BCDA Press Statement on Rappler article
- New Clark City, a project of the Bases Conversion and Development Authority (BCDA), is on track to becoming the country’s first smart, green, resilient and fully master-planned metropolis. This project was conceptualized and initiated during the Aquino administration, and was continued and fast-tracked by the Duterte government.
- One of the key elements in getting this flagship project built in just 18 months since it broke ground in January 2018 was the transaction advisory services provided by the Asian Development Bank (ADB) all throughout the process.
- Phase 1A of the New Clark City project, which includes sports facilities built for the upcoming SEA Games, was developed through a joint venture agreement (JVA) between BCDA and Malaysian firm MTD Capital Berhad.
- The Office of the Government Corporate Counsel (OGCC), in its Opinion No. 182, s. 2018, confirmed that the “provisions of the executed JVA and the legal framework of the Project are in compliance with the existing laws, rules and regulations.”
- The provisions in the construction of the sports facilities are very advantageous to the government because under the terms, BCDA will not pay a single centavo until the facilities are completed and accepted.
- One of the payment options in the joint venture terms is to pay MTD P2.2 billion per year; but to avoid payment of additional interest, BCDA and the national government opted to pay in full upon completion and acceptance of the sports facilities as approved and reflected in the 2019 General Appropriations Act (GAA) passed by Congress. This means that upon full payment and complete turnover to BCDA, BCDA will receive 100% share of the revenues. To date, BCDA has not made any payment to MTD.
- MTD has undertaken the project through its own sources of financing. BCDA did not enter into any loan agreement and we did not borrow a single centavo for this development.
- As to the mode in the development of the sports facilities, the OGCC stated that “under the Philippine setting, there are six (6) available PPP frameworks:
- Joint Venture
- Concession; and
- Disposition or Divestment
Thus, BCDA can undertake the Project including the development of the Sports Facilities using any of the above enumerated PPP frameworks."
According to ADB, a joint venture was the best mode, to which the OGCC concurred.
- As to the cost, the unsolicited proposal underwent extensive evaluation, and BCDA and ADB were able to negotiate the project cost of sports facilities down by almost 50 percent. The proposal was also subjected to a competitive Swiss challenge.