68 INFRASTRUCTURE

DOTC to address project backlogs by 2019

The Transportation department said it plans to catch up on transport project implementation by 2019. But this will require much better efforts at preventing delays caused by complaints on the bidding process for projects as what has happened recently in a number of major projects. The department has had no major infrastructure projects implemented in the past 3 years except NAIA 1 and 3 rehabilitation, but even these were delayed.

he Department of Transportation and Communications (DOTC) expects the to suffer from a Ttransportation gap for the next 5-10 years as a number of key projects of the Transport department under the PPP program have been delayed due to complaints from losing or disqualifi ed private sector parties. Transport Secretary Joseph Emilio Abaya, however, said "We envision erasing the backlog in transportation infrastructure over the next 5 to 10 years, in such a way that the infrastructure we build will meet the country’s needs for the 10 to 20 years that follow." Secretary Abaya added that “fairness, openness, and transparency” will be observed in bidding and procurement, in contrast to the previous administration. So that has required a thorough review of projects approved, delaying the awarding of 2 have been awarded. These are the P1.72 billion Automated projects. What he did not mention was that expertise and relevant Fare Collection System to a consortium of the Ayala and Metro experience has been missing at senior levels in the DOTC so Pacifi c groups; and the P17.5 billion Mactan-Cebu International that Terms of Reference (TOR) and even Request for Proposals Airport Project to the GMR-Megawide consortium. Even these (RFP) can be challenged. Out of the 57 projects (worth P530 were delayed prior to awarding as disqualifi ed or losing bidders billion) under the government's public-private partnership (PPP) raised issues in the bidding process. These were resolved in favor program, 28 are under the DOTC. However out of the 28, only of the winners and were eventually awarded, but it all took time.

Some key projects of the Transport department under the PPP program as well as smaller ones have suff ered delays due to complaints from interested private sector parties.

Philippine ANALYST July 2014 INFRASTRUCTURE 696

Although the DOTC says it expects to catch up with The National Economic and Development Authority (NEDA) the transportation backlog, there is no guarantee that delays said the PPP initiative would require investment of up to P740 billion in the awarding and implementation of future projects will through 2016 to boost the economy and the country’s investment rate. now be avoided. History is not encouraging in this regard. Nonetheless, the department is expected to award the P64.9 billon LRT Line 1 Extension and operations and NAIA T3 fi nally starts full operation maintenance (O&M) Project to another joint venture between the Ayala and Metro Pacifi c groups, and is bidding out the It took almost 2 decades to fi nally complete DOTC’s new P2.5 billion Integrated Terminal System (ITS) Southwest international airport terminal in Manila. Project and the P4 billion ITS South and North Project. Other PPP projects under DOTC include: After 17 years the Ninoy Aquino International Airport (NAIA) 1. the O&M and extension of the Light Rail Transit Line 2; Terminal 3 is fi nally fully operational, having completed all 2. the O&M contract of the Laguindingan airport; the necessary repairs and upgrades to international standards on July 31. DOTC Secretary said, “Our gateway 3. the O&M of the New Bohol (Panglao) Airport; airport will now be able to welcome 3.5 million more passengers 4. the O&M of the Puerto Princesa Airport; with modern facilities every year, and Terminal 1 will now be 5. the O&M of the Davao Airport; considerably decongested to improve passenger convenience.” 6. the O&M of the Bacolod Airport; The project was originally awarded to the consortium of German fi rm Fraport and the Philippine International 7. the O&M of the Iloilo Airport; Airport Terminal Co. in 1997 and was supposed to be 8. the Davao Sasa Port improvement; completed in 2002. But the contract was nullifi ed in 2002 9. the Motor Vehicle Inspection Project; over allegations of irregularities in the bidding process 10. the Mass Transit System Loop; and the scheduled completion of the project was moved to 11. the North-South Commuter Rail, which would start from 2008. By 2008, it was assessed to be only 58% operational. Malolos in Bulacan to Calamba in Laguna; Former DOTC Secretary initiated talks with Takenaka Corp. of Japan to complete its facilities despite 12. the LRT1 Extension to Dasmarinas Project; the ongoing cases. This effort was continued by DOTC 13. the Manila Bay –Pasig River-Laguna Lake Ferry System Secretary Abaya when he assumed offi ce in October 2012. The Project; negotiation was fi nalized in July 2013 and a new $40-million 14. the C5 Transport Development Project; contract was signed in August 2013. The DOTC said in a 15. the Clark International Airport Project; statement, “Over the past 1-year period, the Japanese fi rm has undertaken completion works for systems such as fl ight 16. the Manila East-Mass Transport System Project; information displays, computer terminals, gate coordination, 17. the Central Spine RORO; landing bridges, and fi re protection systems…Certain systems 18. the R10 Link Mass Transit System; which are non-critical to full airline operations, such as the 19. the O&M of NAIA; building maintenance system, will be completed within the year.” Five major airlines are transferring fl ight operations to NAIA 20. the Road Transport IT Infrastructure Project Phase 2; Terminal 3. These include: 21. the Ferry Passenger Terminal Buildings Development;  Delta Airlines (July 31), 22. the New Cebu Container Port and Redevelopment of  KLM Royal Dutch Airlines (Aug. 4), Existing Cebu Baseport  Emirates (Aug. 15), Since the launching of its PPP Program in 2010, the Aquino administration has awarded the following projects:  Singapore Airlines (Sept. 1), and 1. P2.01 billion Daang Hari-SLEX Link Road;  Cathay Pacifi c (2nd week of Sept.). 2. P15.52 billion NAIA Expressway; The DOTC noted that the transfer of the 5 airlines will reduce Terminal 1’s annual passenger throughput from the 3. P16.42 billion PPP for School Infrastructure Phase 1; current 8 million annual passengers to its designed capacity of 4. P8.80 billion PPP for School Infrastructure Phase 2; 4.5 million. This also means that lesser number of travelers will 5. P5.69 billion Modernization of Philippine Orthopedic be affected by the ongoing rehabilitation works at Terminal 1. Center; 6. P1.72 billion Automatic Fare Collection System (DOTC); and 7. P17.5 billion Mactan-Cebu International Airport Passenger Terminal Building (DOTC).

Philippine ANALYST July 2014 70 INFRASTRUCTURE

With the operation of NAIA T3, Terminal 1’s annual passenger throughput will be brought down from the current 8Mn annual passengers to its designed capacity of 4.5Mn.

Flood control projects funded by DAP to  2 of 3 projects under the rehabilitation works on the same continue - DPWH tail dike with a budget of P139 million;  dredging work on the Orani River in Bataan worth P50 The Department of Public Works and Highways (DPWH) million; and said most of the projects under its fl ood control master plan  dredging work on the Del Carmen-Balimbing Creek San for Mega Manila will continue to be implemented despite Fernando City, Pampanga, worth P30 million. the cancellation of the Disbursement Acceleration Program In Southern Tagalog, the P780-million Laguna lake (DAP) that fi nanced some of these projects. fl ood control and river protection convergence program is currently being implemented by the DPWH and the Laguna According to the DPWH, 70 projects from some 100 Lake Development Authority. The 2 projects under the government fl ood control projects funded by about P4.96 program – the construction of river control structures at the billion from the Disbursement Acceleration Program (DAP) Sta. Maria-Mabitac and the Sta. Cruz-San Pedro-Biñan rivers have been completed. These projects, which started in late – are almost complete. While 2 of 13 units of amphibious 2012, are part of the DPWH’s fl ood control master plan for dredging equipment purchased by the agency for P136.5 Metro Manila and areas in Central Luzon and Southern Tagalog. million have already been delivered. There are 2 other units Of the completed projects, 56 are for Metro Manila which include: awaiting release from the Bureau of Customs. The remaining 9  6 projects under the Upper Marikina River Improvement units are expected to be delivered by the end of August 2014. Program worth P222.5 million; DPWH Secretary clarifi ed that since the  4 projects under the East Mangahan Floodway Program DAP-funded projects were either already completed or in worth P190 million; progress, these would not be dropped following a qualifi er in the Supreme Court ruling declaring the unconstitutionality of  2 projects under the Mangahan Floodway Dredging Program DAP that projects “already covered by contracts and funded” worth P100 million; should continue. However undisclosed, the projects under  the Marikina River dredging project worth P50 million; DAP that have not yet started will have to be put on hold until  5 projects out of 6 worth P113 million to include restoration of DPWH secures funding from another government budgetary damaged slope protection along Marikina River, rehabilitation source. President Aquino is requesting a supplemental budget of Tullahan River, repair of damaged slope protection along to implement critical projects supposed to be funded by DAP. Lakeshore Dike, and construction and repair of Napindan revetment wall; 3 waterworks infrastructure projects planned  2 projects on the Manila Bay seawall strengthening project for implementation in 2015 worth P211.05 million;  24 projects out of 46 under the Valenzuela-Obando- The government has 3 water projects lined-up for Meycauayan River program with a budget of P1.53 billion; implementation in 2015 to address a projected water shortage  12 projects out of 18 covered by Phase 1 of the Kalookan- in Metro Manila in 7 years. Those, however, might not be Malabon-Navotas Area fl ood control program with a budget enough and given the implementing record of the government of P600 million, among others. on water projects may not resolve the problem. The DPWH also noted that it has begun a study on the preliminary engineering and detailed designs of the Manila Bay The government is set to auction off 3 dam and water breakwater extension. facility projects worth nearly $1.1 billion to augment In Central Luzon, 8 projects were completed: water supply in Metro Manila and Bulacan. These are the P18.7-billion Kaliwa Dam Project in Tanay, Rizal under  4 of 6 projects under the Mitigation Measures for Breaches the public-private partnership (PPP) scheme; the P24.4- in the San Fernando-Sto. Tomas-Minalin Tail Dike program billion Bulacan Bulk Water Supply Project also under PPP; in Pampanga with a budget allocation of P637 million; and the Angat Water Transmission Improvement Project.

70 projects from some 100 government fl ood control projects funded by about P4.96 billion from DAP are completed. Other projects under DAP that have not yet started will have to be put on hold.

Philippine ANALYST July 2014 INFRASTRUCTURE 717

4-decade old Angat Dam currently provides 97% of Metro Manila’s 12 million residents.

The Kaliwa Dam Project is expected to increase water Angat Dam currently provides 97% of Metro Manila’s potable supply in Metro Manila by 2.4 million liters a day over the next water requirement. However, the nearly 12 million residents 30 years, equivalent to 60% of the existing supply from Angat depending on this water source suffer water service interruptions Dam in Bulacan. The 2nd PPP project is expected to provide especially during the El Niño (dry weather) season, indicating treated water to Bulacan province. Metropolitan Waterworks low water elevation of the dam during this critical period. and Sewerage System (MWSS) will allot 5.5 cubic meters The Asian Development Bank (ADB) warned the Philippines per second from its water rights in the Angat reservoir for this of a looming water crisis and urged the country to boost supply project. While the 3rd facility will involve the construction of a in its outlook report issued last year. The report showed the new tunnel from Ipo Dam to Bigte Basin in Bulacan in order to Philippines and 48 other countries are in varying stages of improve water transmission to Metro Manila. This 3rd project “water insecurity.” In Asia-Pacifi c, 3 out of 4 countries have will be partly fi nanced by the Asian Development Bank (ADB). a serious water supply problem. The Philippines together with The government aims to bid out the 3 projects within the next Vietnam performed poorly in the National Water Security few months and fi nalize the procurement process by the 1st half Index. Both countries received the lowest score of 1 in urban of next year. With this timeline, the projects will be able to help water security among ASEAN countries. The 2 countries augment the expected water shortage in 2021. PPP Executive also tied at 2nd to the bottom in overall water security. Director Canilao downplayed investor concerns such as right- of-way acquisitions and risks that future administrations will not honour contracts stating that these projects have “a cost recovery system" in place. She added that a measure putting more teeth into a law governing PPP projects is now being reviewed in congress, although a new law has prospective application and might not apply to contracts concluded prior to the passage of the law.

Philippine ANALYST July 2014 72 INFRASTRUCTURE

STATUS OF BIG TICKET INFRASTRUCTURE PROJECTS AS OF JUNE 2014

IMPLEMETING FUNDING CIVIL WORKS PROJECT PROJECT TITLE STATUS / ISSUES AGENCY SOURCE TIMEFRAME COST ROADS Ongoing procurement process for a consultant on advisory services. A Laguna Lakeshore P122.8 DPWH PPP 2016 - 2021 resettlement action plan is completed and will be presented to NEDA. Expressway Dike billion Bidding is still targeted in 1Q2015. Ayala Corp.-Aboitiz Land offered the highest premium of P11.659Bn, P35.42 followed by MPCALA Holdings with P11.33Bn. Awarding was expected Cavite-Laguna Expressway DPWH PPP 2015 - 2018 billion in early July, but is now suspended indefi nitely due to the appeal of the disqualifi ed bidder (SMC) fi led before the Offi ce of the President. RAILWAYS LRT 1 South Extension – No notice of award yet because of the Temporary Restraining Order DOTC PPP 2015 - 2020 P64.9 billion Construction and O&M issued by the Supreme Court over the Common Station. Preparatory works for the construction of the project has begun. LRT Line 2 East Extension DOTC ODA-NG TBD P9.7 billion This is needed for the detailed design of the foundation of pier, – Construction guideways, and viaduct and traffi c management plan. 10-15 years Currently fi nalizing qualifi cation documents. Target rollout in Sept. O&M of LRT Line 2 DOTC PPP (concession - 2014. period) AIRPORTS Laguindingan Airport 2015-2017 P14.62 DOTC PPP Target rollout of the project in 4Q2014. Development and O&M (Phase 1) billion Busuanga Airport The DED will be bid out by the DOTC in 3Q2014, while construction DOTC GOP 2015 - 2017 P4.11 billion Development will be bid out in 2Q2015. O&M of Puerto Princesa DOTC-CAAP PPP - P5.13 billion To be presented to the next NEDA Board. Airport Enhanced O&M of New Still fi nalizing project structure. Target rollout of the project in DOTC-CAAP PPP TBD P2.34 billion Bohol Airport 4Q2014. OTHER TRANSPORT PROJECTS Cebu Bus Rapid Transit P10.62 Still ongoing preparation of the DED. Bidding for construction is DOTC ODA (WB) TBD (BRT) billion expected to be done in 2Q2015. Integrated Transport Interested groups can submit prequalifi cation documents until Oct. System Project – South DOTC PPP 2014-2016 P4 billion 6. Terminal UTILITIES Bulacan Bulk Water MWSS PPP TBD P24.4 billion Ongoing prequalifi cation of bidders. Supply Project New Centennial Water P18.72 For issuance of invitation to bid. Awarding of the contract is targeted MWSS PPP 2015 - 2021 Supply Source billion in Feb. or March 2015. Approved by the NEDA Board in May. Invitation to bid expected in Angat Water Transmission MWSS ODA (ADB) 2014 - 2018 P5.8 billion June. The project involves the construction of a new tunnel from Ipo Improvement Dam to Bigte Basin in Bulacan. ROADS Tarlac-Pangasinan-La P18.13 PROPONENT: Private Infra Dev Corp. DPWH-TRB PPP 2010 - 2015 Union Expressway (TPLEX) billion Section 1 (Tarlac City – Rosales Pangasinan) was opened in April 2014. Basilan Circumferential DPWH ODA-NG 2000-2014 P1.57 billion Completion of the project is expected in December 2014. Road PROPONENT: Citra Metro Manila Tollways Corp. Completion is planned to be accelerated to June 2016. Construction of columns and islands are ongoing along Quirino Ave. The 1st phase Skyway Stage 3 DOTC-TRB PS 2014 - 2017 P26.6 billion of the project (Buendia to Plaza Dilaw) is expected to be operational by mid-2015. The proponent is just securing the necessary permits to build the segments. AIRPORTS PROPONENT: Megawide-GMR Consortium Mactan Cebu International DOTC allotted P122.6Mn for procurement of an independent P17.52 Airport Passenger DOTC PPP 2015 - 2018 consultant, who will act as the government’s representative billion Terminal Building in monitoring the project’s progress and the concessionaire’s compliance. Procurement process is ongoing. OTHER TRANSPORT PROJECTS Automated Fare PROPONENT: AF Consortium DOTC-LRTA PPP 2014 - 2015 P1.72 billion Collection System (AFCS) Ongoing pre-operation activities. UTILITIES The acquisition of consent of the Panay-Bukidnon indigenous people Jalaur Multi-Purpose community for the construction phase of the project is currently NIA ODA-GOP TBD P11.2 billion Irrigation Project Phase II ongoing. DED has already been completed. NIA targets to issue the notice to proceed by February 2015. Pasig-Marikina River ODA Channel Improvement DPWH 2013-2016 P5.54 billion Ongoing construction along Lower Marikina River. (JICA) Phase 3 Philippine ANALYST July 2014