State-run Philippine Reclamation Authority (PRA) yesterday urged Metro Pacific Tollways Corp. (MPTC) unit Cavitex Infrastructure Corp. (CIC) to adjust the revenue sharing in favor of the government, amid the alleged P11 billion unrecovered investments in the expansion of Manila-Cavite Expressway (Cavitex).
In response to the claim of the lack of formal requests from the PRA on the adjustment of revenue sharing to a 60-40 ratio, PRA said there have been numerous instances where the PRA Board has iterated demands for the revision of the prevailing 90-10 revenue sharing arrangement to a proposed 60-40 distribution model.
“This insistence stems from the assertion that the CIC cannot credibly assert an ongoing failure to recoup their initial capital investment in the project. Such demands underscore a legal interpretation by the PRA Board regarding the adequacy of returns on investment and the necessity for equitable redistribution of revenues derived from the project, potentially invoking contractual clauses or regulatory provisions governing revenue-sharing agreements within the pertinent legal framework.” PRA said.
Last week, MPTC said the shift to 60-40 revenue will take effect upon the full payment of all the debts obtained by the company for the construction and expansion of Cavitex, which involves outstanding debt of P7 billion for the completion of the project’s two segments and another P4 billion bank debt.
However, PRA said the alleged expenditure of P11 billion by CIC for project completion holds no relevance to the issue of revenue sharing between the parties.
According to the terms of the joint venture agreement (JVA), the transition from the current 90-10 ratio to a fairer 60-40 ratio is predicated solely on the completion of Phase 1.
“The original parties to the JVA anticipated swift recoupment of investments and substantial profits for the private partner upon Phase 1’s completion. Therefore, it is incumbent upon PRA to assert that the adjustment in revenue sharing to 60-40 in favor of the government is expressly tied to the fulfillment of Phase 1,” PRA said.
Under the JVA between the two parties signed in 1998, CIC undertakes the design, construction and financing of the project, while PRA operates and maintains the Manila-Cavite Toll Expressway Project with 90 and 10 percent revenue sharing, in favor of CIC.
PRA, through its attached agency PEA Tollway Corp., has filed a mandamus case before the Court of Appeals to shift the revenue sharing in Cavitex from 90-10 percent to 60-40 percent in favor of the government.
