48 INFRASTRUCTURE

Pres. Aquino: 8 PPP projects to be rolled out in 2012 President Aquino committed to bid out 8 public-private partnership (PPP) projects within the year, as he instructed the Cabinet to accelerate the administration’s centerpiece infrastructure program. This is in line with the administration’s focus on infrastructure as one of its 3 primary areas of growth.

“ e intend to roll out about 8 of them (PPP projects) this year,” said President Aquino as he spoke before the Wbusiness community at the Philippine Investment Forum held on March 27 in Makati City. The President announced that he had already instructed the Cabinet economic cluster and the National Economic and Development Authority (NEDA) to fast- track the review of pending PPP project proposals. “There has to be more speed in terms of giving a thumbs-up or a thumbs-down to all the various projects under consideration. We cannot afford to think for decades upon decades.” The President lamented the delay in project approval, which he explained had already caused the country to miss out on opportunities. Since the PPP program was launched in November 2010, only 1 project had been auctioned to the private sector—the Daang Hari-SLEX (South Expressway) Link. The Daang Hari-SLEX Link is a P1.96- billion road project awarded to Ayala Corp. on December 22. NEDA Board approval, and 3 road projects of the Department While the President did not name the projects that will of Public Works and Highways—the NLEX-SLEX (North be rolled out this year, there are indications that this will Luzon Expressway-South Luzon Expressway) Connector Road, include the Light Rail Transit Line 1 (LRT-1) South Extension NAIA Expressway Phase II, and the CALA (Cavite-Laguna project and the school infrastructure project, which will likely Expressway)— which are scheduled for bidding later in the year. be auctioned in the 1st half of the year (please see table). The President’s commitment to roll out these projects is Meanwhile, the Vaccine Self-Suffi ciency Project Phase 2 in line with the administration’s focus on the infrastructure was recently endorsed for NEDA Board Approval, and will sector as one of the 3 primary areas of growth, alongside possibly be rolled out in the 2nd half. Further down the line agriculture and tourism. These sectors are credited for their are the operations and maintenance (O&M) contracts for the potential to create huge economic and social benefi ts for the Airport and the Puerto Princesa Airport, described country, specifi cally through job-generation. However, for by NEDA Secretary-General Cayetano Paderanga to be “nearing” infrastructure, these benefi ts could only be realized when the

Economic and social benefi ts of the PPP could only be realized when projects begin construction.

Philippine Alert April 2012 INFRASTRUCTURE 449

PROJECTS LIKELY TO BE ROLLED OUT IN 2012 IMPLEMENTING AGENCY PROJECT COST PROJECT DESCRIPTION STATUS (IN BN PESOS) Construction of 9,332 classrooms, with Public-Private Partnership for School 6 bidders already pre- furniture and fi xtures, in various school sites in Department of Education 10.0 Infrastructure Program qualifi ed; bidding eyed in July Regions I, III and IV-A Department of Transportation Approved by NEDA Board; Expansion of the existing LRT Line 1 by 11.7 km LRT-1 South Extension Project and Communications 61.5 bidding postponed from April starting from from Baclaran to Bacoor, Cavite (DOTC) to May Endorsed by Investment Construction and O&M of facilities for Vaccine Self-Suffi ciency Project Coordination Committee- formulation, packaging, and labeling of Department of Health 0.9 Phase 2 Cabinet Committee for NEDA vaccines, including purchase of equipment Board approval Privatization of the operations and maintenance Awaiting NEDA Board approval; Laguindingan Airport O&M DOTC 1.5 of the Laguindingan Airport in Misamis Oriental bidding likely in 2H2012 Puerto Princesa Airport Development Privatization of the operations and maintenance Awaiting NEDA Board approval; DOTC 4.5 (O&M) of the Puerto Princesa Airport in Palawan bidding likely in 2H2012 Construction of a 13.4-km, 4-lane elevated Under DPWH review; right-of- Department of Public Works NLEX-SLEX Connector expressway staring in Caloocan City and ending 20.2 way confi rmation from DOTC and Highways (DPWH) in Buendia, Makati to connect NLEX and SLEX still pending Construction of 4.9-km, 4-lane expressway Project design reconfi gured; NAIA Expressway II linking Skyway and Manila-Cavite Coastal DPWH 13.6 bidding eyed in late 2012 Expressway Construction of a 41.8-km, 4-lane at-grade NEDA Board approval expected CALA Expressway expressway extending from Kawit, Cavite to DPWH 20.0 in May Sta. Rosa, Laguna Sources: Public-Private Partnership (PPP) Center; Department of Education (DepEd); Department of Transportation and Communications (DOTC); and Department of Public Works and Highways (DPWH) projects begin construction. NEDA had earlier revealed that fi nancing will be used for Contract A, while offi cial development implementation of the PPP projects lined-up for the medium- assistance (ODA) financing will be used for Contract B. term could increase the gross domestic product (GDP) by 3.8% First to be auctioned is the PPP contract, expected this May by 2017. As of this writing, though, civil works have yet to 2012. Bidding for this was initially set in April, but the delay start for the Daang Hari-SLEX project, which is the only PPP in the release of the terms of reference pushed the schedule project that has been awarded to a private sector proponent. back by 1 month. Meanwhile, bidding for the delivery and installation of equipment and rolling stock is not expected Bidding for LRT South Extension underway until late 2012 as the loan agreement with Japan International Cooperation Agency (JICA) has yet to be fi nalized. It should The government is set to bid out the Light Rail Transit Line be noted, though, that due to the ODA-nature of Contract B, 1 (LRT-1) South Extension project, which will extend the bidding will be exclusive to Japanese fi rms. The LRT-1 South LRT-1 from its current end point in Baclaran to Bacoor, Extension project is expected to begin civil works towards Cavite. The project, to be fi nanced using the “hybrid the end of 2012, with full project completion slated for 2015. Once completed, the extended LRT-1 will help ease the scheme,” will open the corridor to the southern part of Metro traffi c condition in , and open the corridor to the Manila. Conglomerates have expressed their interest in the southern part of the metropolis. The extension will provide project, particularly Metro Pacifi c and Ayala Corp. which reliable transportation to some 40,000 people, increasing LRT- recently forged ties to pursue and develop railway projects. 1’s daily ridership from 400,000 to 440,000. According to NEDA Secretary-General Cayetano Paderanga, the project is also expected The LRT-1 South Extension is a P61.5-billion project to spur commercial development around the rail stations. NEDA to extend the existing LRT-1 by 11.7 kilometers from the has identifi ed the project as among those with the highest gross Baclaran station to Bacoor, Cavite. The project is among domestic product (GDP) and employment impact per peso. those approved by the National Economic and Development The country’s top conglomerates Metro Pacifi c Investments Authority (NEDA) Board in its 1st meeting for the year held Corporation (MPIC), Ayala Corporation, and San Miguel last March 22. The project is divided into 2 contracts: Contract Corporation (SMC) have all early on announced that they will A covers the construction of the extension, and operations and bid for the project. LRT-1 South Extension, in fact, will be the 1st maintenance (O&M) of the entire LRT-1, including the added railway project to be pursued by the “strategic partnership” recently sections; while Contract B covers the delivery and installation formed by MPIC and Ayala Corp. The alliance, formed specifi cally of electromechanical equipment and rolling stock. The project to “pursue and develop light rail projects,” will harness the strengths will be fi nanced under the so-called “hybrid scheme,” which of each conglomerate: Ayala for the real estate development of refers to the use of different modes of fi nancing for each the stations, and MPIC for the railway construction. Analysts contract of the project. Public-private partnership (PPP)

The LRT-1 South Extension project will open the corridor to the southern part of the metropolis.

Philippine Alert April 2012 50 INFRASTRUCTURE

LIGHT RAIL TRANSIT LINE 1 (LRT-1) SOUTH EXTENSION PROJECT

Implementing Agency: Department of Transportation and Communications (DOTC) - Light Rail Transit Authority (LRTA)

Project Details: The project involves the extension of the LRT-1, including delivery and installation of necessary electromechanical equipment and rolling stock, and operations and maintenance of the extended railway. LRT-1 will be extended by 11.7 kilometers (km) from its current terminus at the Baclaran station to Bacoor, Cavite. Of the added length, 10.5 km will be elevated, while 1.2 km will be at-grade. This will bring the total length of the LRT-1 to 32.4 km. There will be 8 stations for the South extension, plus 2 stations identifi ed for future provision (in italics), these are: 1. Redemptorist station- Redemptorist St., west of Roxas Blvd. 2. MIA station- south of Coastal Mall, west of Roxas Blvd. 3. Asia World station- near Asia World Development, west of Roxas Blvd. 4. Ninoy Aquino station- near Ninoy Aquino bridge in Parañaque City 5. Dr. Santos station- Dr. Santos Road in Parañaque City 6. Manuyo Uno station- Manuyo Uno, Las Piñas City 7. Las Piñas station- east of Quirino Ave. in Las Piñas City 8. Zapote station- north of Alabang-Zapote fl yover 9. Talaba station- Talaba, Las Piñas City 10. Niyog station- Niyog Road in Bacoor, Cavite

Project Contracts: Contract A: Build-and-design and operations and maintenance Contract B: Delivery and installation of electromechanical equipment, including train tracks, power supply systems, ticketing machines, and 152 new train coaches. Project Cost and Financing: Total Cost: P61.5 billion Contract A: P30.9 billion (PPP) Contract B: P30.6 billion (JICA ODA) Status: • Approved by the NEDA Board on March 22, 2012 • Right-of-way acquisition is 80.12% complete • Invitation to bid eyed for publication in mid-May

Sources: Department of Transportation and Communications-Light Rail Transit Authority, Public-Private Partnership Center, and press statements

Philippine Alert April 2012 INFRASTRUCTURE 551 have pointed out that the 2 corporations are anticipating stiff The Bases Group is composed of the BCDA, Clark competition in the infrastructure sector, and so decided to forge Development Corp., Clark International Airport Corp., an alliance. The partnership will be pitted against SMC, whose John Hay Management Corp., Poro Point Management president Ramon Ang has categorically stated that the corporation Corp., North Luzon Railways Corp., Bataan Technology will indeed bid for the project. All 3 conglomerates have already Park Inc. and BCDA Management and Holdings Inc. established their presence in the infrastructure sector: MPIC is the builder and concessionaire of the North Luzon Expressway, while Carmen water project awarded Ayala was just awarded the contract to build the 1st PPP project rolled out by the administration-- the Daang Hari-SLEX (South The P1.55-billion bulk water supply project in Cebu is the fi rst Luzon Expressway) Link project, and SMC is the proponent of project to be undertaken via the public-private-partnership the Tarlac-Pangasinan-La Union Expressway and Skyway-SLEX. (PPP) scheme at the local government level. The 30-year agreement to deliver 35 million liters of water is expected BCDA prepares a united development plan to come on stream by 3Q2013.

The Bases Conversion and Development Authority (BCDA) Manila Water has signed a joint venture agreement with the is in the process of developing a long-overdue unifi ed mas- provincial government of Cebu to develop and operate a P1.55- ter plan that maps out the development goals and priority billion bulk water supply project in Carmen, Cebu Province. This projects of its various government-owned properties. is considered a landmark project for the Aquino administration’s Public-Private-Partnership (PPP) program since it is the fi rst The Bases Conversion and Development Authority (BCDA), PPP project undertaken at the local government level. The and its subsidiaries, called collectively as the Bases Group, are Manila Water-led consortium, which also comprised of Viscal in the process of fi nally putting together a comprehensive plan Development Corp. and Stateland, owns 51% of the project with that would guide its development projects until 2020. All priority the remaining 49% held by the Cebu provincial government. projects to be included in the master plan would fall under 6 areas: In a disclosure to the Philippine Stock Exchange (PSE), regional development and urban planning; infrastructure; marketing Manila Water said that the agreement was to develop and and promotions; social development; support for Armed Forces operate a new water supply source in Cebu Province for a modernization; and business, tourism and trade and investments. period of 30 years, renewable for another 25 years. The The unifi ed master plan has several big- infrastructure projects project shall supply 35 million liters per day of potable bulk lined up (see table). water sourced from the Luyang River in Carmen. Expected On the business, tourism and trade and investments side, the to benefi t are residents in the towns of Carmen, Compostela, master plan would map out the development of the Clark freeport Liloan and Consolacion, and the cities of Danao, Mandaue as “the fulcrum of Central Luzon,” with Clark Development and Lapu-Lapu. The project will be on stream by the 3Q2013. Corp. spearheading the development of the business, industry, Manila Water won the Carmen Water Project after it matched tourism and leisure markets within the freeport by 2015. BCDA the P13.95 tariff rate of Cebu Bulk Water Consortium, the top also hopes to uplift the image of the Clark Freeport, Poro Point bidder when the project was opened for bidding last December Freeport, John Hay special economic zone, and the Bataan 2011. The other bidder for the project was the Maynilad-led Technology park into “more sustainable and globally competitive consortium. Manila Water as the original proponent of the project economic zones that would serve as banner components of was given until January 15, 2012 to match Cebu Bulk Water’s bid. the Aquino administration’s tourism infrastructure by 2014”.

Project Title Estimated Cost Estimated Timeline Project Details The construction and development of the Clark International Airport complex, Clark International Airport $1.7 - billion 2015 including the terminals and support facilities. The new airport complex should be able to handle 5-7 million passengers a year Completion of the San Fernando airport located inside the Poro Point freeport so it San Fernando Airport and Seaport - 2013 could serve as a feeder airport for Clark. A seaport would also be developed at the same time. The projected monorail system would link up with the Metro Rail Transit (MRT) servicing the EDSA route, the Light Rail Transit (LRT) traversing the entire length South Metro Manila monorail loop --of Taft Avenue from Baclaran, Paranaque City to Monumento in Caloocan City, and system the Philippine National Railways (PNR) that cuts across Metro Manila towards the Southern Luzon regions. A high-speed railway connecting Clark to Metro Manila. Envisioned by the DOTC to M.Mla –Clark High speed rail system $2 - billion 2018 replace the Northrail project. Tarlac-La Union Expressway Extension P11.5 -billion 2012 (phase1) On-going (67% completion in Phase 1) with some ROW problems stalling next phase. NLEX-SLEX connector Road P20 - billion - Part of the priority projects for 2012 roll-out in Aquino’s PPP program.

A comprehensive development plan is fi nally being put together.

Philippine Alert April 2012 52 INFRASTRUCTURE

The fi rst PPP project initiated at the local level.

Currently, Metropolitan Cebu has a water demand of some Meanwhile, the measures undertaken by the government 340,000 cubic meters of water per day but only half of this is specifi cally the issuance of the directive were criticized by some reportedly being serviced. The Carmen Water Project is the fi rst parties arguing that it forces the people of to pay at higher long-term bulk water supply project in Cebu Province and is rates. “If that is the case then the power summit would just be a meant to reduce Cebu Province’s reliance on deep wells. The rubber stamp for DOE circular DC 2012–03-0004, which forces extracting of water from the underground aquifer had caused consumers to pay an additional 50 to 80 centavos per kWh for groundwater sources in Cebu to deteriorate (about 90% of their electricity due to the manipulations of favored private power Cebu’s drinking water is sourced from deep well extraction). generators like Therma Marine Inc. owned by the Aboitizes,” But other than being the fi rst water project successfully Party-list Representative Teddy Casiño said in a statement. awarded under the Aquino administration’s PPP program, the DOE Secretary Rene Almendras said that the government Carmen Water Project is heralded because it is the fi rst PPP recognizes the fact that Mindanaoans may have to pay higher project to be initiated at the local level. Most prospective PPP as part of the short-term solution to the power crisis. To build activity in the is taking place at the national level, new plants is costly and the generation of new power supply although interest among provincial and local governments is capacity takes a lead time of at least 5 years, much longer if growing. Several provinces – Cavite, Camarines Sur, Northern it’s hydro or geothermal. Although expensive, the government Samar, Nueva Ecija, and most recently Pangasinan – have passed was pressed to allow sourcing power from barges and diesel. their own PPP codes, and the PPP center have issued a new Securing availability became a priority because power outages manual for local government-led PPPs. According to the newly do not just affect households but also disrupt business operations drafted manual, local government units can make PPPs more in the region. Alongside this measure, the DOE is also evaluating commercially attractive through a number of channels. These other solutions such as the operation of the Diesel Power include equity participation, investment and operating subsidies, Plant (IDPP), which will be able to produce an initial power take-or-pay arrangements, exclusivity rights, and allowing of 15-20 MW and may increase upon rehabilitation, and the private service providers to earn revenues from ancillary sources. improvements of the Agus and Pulangui hydropower plants. The Pulangui plant will be rehabilitated and DOE is already DOE issues circular to improve power studying ways on how to mitigate its effect on the power supply. Agus Plant, meanwhile, will be rehabilitated in June. situation in Mindanao Meanwhile, DOE expressed that the long-term solution for the region is the installation of baseload generation. The The Department of Energy (DOE) issued DC2012-03-2004 government must be able to identify the right mix of power aimed at rationalizing the Mindanao Grid power supply sources that can provide both reliable and affordable electricity. system. The government was pressed to provide immediate Plants are expensive to build so the challenge is for the country to solution to the power shortage in the region. attract investors to build the appropriate facilities in Mindanao.

According to DOE, the issuance of the circular has helped reduce the number of electric cooperatives that are experiencing power outages in Mindanao. The Energy department claims that power outages have been solved in some areas such as , , Dapitan, Valencia, Camiguin, , , , Mati, , Surigao, , and Cabadbaran. As the circular only serves as the short-term solution in Mindanao, it directs electric cooperatives to nominate their needed power to supply their demands. This now results to less power outage for provinces in Mindanao and current power supply defi cit of 100-160 MW from 360 MW during the previous months. However, the DOE continues to monitor its implementation to ensure strict compliance to the directive among stakeholders.

To secure availability is more important because power outages also disrupt businesses.

Philippine Alert April 2012 INFRASTRUCTURE 553

STATUS OF BIG TICKET INFRASTRUCTURE PROJECTS AS OF APRIL 2012

IMPLEMENTING FUNDING CIVIL WORKS PROJECT TITLE PROJECT COST STATUS / ISSUES AGENCY SOURCE TIMEFRAME Daang Hari-SLEX Link Concession agreement for construction and O&M signed between DPWH DPWH PPP May 2012- P1.96 billion Road Project and Ayala Corp. on April 3. Civil works to commence in May 2012. DPWH Sec. Singson said he will recommend to the President to approve NLEX-SLEX Connector both MPTDC’s Connector proposal and Citra’s proposal for Skyway DPWH PPP Nov 2013 P19.98 billion Road Project Stage 3. The Secretary disclosed that the bidding and awarding of the Connector project will take place later in the year. NAIA Expressway Project proposal reportedly ready for submission to NEDA. Bidding eyed DPWH PPP 2 years P13.58 billion Phase II in 2H2012.

Project proposal due for submission to NEDA in May. Bidding eyed in CALA Expressway DPWH PPP 2012-2015 P19.69 billion June 2012.

Tarlac-Pangasinan-La Project accomplishment for Phase 1 Tarlac City to Rosario, La Union is Union Expressway DPWH PPP 2014-2017 P19 billion 74.66%. Phase I completion eyed in May 2013. (TPLEX)

Bidding postponed from mid-April to May as the DOTC has yet to fi nalize LRT-1 South Extension DOTC/LRTA PPP/ODA 2010-2015 P61.5 billion the terms of reference for the project.

DOTC still awaiting legal advice on whether to auction O&M contract or MRT-3 Privatization DOTC/LRTA PPP 2012-2015 P6.3 billion just maintenance contract.

Laguindingan Airport Airport completion slated in December 2012. O&M contract said to be DOTC ODA-NG/ -- P7.85 billion (const.) Development “nearing” NEDA approval.

Puerto Princesa Construction, fi nanced by Korean ODA, scheduled to start in late 2012. DOTC PPP 2008-2012 P1.8 billion (O&M) Airport Development Meanwhile, O&M contract reportedly “nearing” NEDA approval.

Project under review to determine the scope of expansion, in light of Clark Airport Budget DOTC/CIAC ODA/PPP 2012-2014 P4.5 billion (const.) a higher number of expected passengers. Review will also determine Terminal funding source for the project.

Project has hurdled NEDA Board approval. This involves the rehabilitation Agus VI Hydroelectric of Units 1 and 2 of Agus 6 that would extend economic life of the 2 units DOE/NAPOCOR -- 3 years P12 billion Power Plant Uprating to 30 years. The project is expected to raise generating capacity to 69 MW to help address power supply issues in the Mindanao grid. Project back to zero after the gov’t scrapped the previously suspended commuter train system in favor of a high-speed rail system. Negotiations June 2012- NorthRail Project DOTC NG P2.6 billion are still on hold due to the upcoming leadership change in . Once December 2014 it resumes, the gov’t is set to call for the replacement of current contractor Sinomach. Jalaur River Multi- The project has already been approved by the NEDA Board. The Budget Purpose Project DA/NIA ODA -- $2 billion Department released P450 million to commence pre-engineering work Stage II for this. Of the project cost, P8.95 billion will be funded by Korean ODA. The feasibility study of the project is currently being reviewed and Mindanao railway DOTC ODA-NG/PPP 2013-2016 P11.2 billion (Phase 1) deliberated by NEDA. The PPP bid is scheduled to be undertaken sometime this year. Project under review by the NEDA Board. DOTC Sec. Roxas, however, is opposing the project, saying this would not signifi cantly contribute to Panay railway DOTC PPP 2012-2016 P66 billion trade as NEDA claims. Instead, Sec. Roxas favors an expressway to link the northern and southern parts of the island. DOTC and Takenaka Corporation agreed to fi nally complete Terminal 3 at a cost of P40 million. The new terminal will increase terminal NAIA-3 DOTC/MIAA PPP -- P15 billion capacity to 33,000 passengers per day and service 28 planes. The project is scheduled to open sometime in 2014. The Toll Regulatory Board technical working group is currently reviewing the project proposal. Meanwhile, DPWH Sec. Singson committed to Skyway Stage 3 DPWH PPP 1998-2014 P350 million recommend to the President the approval of Skyway Stage 3 project, as well as MPTDC’s NLEX-SLEX Connector proposal. Casecnan Already approved by the NEDA board and is now in the middle of loan Multipurpose negotiations. NEDA said that the project may be funded through Chinese NIA PPP 3 years P25.4 billion Irrigation and Power ODA which will amount to P5.29 billion. The rest of the cost will be Project shouldered by the Philippine government. A new terminal is currently under construction. It is part of the Phase North Harbor 1 of the 2-year expansion plan for the harbor, which will improve the PPA ODA/NG 2013-2017 P7.05 billion Development harbor’s capacity to 3,000 passengers a day from 1,000 passengers a day. Bidding for the engineering and procurement contract of the project is Batangas-Manila scheduled on 1Q2013. The gov’t will own and operate the pipeline. The DOE PPP 2012-2013 (Phase 2) Pipeline private sector will only participate in Phase 2, which is the construction of the receiving terminal.

Philippine Alert April 2012