Southwest Integrated Transport System Project

Project Information Memorandum

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS

SOUTHWEST INTEGRATED TRANSPORT SYSTEM PROJECT

PROJECT INFORMATION MEMORANDUM (PIM)

10 JANUARY 2014

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DISCLAIMER

The information contained in the Bidding Documents, Information Documents and any other information, whether verbal or written, provided by the Department of Transportation and Communications (“DOTC”) or any of its employees or advisors, or on behalf of the DOTC, is provided to Bidders on the terms and conditions set out in the Bidding Documents and such other terms and conditions subject to which such information is provided.

The Bidding Documents and Information Documents are not agreements and are neither offers nor invitations by the DOTC to the Bidders or any other person. The DOTC, its employees and advisors are not bound by any of the contents of the Bidding Documents or Information Documents. The purpose of the Bidding Documents and Information Documents is to provide interested parties with information that may be useful to them in making their Bids pursuant to the Bidding Documents. The Bidding Documents and Information Documents include statements that reflect various assumptions and assessments arrived at by the DOTC in relation to the Project. Such assumptions, assessments and statements do not purport to contain all the information that each Bidder may require. The Bidding Documents and Information Documents may not be appropriate for all persons, and it is not possible for the DOTC, its employees or advisors to consider the investment objectives, financial situation and particular needs of each party who reads or uses the Bidding Documents and Information Documents. The assumptions, assessments, statements and information contained in the Bidding Documents, Information Documents and associated documents may not be complete, adequate, accurate or correct. Each Bidder should therefore, conduct its own investigations and analysis and should check the completeness, adequacy, accuracy, correctness, and reliability of the assumptions, assessments, statements and information contained in the Bidding Documents and Information Documents and obtain independent advice from appropriate sources.

Information provided in the Bidding Documents and the Information Documents is on a wide range of matters, some of which may depend upon interpretation of law. The information given is not intended to be an exhaustive account of statutory requirements and should not be regarded as a complete or authoritative statement of law. The DOTC accepts no responsibility for the accuracy or otherwise for any interpretation or opinion on law expressed herein.

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The DOTC, its employees and advisors make no undertaking, assurance, representation or warranty and shall have no liability to any person, including any Bidder, under any law, statute, rules or regulations, principles of restitution or unjust enrichment or otherwise, for any loss, damages, cost or expense that may arise from or be incurred or suffered on account of anything contained in the Bidding Documents, Information Documents or other information provided to Bidders, including the completeness, adequacy, accuracy, correctness, and reliability of the Bidding Documents, Information Documents and any assessment, assumption, statement or information contained therein or deemed to form part of the Bidding Documents, Information Documents or arising in any way from participation in the Bidding Process.

The DOTC also accepts no liability of any nature, whether resulting from negligence or howsoever caused, arising from reliance of any Bidder upon the statements contained in the Bidding Documents or Information Documents.

The DOTC may, in its absolute discretion, but without being under any obligation to do so, amend, update, or supplement the information, assessments or assumptions contained in the Bidding Documents or Information Documents. However, the DOTC, its employees and advisors shall not be liable to any Bidder (including the Winning Bidder) in respect of any failure to (i) disclose or make available any information, documents or data; (ii) amend, update, or supplement the Bidding Documents or Information Documents; or (iii) provide any information regarding any inaccuracy, error, omission, defect or inadequacy in the Bidding Documents or Information Documents.

The issuance of the Bidding Documents or Information Documents does not imply that the DOTC is bound to select a Bidder or to appoint the selected Bidder, as the case may be, for the Project, and the DOTC reserves the right to reject all or any of the Bidders or Bids without assigning any reason whatsoever.

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CONTENTS

1 Project Background ...... 6

2 Project Site Overview ...... 8 2.1 About Metro Manila ...... 8 2.2 About the Project Site ...... 11 2.2.1 Southwest ITS Project Site ...... 12 3 Overview of the Existing Demand...... 13 3.1 Traffic at the ITS Terminal (Estimated for Year 2012) ...... 13 4 Scope and Structure of the PPP Project ...... 19 4.1 Project Description ...... 19 4.2 Legal Framework for the Southwest ITS Project ...... 20 4.2.1 Procurement Process ...... 20 4.3 Proposed Contractual Arrangement ...... 21 4.3.1 PPP Structure ...... 21 4.3.2 Implementing Agency ...... 21 4.3.3 Concession Period ...... 21 4.3.4 Incentives...... 22 4.3.5 Project Site & Access Road ...... 23 4.3.6 Concessionaire Revenue ...... 23

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LIST OF ABBREVIATIONS

AADT Average Annual Daily Traffic AO Administrative Order BOI Board of Investments BOT Build-Operate-and-Transfer BTO Build-Transfer-Operate BSP Bangko Sentral ng Pilipinas or Central Bank of the Philippines CPC Certificate of Public Convenience DILG Department of Interior and Local Government DMB Diosdado Macapagal Boulevard DOTC Department of Transportation and Communications DPWH Department of Public Works and Highways EDSA Epifanio de los Santos Avenue EO Executive Order FTI Food Terminal Inc. GDP Gross Domestic Product IRR Internal Rate of Return ITB Instruction to Bidders ITS Integrated Transport System LGU Local Government Unit LRT Light Rail Transit LTFRB Land Transportation Franchising and Regulatory Board LTO Land Transportation Office MMDA Metro Manila Development Authority NCR National Capital Region NEDA National Economic and Development Authority PBAC Pre-Qualification Bids and Awards Committee PDP Philippine Development Plan PIP Public Investment Program PNR Philippine National Railway PPP Public Private Partnership PRA Philippine Reclamation Authority PUV Public Utility Vehicle ROW Right of Way SLEX South Luzon Expressway

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1 PROJECT BACKGROUND

The 2011-2016 PDP prioritized the creation of an integrated and multimodal transport and logistics system under a PPP framework as the centerpiece strategy for infrastructure development. The PDP identifies the need to fast-track the establishment of an efficient, reliable, seamless and integrated mass transportation network/system to spur the country’s economic growth.

On 21 February 2012, the President issued EO No. 67 (EO 67) entitled: “Providing for the Establishment of the Integrated Transport System (ITS)”, which is an integrated and multimodal transport and logistics system (“ITS Project”).  Section 3 of EO 67 directs the DOTC to fast-track the implementation of the ITS Project with the cooperation of all concerned agencies. The ITS Project must also be included by NEDA in the 2011-2016 PIP.  Section 4 of EO 67 states that the ITS Project shall be structured under any of the schemes allowed under the Philippine Build-Operate-and-Transfer (BOT) Law.  Section 5 of EO 67 designated the DOTC as the lead agency in planning, implementing and monitoring of the ITS Project. DOTC is empowered to formulate and recommend national policies and guidelines for the preparation and implementation of integrated and comprehensive transportation and communication systems at the national, regional and local levels.  Section 6 of EO 67 provides for the creation of an Inter-Agency Committee which shall be an advisory body and consultative forum in matters relating to the planning, implementation and monitoring of the ITS Project. The Inter-Agency Committee, composed of members from DOTC, MMDA, DPWH, DILG, NEDA, LTFRB and LTO, shall provide for a mechanism for coordination to fast-track the implementation of the ITS Project.  Section 6 and 7 of EO 67 mandates the Inter-Agency Committee to perform the following principal functions of providing technical advice and recommendations to DOTC: - Overseeing the implementation of the ITS Project; - Regulating the terminal fees that may be charged for the use of the transport terminals and other facilities established under the ITS Project; - Issuing the implementing rules and regulations, procedures, guidelines and priority actions necessary to carry out the provisions of EO 67;

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- Performing other functions as may be necessary to implement EO 67 and as may be directed by the President.

On 16 July 2013, the President issued AO No. 40 (AO 40) entitled: “Providing for the Establishment of the Interim Transport Terminals in preparation of the Integrated Transport System under EO NO. 67 (s. 2012)”. Section 6 of the AO states that the operation of interim transport terminal shall be ceased within sixty (60) days from the date that DOTC has determined that the permanent ITS terminals are fully operational.

The ITS Project aims to maximize road usage by reducing vehicle volume and improving traffic flow along Metro Manila’s major thoroughfares, particularly EDSA. The ITS Project aims to provide for the establishment of integrated transport terminals to provide effective interconnections between different transport modes and services thereby ensuring efficient and seamless travel for the commuting public.

The ITS Project envisages the establishment of three (3) mass transportation intermodal terminals at the outskirts of Metro Manila – one (1) in the north (of EDSA) serving passengers to and from northern Luzon, one (1) in the south serving passengers to and from the Laguna/Batangas side, and one (1) in the southwest serving passengers to and from the Cavite side. The terminals will connect passengers from the province to other urban transport systems such as the LRT/PNR, city buses, taxis, and other PUVs serving inner Metro Manila. The terminals will include passenger terminal buildings, emergency maintenance areas (i.e. for minor repairs of buses and other vehicles), arrival and departure bays, ticketing facilities, park-ride facilities, and transfer facilities such as shuttles to provide seamless transport connections.

The DOTC invites bidders to submit Bids to finance, design, construct, operate and maintain the Southwest ITS Project (or the ‘Project’).

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2 PROJECT SITE OVERVIEW

2.1 About Metro Manila Metropolitan Manila, the National Capital Region (NCR), more popularly known as Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines. It is composed of 16 cities, namely Manila, Caloocan, Las Piñas, Makati, Malabon, Mandaluyong, Marikina, Muntinlupa, Navotas, Pasay, Pasig, Parañaque, Quezon City, San Juan, Taguig, and Valenzuela, and the Municipality of Pateros.

The region is the political, economic, social, cultural, and educational center of the Philippines. As proclaimed by Presidential Decree No. 940, Metro Manila as a whole is the Philippines' seat of government while the City of Manila is the capital. The largest city in the metropolis is Quezon City, while the largest business district is the Makati Central Business District.

Metro Manila is the most populous of the twelve defined metropolitan areas Figure 2.1: Political Map of Metro Manila in the Philippines and the 11th most populous in the world. The region accounts for 37% of the Philippine gross domestic product (GDP), 13% of employment, and contributes 41% of the country’s total tax collection. As of the 2010 census, it had a population of 11,855,975 and holds the biggest concentration of urban population among the major cities in the Philippines. The metropolis has a total area of 63,600 hectares comprising about 0.2 percent of the total Philippine land area. The status of Metro Manila’s land use is shown in Table 2.1.

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Table 2.1: Land Use Pattern in Metro Manila

Land Use Area (Hectares) % Share

Residential 24,530 38.57

Commercial 2,446 3.85

Industrial 3,129 4.92

Institutional 3,537 5.56

Utilities 665 1.05

Open Space/Vacant Areas 8,623 13.56

Agricultural 5,630 8.85

Fishponds 1,280 2.01

Parks/Cemetery 6,162 9.69

Race Track/Golf Course 778 1.22

Water Surface 1,022 1.61

Mountains/Hills 5,798 9.12

Total 63,600 100

In Metro Manila, the rapid growth in population and, as a consequence, motorization, have caused many urban transportation and environmental problems. The resulting urban pattern is one where an increasing number of people live at the fringes of the metropolitan area but still need to travel to the city centers to work or study.

The urban transport sector in Metro Manila comprises primarily of an urban road network and public transport system. EDSA is Metro Manila’s main thoroughfare stretching around 24 kilometers and connecting the north and south of the metropolis. Its average annual daily traffic (AADT) is over 156,000 vehicles. Table 2.2 presents the past data on the number of franchises and authorized units of road based public transportation in Metro Manila.

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Table 2.2: Public Utility Vehicles in Metro Manila

As of As of As of As of As of December 2009 December 2010 December 2011 December 2012 October 2013 Type of Service No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of Franchise Units Franchise Units Franchise Units Franchise Units Franchise Units

Public City Buses 385 5,299 522 7,161 522 7,161 391 5,392 391 5,392 Utility Buses Inter-Regional Buses 1,515 10,238 1,215 8,872 1,215 8,872 1,212 8,561 1,212 8,561

City Buses 2 30 2 30 2 30 - - - - Mini Buses Inter-Regional Buses 50 103 50 103 50 103 32 62 32 62

Public Utility Jeepneys 57,505 60,564 57,326 59,938 57,537 60,149 57,931 60,876 57,935 60,880

Taxi 17,775 22,386 15,921 21,798 15,924 21,801 17,487 24,314 17,488 24,315

Vehicles for Hire 3,180 3,397 5,104 5,375 5,227 5,498 9,255 10,185 9,255 10,185

Shuttle Transport 1,289 2,291 1,155 2,197 1,156 2,198 1,179 2,332 1,179 2,332

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2.2 About the Project Site The identified site for the proposed Project is located in the southwest of Metro Manila at PRA property beside Asia world/Uniwide along Coastal Road, Paranaque City. Figure 2.2 illustrates the location of the Project site within Metro Manila.

SOUTHWEST ITS PROJECT

Figure 2.2: Location of the Project Site within Metro Manila

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2.2.1 Southwest ITS Project Site

Location of the The Project site is located in the southwestern part of Metro Manila and it Project Site lies near Manila-Cavite Expressway which connects Metro Manila to the province of Cavite.

Co-ordinates Latitude - 14°30'44.04"N; Longitude - 120°59'31.71"E

Site Area 2.9 Hectares

Access The site is accessible from the Manila-Cavite Expressway (R1 Expressway) and there are plans to provide access to the site from Diosdado Macapagal Boulevard (DMB) and the future LRT-1 extension.

The following plan illustrates the structure of the Project site and also shows the developments in the context areas.

DIOSDADO MACAPAGAL BOULEVARD

LOCATION OF PROPOSED LRT STATION

PROJECT SITE (2.9 HECTARE) TO MANILA

R-1 EXPRESSWAY

TO CAVITE

Figure 2.3: Southwest ITS Project Site Location of LRT Station is indicative.

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3 OVERVIEW OF THE EXISTING DEMAND Table 3.1 demonstrates the existing situation of the provincial traffic under various parameters. Table 3.1: Overview of the Provincial Bus and Passenger Traffic at the ITS Terminal (Estimated at Year 2012) Parameters (Year 2012) Arrival Departure Provincial bus volume per day 1,060 949 Provincial Passenger volume per day 48,527 44,828

3.1 Traffic at the ITS Terminal (Estimated for Year 2012) Table 3.2 presents the hourly traffic of provincial buses and the provincial passengers on a 15-minute interval basis. Table 3.2: Hourly Volume of Provincial Bus & Passenger Traffic at 15 Min. Interval (Estimated for Year-2012) Direction 1 (Arrivals) Direction 2 (Departures) North bound buses via Manila- South bound buses via manila- cavite expressway cavite expressway Time Period Average Average Number of Number of passenger passenger buses buses occupancy/bus occupancy/bus 01:00 - 02:00 3 20 7 44 01:15 - 02:15 2 13 6 42 01:30 - 02:30 1 13 5 40 01:45 - 02:45 3 22 5 42 02:00 - 03:00 3 33 4 55 02:15 - 03:15 8 25 4 46 02:30 - 03:30 12 29 5 42 02:45 - 03:45 12 31 4 38 03:00 - 04:00 15 29 5 33 03:15 - 04:15 15 39 7 44 03:30 - 04:30 17 43 9 46 03:45 - 04:45 29 40 16 42 04:00 - 05:00 39 39 19 44 04:15 - 05:15 50 37 30 42 04:30 - 05:30 62 37 41 43

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Direction 1 (Arrivals) Direction 2 (Departures) North bound buses via Manila- South bound buses via manila- cavite expressway cavite expressway Time Period Average Average Number of Number of passenger passenger buses buses occupancy/bus occupancy/bus 04:45 - 05:45 67 41 45 42 05:00 - 06:00 66 46 53 43 05:15 - 06:15 63 51 57 40 05:30 - 06:30 64 58 53 39 05:45 - 06:45 61 60 58 41 06:00 - 07:00 66 59 62 39 06:15 - 07:15 63 60 59 43 06:30 - 07:30 54 59 62 41 06:45 - 07:45 54 61 50 42 07:00 - 08:00 47 62 45 44 07:15 - 08:15 56 61 47 42 07:30 - 08:30 63 60 40 45 07:45 - 08:45 65 58 51 41 08:00 - 09:00 72 58 52 38 08:15 - 09:15 62 58 42 36 08:30 - 09:30 54 58 45 35 08:45 - 09:45 51 56 36 37 09:00 - 10:00 46 55 36 38 09:15 - 10:15 55 52 40 38 09:30 - 10:30 58 51 41 37 09:45 - 10:45 60 49 45 36 10:00 - 11:00 53 48 43 35 10:15 - 11:15 51 48 50 33 10:30 - 11:30 49 48 58 35 10:45 - 11:45 48 51 65 33 11:00 - 12:00 54 52 66 34 11:15 - 12:15 51 51 59 37 11:30 - 12:30 50 50 51 38 11:45 - 12:45 53 49 42 41 12:00 - 13:00 50 48 35 43

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Direction 1 (Arrivals) Direction 2 (Departures) North bound buses via Manila- South bound buses via manila- cavite expressway cavite expressway Time Period Average Average Number of Number of passenger passenger buses buses occupancy/bus occupancy/bus 12:15 - 13:15 49 47 36 39 12:30 - 13:30 50 48 48 39 12:45 - 13:45 45 47 52 40 13:00 - 14:00 53 48 68 42 13:15 - 14:15 52 53 67 45 13:30 - 14:30 61 52 61 47 13:45 - 14:45 66 54 61 47 14:00 - 15:00 64 54 53 49 14:15 - 15:15 68 52 56 49 14:30 - 15:30 69 50 48 50 14:45 - 15:45 72 50 49 50 15:00 - 16:00 72 49 46 51 15:15 - 16:15 73 49 48 53 15:30 - 16:30 72 47 50 52 15:45 - 16:45 63 46 51 56 16:00 - 17:00 64 47 55 56 16:15 - 17:15 56 48 53 57 16:30 - 17:30 50 51 58 58 16:45 - 17:45 54 50 62 57 17:00 - 18:00 47 48 60 58 17:15 - 18:15 57 45 55 58 17:30 - 18:30 57 41 43 59 17:45 - 18:45 59 34 35 60 18:00 - 19:00 67 31 29 62 18:15 - 19:15 58 26 29 61 18:30 - 19:30 73 27 33 62 18:45 - 19:45 64 27 33 62 19:00 - 20:00 58 29 38 61 19:15 - 20:15 73 33 39 62 19:30 - 20:30 50 36 41 61

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Direction 1 (Arrivals) Direction 2 (Departures) North bound buses via Manila- South bound buses via manila- cavite expressway cavite expressway Time Period Average Average Number of Number of passenger passenger buses buses occupancy/bus occupancy/bus 19:45 - 20:45 72 32 41 62 20:00 - 21:00 72 31 45 62 20:15 - 21:15 56 27 54 59 20:30 - 21:30 51 25 57 59 20:45 - 21:45 25 35 57 58 21:00 - 22:00 18 44 55 58 21:15 - 22:15 14 53 43 60 21:30 - 22:30 15 52 39 59 21:45 - 22:45 15 46 37 60 22:00 - 23:00 13 45 35 57 22:15 - 23:15 14 42 38 57 22:30 - 23:30 17 40 35 56 22:45 - 23:45 13 39 32 56 23:00 - 24:00 13 33 24 57 23:15 - 00:15 10 32 19 58 23:30 - 00:30 7 30 16 59 23:45 - 00:45 6 28 15 55 24:00 - 00:00 5 27 14 54 00:15 - 01:15 4 29 11 51 00:30 - 01:30 4 26 10 51 00:45 - 01:45 3 23 7 52

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Figure 3.1: Hourly Volume of Buses at 15 Min. Interval (Estimated at Year 2012), North Bound Direction via Manila-Cavite Expressway 75 70

30 Number Number of Buses

05:30 - 05:30 06:30 - 13:00 14:00 - 20:30 21:30 - 01:00 01:00 - 02:00 01:30 - 02:30 02:00 - 03:00 02:30 - 03:30 03:00 - 04:00 03:30 - 04:30 04:00 - 05:00 04:30 - 05:30 05:00 - 06:00 06:00 - 07:00 06:30 - 07:30 07:00 - 08:00 07:30 - 08:30 08:00 - 09:00 08:30 - 09:30 09:00 - 10:00 09:30 - 10:30 10:00 - 11:00 10:30 - 11:30 11:00 - 12:00 11:30 - 12:30 12:00 - 13:00 12:30 - 13:30 13:30 - 14:30 14:00 - 15:00 14:30 - 15:30 15:00 - 16:00 15:30 - 16:30 16:00 - 17:00 16:30 - 17:30 17:00 - 18:00 17:30 - 18:30 18:00 - 19:00 18:30 - 19:30 19:00 - 20:00 19:30 - 20:30 20:00 - 21:00 21:00 - 22:00 21:30 - 22:30 22:00 - 23:00 22:30 - 23:30 23:00 - 24:00 23:30 - 00:30 24:00 - 00:00 00:30 - 01:30 Time Period

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Figure 3.2: Hourly Volume of Buses at 15 Min. Interval (Estimated at Year 2012), South Bound Direction via Manila-Cavite Expressway 70 65 60

30 Number Number of Buses 25

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4 SCOPE AND STRUCTURE OF THE PPP PROJECT

4.1 Project Description The Project to be undertaken by the Concessionaire consists of: a) the design, engineering, and construction of the ITS Terminal, within 12 months from the start of construction; b) from its completion until the end of the concession period, the operation and maintenance of the ITS Terminal in accordance with specified performance standards; c) the collection of pre-approved tolls from users of the ITS Terminal; d) the financing of the above activities; e) the carrying out of the Commercial Business (at the Concessionaire's option) and collection of any revenues generated from the same; and f) turn-over of the Project assets to the DOTC at the end of the Concession Period, all in accordance with the Concession Agreement.

The accompanying work to be effected by the DOTC or for which the DOTC is responsible consists of: a) the provision or acquisition of the Project site; b) the design, engineering and construction of the access road leading to the Project site; c) the financing of the above activities; d) the amendment of CPCs 1 of affected units of bus operators to ensure the compulsory use of the ITS Terminal; and e) the implementation of the necessary regulatory measures or changes to ensure the successful implementation of the Project, including such regulations and institutional support as may be necessary to implement the timetable/departure schedule, all in accordance with the Concession Agreement.

1 “CPC” means the certificate issued by the LTFRB authorizing the operation of public land transportation services provided by motorized vehicles.

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4.2 Legal Framework for the Southwest ITS Project The bidding and implementation of the Project shall be conducted in accordance with Republic Act No. 6957, as amended by Republic Act No. 7718 ("BOT Law”), and its 2012 Revised Implementing Rules and Regulations (“2012 Revised IRR”). The BOT Law is the primary law governing PPP in the Philippines and provides the legal framework for government agencies to enter into PPP contracts with qualified private sector proponents for the implementation of government infrastructure and development projects.

4.2.1 Procurement Process The Southwest ITS Project will be procured by a single-stage public bidding in accordance with the rules and procedures for public bidding set out in the BOT Law and the 2012 Revised IRR. The bidding will follow the solicited mode under the 2012 Revised IRR. Under the solicited mode, prospective bidders are qualified based on minimum legal, technical and financial eligibility requirements determined by the PBAC to be formed by the implementing agency. The qualification documents and the bid of each prospective bidder will be evaluated based on their completeness, adequacy and compliance with the prescribed evaluation criteria. The general procedure for the procurement and bidding under the single-stage process will be as follows: a) Prospective bidders will be invited by the PBAC to submit their qualification documents and bid proposals. The prospective bidders shall submit these in three (3) envelopes, containing the qualification documents, the technical proposal and the financial proposal. b) Prior to the bidding, the PBAC will conduct a pre-bid conference to which all prospective bidders will be invited. During the pre-bid conference, prospective bidders may seek clarification regarding any requirements and/or terms and conditions of the bidding documents. c) On the deadline stipulated in the Instructions to Bidders, prospective bidders will be asked to submit their bids consisting of their qualification documents, technical and financial proposals, a bid security and other supporting documents. d) After reviewing the qualification documents, the PBAC will determine which of the prospective bidders fulfill the prescribed qualification requirements and inform all such qualified bidders. Only the bid proposals of qualified bidders will be evaluated by the PBAC. The PBAC shall also inform all disqualified bidders in writing of their failure to qualify and the reasons for their disqualification from the bidding. e) The technical proposals of qualified bidders will be opened and evaluated by the PBAC on a pass/fail basis. Qualified bidders will be informed as to whether their

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technical proposals passed the evaluation. The financial proposals of qualified bidders who fail to pass the technical evaluation shall be returned unopened together with the reasons for their disqualification from the bidding. f) The financial proposals of qualified bidders which pass the technical evaluation will be opened and evaluated by the PBAC based on the most advantageous bid for the government. The specifics of the criteria for the evaluation of the financial proposals are described in the Instructions to Bidders. g) The qualified bidder which pass the technical evaluation and with the best financial proposal shall be considered for awarding the Project, subject to its compliance with requirements prescribed in the ITB.

4.3 Proposed Contractual Arrangement The sections below provide a brief outline of certain significant aspects of the Project structure. The details are provided in the draft Concession Agreement.

4.3.1 PPP Structure The Project will be implemented using a BTO arrangement, which is a contractual arrangement whereby the implementing agency (DOTC) contracts out the construction of an infrastructure facility (ITS Terminal) to a private entity (Concessionaire) such that the private entity builds the facility on a turnkey basis, assuming cost overruns, delays and specified performance risks. Once the facility is commissioned satisfactorily, title over the facility is transferred to the implementing agency. The private entity, however, operates the facility on behalf of the implementing agency in accordance with specified performance standards and specifications set out in the PPP contract.

4.3.2 Implementing Agency The implementing agency for the Project is the DOTC. The BOT Law provides the DOTC with a valid and tested legal framework to undertake the Project. The law authorizes infrastructure agencies such as the DOTC to enter into BOT contracts with qualified private sector proponents for the implementation of public infrastructure or development projects.

4.3.3 Concession Period The PPP concession shall be for a period of 35 years.

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4.3.4 Incentives In accordance with the BOT Law, project proponents may avail of the investment incentives under the Omnibus Investments Code as described below. The DOTC, however, does not guarantee that the project proponent will be granted such incentives.

4.3.4.1 Incentives under Omnibus Investments Code Project Proponents for PPP Projects are entitled to fiscal and non-fiscal incentives under the Omnibus Investment Code of 1987, upon registration with the BOI if: a) the project cost exceeds 1 Billion Pesos; or b) the project activity or sector is included in the current Investment Priorities Plan of the BOI, even if the project cost does not exceed 1 Billion Pesos. Every annual Investment Priorities Plan contain General and Specific Guidelines that provide certain rules for the approval of the BOI registration of any enterprise and the entitlement to incentives of such registrant to implement the general parameters indicated in the Omnibus Investment Code. One key incentive provided under the Omnibus Investments Code is the exemption from payment of income taxes upon the scheduled start of commercial operations. Such tax exemption may be for a period of six (6) years, for pioneer enterprises, or four (4) years for non-pioneer enterprises from the start of commercial operations, as may be determined under the Omnibus Investments Code. The income tax holiday may be extended for another year, at the discretion of the BOI, as long as the total exemption period does not exceed eight years, in each of the following cases: a) compliance with the BOI’s prescribed ratio of capital equipment to the number of workers for the project; or b) utilization of indigenous raw materials at rates set by the BOI; or c) net foreign exchange savings or earnings amount to at least US$500,000 annually during the first three years of operation. Other additional fiscal and non-fiscal incentives may also be available, such as: a) simplification of customs procedures; b) unrestricted use of consigned equipment; c) tax and duty exemptions on imported spare parts used on consigned equipment; d) employment of foreign nationals in supervisory, technical or advisory positions for five (5) years from the date of registration with the BOI, extendible for limited periods at the discretion of the BOI; and

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e) the positions of President, General Manager and Treasurer of foreign-owned registered enterprises (majority foreign-owned) or their equivalent shall not be subject to the 5-year limitation.

4.3.4.2 Incentives Extended by Local Governments An LGU may, in its discretion, provide tax incentives, exemptions or relief to a PPP project proponent for projects implemented within its jurisdiction. The precise incentives granted, however, will vary with each LGU.

4.3.4.3 Foreign Exchange Foreign exchange may be traded freely and with few restrictions, brought into or sent out of the country by foreign corporations operating in the Philippines. Foreign investments/profits can also be repatriated in foreign exchange. Repatriation of foreign exchange sourced from the banking system will need prior BSP registration of inward remittance of the underlying investment.

4.3.5 Project Site & Access Road The DOTC shall provide, at no cost to the project proponent, all the right-of-way and other possessory rights over the Project site as may be necessary for the implementation of the Project. In addition, the DOTC shall ensure the construction, operation and maintenance of the access road leading to the Project site.

4.3.6 Concessionaire Revenue As a form of repayment for financing, constructing, operating and maintaining the Southwest ITS Project, the Concessionaire shall be authorized to charge and collect prescribed tolls from the various modes/vehicles using the ITS Terminal, during the Concession Period. The Concession Agreement shall set out the tolls that may be charged by the project proponent for each year of the Concession Period. In addition, the Concessionaire shall be entitled to construct commercial assets or to carry out commercial businesses on the Project site and to collect and retain the revenues from these commercial business undertakings for so long as such construction and businesses do not interfere with the Project. Such commercial assets shall not include any residential property. For this purpose, the development of hotels and service apartments/hotel apartments shall not be deemed to constitute residential property.

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