0.17% to close P29.50 apiece yesterday from P29.45 each on Thursday last week. Financial markets were closed on Friday in observance of All Saints’ Day.

SM Land, meanwhile, is a privately held company of the Sy family that merged with SM Prime Holdings, Inc. as part of a consolidation effort that will leave the listed mall developer as surviving entity. -- Claire-Ann Marie C. Feliciano          

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