Davao, Iloilo, Laguindingan, Bacolod-Silay and New (Panglao) AIRPORTS DEVELOPMENT, OPERATIONS AND MAINTENANCE PROJECTS ______

Pre-Qualification Conference

13 March 2017 1 Outline of Presentation

Development Objective

Background of Airports

Project Description & Scope

Bidding Process

Instructions to Prospective Bidders

Way Forward

2 Airport Projects Development Objective

To improve services at the respective key regional airports including required enhancement of airside and landside facilities at the respective airports by granting concessions to private sector proponents.

3 Location- Airports

Iloilo Airport Estimated Cost: New Bohol PHP 30.4 Bn Airport Passenger Traffic (2016): Estimated Cost: ~1.94 Mn PHP 4.57 Bn Passenger Traffic () : 0.9 Mn

Bacolod-Silay Airport Estimated Cost: Davao Airport PHP 20.26 Bn Estimated Cost: Passenger Traffic (2016): PHP 40.57 Bn ~1.53 Mn Passenger Traffic (2016): ~3.55 Mn Estimated Cost: PHP 14.62 Bn Passenger Traffic (2016): ~1.80 Mn 4 Davao International Airport

 Davao airport is located in Catitipan, Barangay Buhangin, Davao City.

 The Davao airport has been operational for more than 15 years

 In terms of passenger traffic throughput, it is the third largest Passenger Traffic airport in the ~3.55 (2016) in Mn CAGR for the period 2007-16 ~9.78%  It provides both domestic and international connectivity Cargo Traffic (2016) in MTs 53,659 CAGR for the period 2007-16 ~1.84%

5 Iloilo International Airport

 Iloilo International airport is located in Cabatuan, Province of Iloilo (Western Visayas region)

 It commenced operations in 2007 and is one of the recently completed airports in Philippines with modern facilities

Passenger Traffic ~1.94  In terms of passenger traffic (2016) in Mn throughput, it is the fifth largest airport in the Philippines CAGR for the period 2007-16 ~7.62% Cargo Traffic (2016) in MTs 13,339

 It provides both domestic and CAGR for the period 2007-16 ~3.13% international connectivity)

6 Laguindingan International Airport

 Laguindingan International airport is located on the northern tip of Misamis Oriental and is approximately 45 kilometers from Cagayan de Oro city and approximately 65 kilometers from Iligan city

 It commenced operations in June 2013 replacing the old Lumbia Airport Passenger Traffic ~1.80  It is the sixth largest airport in the (2016) in Mn Philippines in terms of passenger traffic CAGR for the period 2007-16 ~9.72% handled Cargo Traffic (2016) in MTs 20,486

CAGR for the period 2007-16 ~5.73%

7 Bacolod-Silay Airport

 Bacolod Airport is located in Silay City, Negros Occidental (Western Visayas region)

 It commenced operations in 2008 and is one of the recently completed airports in Philippines with modern facilities

Passenger Traffic ~1.53  In terms of passenger traffic (2016) in Mn throughput, it is the eighth largest CAGR for the period 2007-16 ~7.75% airport in the Philippines Cargo Traffic (2016) in MTs 16,534

CAGR for the period 2007-16 ~8.24%

8 New Bohol International Airport

 New Bohol airport is to be located in Panglao Island and shall replace the existing Tagbilaran Airport

 Tagbilaran airport is an important airport in the Philippines with largely tourist–driven traffic

 The airport is expected to have a Passenger Traffic (2016) in Mn ~0.9 design capacity of ~1.958 million (for existing Tagbilaran Airport) passengers CAGR for 2007-16 ~10.88% Terminal Design Capacity in 1.958 Mn Cargo Traffic (2016) in MTs 4,138

9 Existing Facilities at the Airports

Laguinding Bacolod- Davao Iloilo New Bohol an Silay Total Area 217 188 354 187 220 (hectares) Terminal Floor Area 22,683 13,700 7,184 6,187 13,337 (sq.m.) 3000 m 2500 m 2002 m 2500 m Runway 2100 m x 45m x 45m x 45m x 45m x 45m Apron Area 74,250 48,210 46,150 25,300 49,335 (sqm)

10 Project Description: Scope of Work (1/3)

1. Taking-over the operations and maintenance of the existing facilities (newly built facilities in the case of the New Bohol Airport Project) from CAAP, excluding, in the case of the Davao Airport Project, the old passenger terminal, and except as otherwise provided in the Bidding Documents.

2. Enhancement/development of landside facilities, including passenger and cargo terminal(s), along with all associated infrastructures and facilities

3. Enhancement/development of airside facilities to meet the enhanced scale of operations of the airports

4. Installation of all required equipment and associated facilities

11 Project Description: Scope of Work (2/3)

5. Provision of required works with respect to the existing terminals (either facilities already in operation, as in the case of the Davao, Iloilo, Laguindingan Airport and Bacolod-Silay, Projects, or newly-constructed facilities, as in the case of the New Bohol (Panglao) Airport Project), along with all associated infrastructure and facilities, necessary to handle operations until the expansion of the existing terminals and/or the development of new passenger terminal(s).

6. Operations and maintenance of landside facilities (including, among others, the passenger terminals) and associated airside facilities (including, among others, the apron, runway and taxiway), during the entire concession period

12 Project Description: Activities not included in Scope of Work* (3/3)

Activities / Responsibilities of CAAP / DOTC: 1. Air Traffic Control (“ATC”) Services 2. Air Navigation Services (“ANS”) 3. Provision and operations of ATC and ANS facilities 4. Necessary upgrade and maintenance of ATC and ANS facilities 5. Existing CAAP administration building 6. Existing CAAP staff houses Further, the following services are not included in the scope of the Projects and would continue to be provided by the relevant agencies at the airports: 1. Customs 2. Immigration 3. Security 4. Quarantine 5. Services provided by the Philippine Overseas Employment Administration (POEA) and the Overseas Workers Welfare Administration (OWWA) 6. Other services currently being provided by other Philippine government agencies

13 Project Description: Contractual Framework

Republic Act No. 6957, as amended by Republic Act No. Legal Framework 7718 ("BOT Law”), and its 2012 Revised Implementing Rules and Regulations (“Revised IRR”) PPP Structure Operate-Add-Transfer (“OAT”) Implementing Department of Transportation and Agencies Civil Aviation Authority of the Philippines 30 years in the case of the Davao, Iloilo, Laguindingan and Bacolod-Silay Airport Projects Concession Period 35 years in the case of the New Bohol (Panglao) Airport Project Right of Way and Government will grant appropriate rights to project site Possession of and relevant existing assets Airport Land

14 Bidding Process(1/2)

 Competitive bidding: two-stage bidding process  Instructions to Prospective Bidders (ITPB) for Pre-Qualification of Prospective Bidders for each Airport Project issued through the current process  Evaluation of Pre-Qualification applications and announcement of Pre- Qualified Bidders for the 2nd stage for each Airport Project  Instructions to Bidders (ITB) including Draft Concession Agreements and Minimum Performance Standards and Specifications to be shared with Pre-Qualified Bidders for each Airport Project  Post issuance of final documents, Bid Proposals, including technical and financial proposals, to be invited from Pre-Qualified Bidders for each Airport Project.

15 Bidding Process(2/2)

 Evaluation of Technical Proposals for each Airport Project  Financial evaluation of Technically Qualified bidders for each Airport Project  Announcement of Winning Bidder for each Airport Project  Notice of Award to be issued to the Winning Bidder for each Airport Project

16 ITPB: Key Definitions

AFFILIATE

. A person, corporation or any entity Controlled by or Controlling the Prospective Bidder or Consortium Member (as the case may be) or associated with the Prospective Bidder or Consortium Member (as the case may be) under common ownership and Control ELIGIBLE PERIOD . A period of last 12 years ending on 31st December 2016 ELIGIBLE PROJECTS . Projects in the Eligible Sector with minimum development costs of One Billion Pesos. Developments costs must be adjusted to current prices using the Philippine Statistics Authority’s Consumer Price Index as provided in the ITPBs. ELIGIBLE SECTORS

. Eligible Sectors are airports, highways, expressways, power, ports, railways, metro rail, industrial parks/ estates, logistic parks, and real estate development

17 ITPB: Key Definitions

CONTROL . The power to direct or cause the direction of the management policies and actions of a body corporate, whether through:

i. ownership of at least fifty percent (50%) plus one (1) of either or a combination of the following: (i.a) the total outstanding voting shares, or (i.b) the voting rights, in another entity, or

ii. the ability to elect a majority of the members of the other entity’s board of directors, or

iii. any legal agreement or legal agreements, including a voting trust or other voting agreements

In determining ownership of shares in a corporation, shares held both directly and indirectly will be counted.

18 ITPB: Key Definitions

AIRLINE . An individual, partnership, corporation, or any other juridical entity that is a holder of any of the following permits issued by the Civil Aeronautics Board ("CAB") of the Philippines:  A valid and effective Permit to Operate Scheduled International Air Transportation Services; or  A valid and effective Permit to Operate Scheduled Domestic Air Transportation Services; or  A valid and effective Foreign Air Carrier's Permit and providing scheduled passenger services. For avoidance of doubt, an individual, partnership, corporation, or any other juridical entity providing dedicated cargo transport services shall not be deemed an Airline for the purposes of this ITPB AIRLINE- RELATED ENTITY . An individual, partnership, corporation, or any other juridical entity that: (1) is an Airline; or (2) is an Affiliate of an Airline

19 ITPB: Qualification Requirements

 Legal Qualification Requirement

 Technical Qualification Requirement

. Development Experience . Design and Engineering Experience . Operations and Maintenance Experience, and . Qualified Key Personnel  Financial Qualification Requirement

20 Legal Qualification Requirement (1/2)

 Legal Qualification Requirement: A Prospective Bidder must be . An individual, partnership, corporation or any other juridical entity; or . A Consortium whose members are individual(s), partnership(s), corporation(s) or any other juridical entity(ies) . Subject to the other provisions detailed in the ITPB

 Participation of Airline Related Entities . In the Consortium  Airline Related Entity/Entities cannot own or be proposed to own an aggregate of more than 33% total equity in the Consortium

21 Legal Qualification Requirement (2/2)

 Participation of Airline Related Entities . Project SPC  Airline-Related Entity/Entities in the Project SPC cannot own or be proposed to own an aggregate of more than 33% total equity in any Project SPC for the duration of the Concession Period

. In the Facility Operator  Airline-Related Entity/Entities in the Facility Operator cannot own or be proposed to own an aggregate of more than 33% of the total equity in a Facility Operator if such Airline-Related Entity was the entity that fulfilled the Winning Bidder’s Operations and Maintenance Experience as provided in Section II-09 (2)(c);

22 Technical Qualifications: Development Experience

 Development Experience: must have satisfactorily undertaken the development of Eligible Projects in terms of overall responsibility for designing, engineering, and construction of Eligible Projects during the Eligible Period, such that  Sum total of the capital costs incurred for Eligible Projects is at least PhP 5.0 Billion; and there is  At least one Eligible Project for which the capital costs incurred is at least PhP 2.0 Billion  Entities which fulfill this requirement  An individual, partnership, corporation, or any other juridical entity, the Prospective Bidder itself or its Affiliate; or  In case of a Consortium, a Consortium Member having at least thirty- three and one third percent (33 1/3%) interest in the Consortium or such Consortium Member’s Affiliate.  Must propose at least one, and at most five, Construction Contractors

23 Technical Qualifications: Design and Engineering Experience (1/3)  Design and Engineering Experience: must have satisfactorily undertaken during the Eligible Period, detailed architectural design and engineering, including airport planning, construction planning and phasing in implementing projects, for airport terminal facilities and associated infrastructure for at least one (1) International Airport possessing with the following criteria for respective airports:

Davao Iloilo Laguindinga Bacolod New Bohol n Passenger capacity of at 4 Million 3 Million 3 Million 2 Million 2 Million least Terminal area 20,000 sqm 14,000 sqm 14,000 sqm 7,000 sqm 7,000 sqm of at least Handling has the capability to handle Code 4E aircrafts, demonstrating works capability undertaken for landside facilities such as passenger terminals and associated facilities, and airside facilities such as runway, taxiways, aprons, etc.

24 Technical Qualifications: Design and Engineering Experience (2/3)

 For expansion projects, the design and engineering experience must involve upgrading the International Airport to meet all the criteria specified earlier (for respective airports), and additionally involve at least any of the following criteria (for respective airports: Davao Iloilo Laguinding Bacolod New an Bohol Increase in 1 Million 750,000 750,000 500,000 500,000 passenger capacity of at least Increase in terminal 5,000 sqm 3,500 sqm 3,500 sqm 1,700 sqm 1,700 sqm area of at least Upgrade in handling upgrade that allows the airport to handle Code 4E aircrafts capability

25 Technical Qualifications: Design and Engineering Experience (3/3)

 Entities which fulfill this requirement

 An individual, partnership, corporation, or any other juridical entity, the Prospective Bidder itself or its Affiliate or a nominee Design and Engineering Contractor; or  In case of a Consortium, a Consortium Member or its Affiliate or a nominee Design and Engineering Contractor

• If fulfilled by a Design and Engineering Contractor, at least one and at most five, Design and Engineering Contractors to be proposed each of which must have the relevant experience and possess the necessary licenses

26 Technical Qualifications: Operation and Maintenance Experience(1/2)

 Operation and Maintenance Experience: must have experience in either  O&M of an International Airport for a period of at least three (3) consecutive calendar years anytime within the Eligible Period , with such International Airport having handled an Annual Passenger Throughput of at least (for respective airports):

Davao Iloilo Laguindingan Bacolod New Bohol

4 Million 3 Million 3 Million 2 Million 2 Million

27 Technical Qualifications: Operation and Maintenance Experience(2/2)

. Entities which fulfill this requirement

 An individual, partnership, corporation, or any other juridical entity, the Prospective Bidder itself or its Affiliate; or  In case of a Consortium, a Consortium Member having at least ten percent (10%) interest in the Consortium or such Consortium Member’s Affiliate

28 Technical Qualifications: Qualified Key Personnel

. The Prospective Bidder, the Consortium Members, and/or the proposed Subcontractors must have, among them and their Affiliates’ personnel, with qualifications and experience as follows:  At least 1 person with a minimum of 10 years of experience and having had the overall responsibility for the development of at least 3 Eligible Projects, each with a project cost of at least Php 500 Million, with at least 1 of such Project having a project cost of at least Php 1 Billion, and with at least one of such Project being an airport  At least 1 person with a minimum of 10 years of experience and having been responsible for the coordination of the operations and maintenance of at least 1 airport with an Annual Passenger Throughput of at least 2 million passengers per annum for a period of at least 3 consecutive calendar years anytime within the Eligible Period  At least 1 person with a minimum of 10 years experience and having been responsible for the commercial development and marketing of an airport with an Annual Passenger Throughput of at least 2 million passengers per annum for a period of at least 3 consecutive calendar years anytime within the Eligible Period

29 Financial Qualification Requirement(1/2)

 Financial Qualification Requirements: A Prospective Bidder must fulfill the following requirements: . For a Prospective Bidder  Net Worth of at least:

Davao Iloilo Laguindingan Bacolod New Bohol Php 1.5 Billion Php 1 Billion Php 1 Billion Php 1 Billion Php 1 Billion

..or its foreign currency equivalent as of its latest audited financial statements, or  A Set-Aside Deposit equivalent to the same amount.

. For a Consortium  the Net Worth of Consortium Members who have an equity share of at least twenty-five percent (25%) each in the Consortium may be added

30 Financial Qualification Requirement(2/2)

. Entities which fulfill this requirement

 An individual, partnership, corporation, or any other juridical entity, the Prospective Bidder or its Affiliate; or

 In case of a Consortium, Consortium Member with at least twenty-five per cent (25%) equity interest in the Consortium, or such Consortium Member’s Affiliate

31 Lock-Up Rules During the Bidding Process* (1/2)

 Prospective Bidder as a Corporation, Partnership or Other Juridical Entity  No restrictions imposed on the ownership structure; provided that, the Prospective Bidder ensures its continued eligibility with respect to the individual Technical and Financial Qualification Requirements as provided in the Invitation Documents

 Prospective Bidder as a Consortium  Lead Member and the Consortium Member proposed to meet the Development Experience may not withdraw or reduce their percentage interests in the Consortium as declared in the Consortium`s Qualification Documents  Other members of the Consortium may withdraw/ be substituted prior to the Bid Proposals Submission Date

*These rules shall apply from the Qualification Documents Submission Date to the Bid Proposals Submission Date 32 Lock-Up Rules During the Bidding Process* (2/2)

 Prospective Bidder as a Consortium  In case of substitution, the Prospective Bidder has to ensure its continued eligibility with respect to the individual Technical and Financial Qualification Requirements as provided in the Invitation Documents  Any change in the composition of the Consortium and/or in the list of Subcontractors must be approved by the PBAC

*These rules shall apply from the Qualification Documents Submission Date to the Bid Proposals Submission Date 33 Why Invest?

 Government commitment for the project Focus on development of the country’s transport infrastructure through private sector participation  Strong Legal Framework – BOT Law Enunciates the policy of the state recognizing the role of the private sector as main engine for national growth and development  Strong project fundamentals Attractive location of the airport with significant business and tourist potential  NEDA* Board-approved projects All projects have been approved by NEDA  Optimal PPP structuring balanced risk sharing and competitive returns to private sector proponents  PPP Agreement for 30/35 years scope for long term investment & returns  Award through competitive bidding transparency and equality for all prospective private sector bidders/investors READY FOR BUSINESS. *NEDA - National Economic & Development Authority 34 Way Forward: Expected Timelines

Activity Expected Timelines Qualification Documents Submission 11 May 2017 Date within 5 calendar days from Notification of results of evaluation of approval of Pre-Qualification Qualification Documents results Issuance of Instructions to Bidders, Draft Concession Agreement & Draft 1 June 2017 MPSS Bid Proposals Submission Date 8 December 2017 Issuance of Notice of Award by January 2018 within 5 calendar days from receipt of Signing Date of Concession the Notice of Complete Compliance with Agreement all Post-Award Requirements

Note that these timelines are tentative and may be subject to change. The final timelines shall be communicated at the appropriate time, as necessary. 35 Way Forward: Pre-Qualification Submission

11 May 2017, Before 2:00 PM at Pre-Qualification, Bids and Awards Committee for Department of Transportation Civil Aviation Authority of the Philippines, [______] Airport Project Unit 164, 16/F, The Columbia Tower, Ortigas Avenue, Mandaluyong City Manila, Philippines

36 THANK YOU!

37