INFRASTRUCTURE 49

1st PPP project bidding: Successful

After a delayed start, the banner program of the Aquino administration, the public-private partnership (PPP) infrastructure program, has been fi nally launched with the successful bidding of the 4-kilometer -South Expressway road link project.

he 1.956-billion Daang Hari (King’s Road) – (SLEX) road link project has been Tawarded to Ayala Corporation after it submitted the highest bid of P902 million for the 30-year contract to build, operate and maintain the 4-kilometer road project. There were only 2 bidders competing for the road project – the Ayala Corporation partnered with the Spanish engineering fi rm, Getinsa; and the South Expressway Link consortium consisting of San Miguel Corp’s Optimal Infrastructure Development, Inc, Star Infrastructure Development Corp. and Citra Group’s CLGP Philippine Holdings, Inc. The joint venture group of D.M. Consunji Inc. and C.M. Pancho Construction Inc., the only other pre-qualifi ed participant, withdrew from submitting a fi nal bid. There were initially 20 individual fi rms and groups that submitted expressions of interest for the project. Ayala Corporation’s bid of P902 million was superior to acquisition will be completed 6 months after the signing of the P608- million bid submitted by the South Expressway the concession agreement and that commercial operations Link consortium. The government had earlier set a P371- will happen earlier than the expected timeline of August 2013. million fl oor price for the project. The Daang Hari-SLEX The project will complement the - East-West road link is the fi rst project to be successfully awarded Highway (CALA Expressway), which is also included in the to the private sector under the Aquino administration’s priority infrastructure PPP program of the national government. flagship public-private partnership (PPP) program. The Daang-Hari-SLEX road link is a strategic component of the Following the successful bidding, the national government Metro Urban Expressway Network Master Plan intended announced that it expects the project proponent to start and to provide a high-standard highway within a 200-kilometer fi nish construction in 2012 and commercial operations to begin radius of . It represents stage 1 of the plan to in 1H2013. However, Ayala Corporation’s own schedule shows complete the circumferential 6 (C-6) road (see project map). that civil works completion will likely be in July 2013. The The road project has long been in the “wish-list” of the DPWH discrepancy in the government and project proponent’s timeline but was not initially included in the priority projects for 2011 was due to the delay in the signing of concession agreement roll-out when the national government launched the PPP program (now expected to happen in the last week of January 2012) last November 2010. The non-inclusion of the road project in the and the right-of-way (ROW) acquisition. Nevertheless, the initial list was due to “project ownership” issues. Prior to the PPP implementing agency of the project, the Department of Public bidding, the contract to construct, operate and maintain the Daang- Works and Highways (DPWH), remains optimistic that ROW Hari-SLEX road link was with Sto.Tomas Development Philippine Alert December 2011 50 INFRASTRUCTURE

PROJECT TIMELINE Publication of Invitation to Participate and Bid July 20, 27 and August 3, 2011 Pre-qualifi cation (PQ) Conference August 8, 2011 Submission and Opening of PQ documents September 19, 2011 Notice of Pre-qualifi cation September 30, 2011 Pre-bid Conference October 7, 2011 One-on-One meeting with pre-qualifi ed bidders October 18-20, 2011 One-on-One meeting with pre-qualifi ed bidders November 22, 2011 Bid Submission Date of Technical Proposals December 12, 2011 Evaluation of Technical Proposals December 13, 2011 Notifi cation of Bidders December 14, 2011 Opening and Evaluation of Financial Proposals December 15, 2011 Post Qualifi cation December 16, 2011 Endorsement of most responsive post-qualifi ed bidder December 17, 2011 Issuance of Notice of Award December 22, 2011 Signing of Concession Agreement* January 2012 (last week) Design* February 2012 to May 2012 Construction* June 2012 to July 2013 Commercial Operation* August 2013 Compiled by: WBF *- estimates based on interviews and press releases.

THE 2 SEGMENTS OF DAANG-HARI SLEX LINK Total Length: 2.3 kilometers, will start at Km 0 at the Daang Hari–Daang Reyna junction I in , Cavite, running generally eastward, Segment 1 passing through the National Bilibid Prison Reservation, and ending at Km 2+300. Civil Works Schedule: June 2012 – December 2012 Total Length: of 1.7 kilometers, will start at the end point of segment 1, Km 2+300, and will end at approximately Km 4+000 to Segment 2 connect with the Susana Heights of the SLEX. Civil Works Schedule: December 2012 –July 2013

PROPOSED TOLL RATES FOR DAANG-HARI-SLEX Class 1 vehicles (jeepneys, pickup trucks, vans and cars) P 17.00 Class 2 vehicles ( light trucks and buses) P 34.00 Class 3 vehicles ( trailers and large trucks) P 51.00

DAANG HARI-SLEX-C6 STAGE 1 & 2 PROJECT

Philippine Alert December 2011 INFRASTRUCTURE 51

WHAT IT’S ALL ABOUT: THE DAAN-HARI-SLEX LINK PROJECT

Project Description and rationale: a new 4 kilometer, 4-lane paved toll road that will pass through the New Bilibid Prison reservation that will connect Bacoor, Cavite to the South Luzon Expressway (SLEX) thru Susana Heights area. The linkage will complement the proposed Cavite-Laguna Expressway (CALA Expressway, also part of the PPP program) and will address the additional requirement for access between Metro Manila and Cavite where rapid urbanization and worsening traffi c is currently being experienced. Project Components: 2 overpasses; 4 local roads; 1 undercrossing; 1 rotunda; and drainage structures. Implementing Agency: Department of Public Works and Highways (DPWH) Mode of procurement: Solicited Total Project Cost: Php 1.956 Billion (US$ 43.5 Million) Government Support: ROW P 177.3 M IC P 10.635 M New Bridge Across SLEX P 70.5 M Expansion of Toll Plaza P 30.0 M TOTAL P 288.435 M

Sources: DPWH and PPP Center

Inc.(ASDI). The ASDI is a company owned by 2 government- has now included in its public-private partnership (PPP) program. owned and controlled corporations (GOCCs), the Philippine However, the various government agencies (the Department National Construction Corp. (PNCC) with 51% ownership; and the of Transportation and Communication and the Mactan-Cebu National Development Corporation (NDC) with 29% ownership. International Airport Authority) involved in the implementation Both PNCC and NDC had hesitated to relinquish ownership of the project have yet to decide exactly what to do with it of the project to the DPWH for inclusion in the PPP program. – whether to sell the existing lot and facilities and move the The ASDI had spent P325 million for the initial road works. entire airport operations to the Municipality of Cordova where Once completed, the road project will decongest traffi c in parts there is more space for future expansion (see map) and then offer of Cavite, Las Piñas and and will reduce the road the project as a build-operate-transfer (BOT) project; or to stay distance from Daang Hari to the Alabang viaduct by 3 kilometers. in the current location, upgrade the existing facilities through The project will also complement the redevelopment plan for PPP or offi cial development assistance (ODA) fi nancing, the New Bilibid Prison (NBP) (see box for more project details). then privatize operation and maintenance of the facility. For certain companies that have expressed interest (e.g. and Metro Pacifi c Investments Corporation) Keen interest in Mactan-Cebu Int’l Airport whatever way is good. But for some, property developers such as Ayala Land, Inc.; Robinsons Land Inc.; and SM Holdings Project Inc., they prefer the option that requires the transfer of location to have the chance of purchasing the real estate where the ..but the government is uncertain what to do with it. Several of current airport is built for development to other commercial use. the country’s biggest property developers and infrastructure If the government decides to relocate the critical hub to fi rms are keeping a close eye on the Mactan-Cebu Inter- Cordova, the government will likely follow the proposed plan national airport project that has been tentatively scheduled involving the transfer of the Ninoy Aquino International Airport for bidding in 1Q2012. However, the government is unsure to Clark (the money earned from the sale of the old site will be what to do with the project. used to partially fi nance the transfer of operations to the new site). If the government decides to stay, it will follow the same There are several companies eyeing the $180 million pattern it has implemented in the privatization of the Caticlan Mactan-Cebu International Airport Development since it was Airport (currently operated and maintained by San Miguel announced in November 2009 and that the national government Corporation). The government has to decide soon since it has Philippine Alert December 2011 52 INFRASTRUCTURE

PROJECT DETAILS OF THE MACTAN-CEBU AIRPORT Project Description/Rationale: The project involves the redevelopment and upgrading of a passenger terminal building and the essential facilities to cater to international and domestic airline passenger demand, and a new cargo terminal. Due to the steady increase of the traffi c and passenger volume and the introduction of wider-bodied aircrafts coupled with the emergence of modern aviation technology, some airport facilities have become obsolete and inadequate. The Mactan-Cebu Airport Development Project is comprised of the following:

Airfi eld Facilities Terminal Facilities Utilities Runway Extension Power Supply System Passenger Terminal Building and Facilities Taxiways Extension Water Supply System Road (ingress and/or egress) Rapid Exit Taxiways Sewage Treatment Plant Car Park Apron Expansion External Lighting

Implementing Agency: The Department of Transportation and Communication/ Mactan-Cebu International Airport Authority Estimated Project Cost: $180 million Implementation Schedule: 2012 - 2015 Project Timeline: September 2010 – commencement of the $1.4 million feasibility study and master plan preparation for additional terminal and expansion facilities through the KOICA (Korean) assistance. April 2011 – completion of the KOICA-funded feasibility study August 2011 – completion of the KOICA-funded master plan 4Q2011 – Preparation of business cases and bid documents for PPP 1Q2012 – Bidding under PPP 4Q2012 – Contract award

imposed a schedule of 1Q2012 for the bidding of the airport Cebu airport project (see box for details). Apart from being the project. According to the Department of Transportation and busiest and biggest airport complex in the Visayas region, the Communication’s (DOTC) published schedule for the project, if project is the largest airport development on offer under the PPP the bidding for the Cebu airport happens in 1Q2012, it expects program (followed by the Clark Airport Development, whose construction to begin immediately after the contract is awarded, total civil works cost – terminal plus supporting infrastructure –is and the project completed by 2015 (see box for details). With estimated at $150 million). The rest of the airport developments the existing uncertainty however, the tentative schedule of on offer under the PPP program are for privatization through 1Q2012 is unrealistic. In the best-case scenario, the project will the award of the operations and maintenance (O&M) contract. be bidded out in 4Q2012 and awarded in 1Q2013, following the outcome of the privatization of the Laguindingan Airport in Misamis Oriental or the Puerto Princesa Airport in Palawan. There are many reasons why investors are interested in the

Philippine Alert December 2011 INFRASTRUCTURE 53

WHY THE INTEREST IN MACTAN-CEBU AIRPORT? f Passenger traffi c average annual growth is 13.45%. Capacity per annum is 4.5 million. Five local and six international airlines use the airport. Estimated passenger arrivals to grow to 5.8 million in 2020, and 6.4 million in 2025.

f A total of 810,673 foreign and local tourists visited Cebu from January to May in 2011, 10.37% higher than the 734,531 visitors it had for the same period in 2010. f Percentage share of visitor arrivals from Mactan-Cebu Airport grew from 10.49% in 2005 to 12.17% in 2009, making it the second busiest international airport in the country. f 5,631 hotel rooms are expected to open between 2010 and 2013. f Malaspascua and Bantayan Islands in Northern Cebu are fast becoming major destinations for diving and water sports activities. f Investments in accommodation and travel and tour operation are expanding.

Source: Department of Tourism & Department of Transportation and Communication

Philippine Alert December 2011 54 INFRASTRUCTURE

STATUS OF BIG TICKET INFRASTRUCTURE PROJECTS AS OF DECEMBER 2011

IMPLEMENTING FUNDING CIVIL WORKS PROJECT TITLE PROJECT COST STATUS / ISSUES AGENCY SOURCE TIMEFRAME Ayala Corp. won the bidding for the project with a bid offer of P902 million versus South Expressway Link Consortium’s P608-million offer. Ayala set to team up with Spanish Daang Hari-SLEX Link Road Project DPWH PPP 2012 – 2013 P1.96 billion engineering fi rm Getinsa for the project. Construction of Phase 1 is slated to begin on June 2012 and Phase 2 on December 2012. Swiss Challenge scheduled for November did not take place and is now expected by mid-2012 as DPWH awaits ROW confi rmation from DOTC, owner of the air rights over the NLEX-SLEX Connector Road DPWH PPP 2014-2016 P20.18 billion PNR. MPTC-proposed connector road will be constructed over a segment of the railway. Project under negotiation but redesign suggested to accommodate DOTC’s plan for the Manila-Clark express railway. From original rollout schedule of December 2011, the project is now expected to be bid out on the latter part of 2012, with construction eyed on April 2014. CALA Expressway DPWH PPP 2014-2016 P19.98 billion MPIC, meanwhile, has recently reiterated its interest in participating in the bidding for the CALA expressway, among other PPP projects. 80.43% of civil works accomplished as of November 2011; Laguindingan Airport Privatization completion is eyed by January 2012. Rollout is expected on DOTC PPP 2008-2012 P7.85 billion (O&M contract) the 1st half of 2012, while tentative start of operations is slated for 2Q or 3Q2012. Feasibility study including Environmental Impact Assessment conducted by JICA underway as of October 31. Project has been identifi ed as a priority under Sec. Roxas’ hybrid LRT-2 East Extension Construction DOTC/LRTA GP/ODA 3 years $120 million PPP scheme. Under this, low-interest ODA will be used to fi nance project implementation, and once completed, the project’s O&M will be privatized. LRT-2 East Extension Privatization DOTC PPP 20 years $100 million Tentative rollout slated for 2nd half of 2012 (O&M contract) 2011 rollout did not take place. The project, however, has been identifi ed for inclusion in the hybrid PPP scheme with LRT-1 South Extension DOTC/LRTA PPP 4 years P83.25 billion the Korean, Japanese, and Chinese governments reportedly expressing interest in providing funding. Under the new PPP schedule for 2012, the project was LRT -1 Privatization (O&M contract) DOTC/LRTA PPP 3-4 years $171 million relegated to being “in the pipeline” from being in the 2011 initial list for rollout. Project still under review. The BCDA has announced that all infrastructure and development projects in Clark, including the airport terminal project, must go through competitive bidding Clark Airport Development (Terminal) DOTC PPP 2 years P8 billion instead of the unsolicited mode, pursuant to the BOT Law. Pangilinan-led MPTC and unnamed British fi rms reportedly interested. Runway extension and improvement of terminal facilities, Caticlan Airport Development DOTC PPP 2010-2016 P2.5 billion included in Phase 1B, currently underway. Possibility of ODA fi nancing instead of PPP. The Korean Puerto Princesa Airport Development DOTC PPP 2012-2014 P4.4-billion government says it is willing to fi nance the project. NAIA Expressway Phase II DPWH PPP 2012-2015 P10.6-billion Scheduled bidding is set on January 2012. Layouts for the port extension have been presented for the Davao Sasa Port DOTC PPP -- P5-billion project but it is still in its planning stage. P20-billion (not Remains to be a concept. Currently, there are no concrete Balara Water Hub MWSS PPP -- fi nal) plans for the project. Tarlac-Pangasinan-LaUnion Expressway (TPLEX also known as DPWH PPP 2009-2013 P11.6-billion Accomplished 42.52% of the project. TLUTE) To receive OGCC opinion on direction of implementation Bulacan Bulk Water Supply Project MWSS PPP -- -- whether funding source would be PPP or other options. There is a possibility to commence planning stage in 2012. Government issued Supplemental Toll Operation Agreement SLEX Extension to City DPWH PPP 2013-2016 P9.5-billion (STOA) to SLTC to operate as toll road for recovering investment with rate of return. Team from Singapore’s Changi Airport visited NAIA in NAIA Complex Rehabilitation and December to study the process fl ow and the conduct of Upgrade (includes T1, T2, T3 and DOTC GOP 2012-2013 P1.16-billion daily operations of the terminals. Results of the study Manila Domestic Airport) expected in early to mid-January 2012. Majayjay Water Project LWUA PPP -- -- This is still under preparatory stage. Feasibility study and master plan preparation completed Mactan Terminal 2 Airport in August 2011; Preparation of business caase and bid DOTC PPP 2012-2015 -- Development documents in 4th quarter of 2011; PPP bid by 1st quarter of 2012; Contract award by 4th quarter of 2012.

Philippine Alert December 2011