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Infradev posts $350M bond for Makati subway project


Mayor Abby Binay and executives of Philippine Infradev Holdings Inc. ride a mock train coach at the Makati City on Tuesday, July 30, 2019 after signing a public-private partnership agreement for the historic $3.5-billion Makati City Subway project. Danny Pata
Mayor Abby Binay and executives of Philippine Infradev Holdings Inc. ride a mock train coach at the Makati City Hall on Tuesday, July 30, 2019 after signing a public-private partnership agreement for the historic $3.5-billion Makati City Subway project. Danny Pata

 

Philippine Infradev Holdings Inc. posted a performance bond equivalent to 10% of the $3.5-billion investment in the Makati City Subway system project.

The company submitted a $350-million performance bond to the city government of Makati, during the joint venture agreement signing in Makati City, Philippine Infradev president and CEO Antonio Tiu said.

The performance bond is a pre-condition to the joint venture deal with the city.

“Performance bond is in the NEDA (National Economic and Development Authority) guidelines... you have to post a financial guarantee in the form of bond, bank guarantee, or cash deposit,” Tiu noted.

The deal covers the construction, operation, and management of a subway system within the city.

The city government is a minority shareholder in the project under the joint venture deal, contributing properties for the subway system, Tiu noted.

Philippine Infradev will build and operate the subway system for 50 years after which it has the option to continue operating the railway or invite other operator to make a bid for the project.

“By then kailangan pag-usapan kung paano itutuloy ... Maraming options,” Tiu said.

In October 2018, the city government awarded the public-private partnership project to the consortium of Philippine Infradev (formerly IRC Properties).

The consortium counts as members Philippine Infradev and its Chinese partners Greenland Holdings Group, Jiangsu Provincial Construction Group Co. Ltd. Holdings Ltd., and China Harbour Engineering Company Ltd.

“IRC together with Chinese partners has already completed the equity portion. Right now, we are in the process of finalizing the debt syndication. Then everything will proceed as planned,” Tiu said.

In March, the Securities and Exchange Commission (SEC) issued a certificate of incorporation to the Makati City Subway Inc.—the corporate vehicle for the subway project.

Makati City Subway has an authorized capital stock of P16 billion, of which P1 billion is the paid-up capital and P4 billion has been subscribed.

In December 2018, Philippine Infradev broke ground for the Makati Subway project

Makati Mayor Abby Binay said the tunnel boring machines will arrive this December to kick start the construction works.

Tiu said the groundbreaking last December was done in conjunction with soil testing and the 10-kilometer alignment.

The transport system will have 10 underground stations located in key destinations that include Ayala Triangle, Makati City Hall, and the University of Makati.

Plans are afoot to integrate the subway to the MRT 3, the Pasig River Ferry System, and the proposed Metro Manila Mega Subway. The completion date for the project is 2025.

The project is expected to significantly ease traffic congestion in Makati by providing up to 700,000 commuters with alternative transport services and reducing by 270,000 the number of vehicles plying the roads of Makati. —VDS, GMA News

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