- Airport Public-Private Partnership (PPP) Project

Republic of the

DEPARTMENT OF TRANSPORTATION and CIVIL AVIATION AUTHORITY OF PHILIPPINES

BACOLOD-SILAY AIRPORT DEVELOPMENT, OPERATIONS AND MAINTENANCE PROJECT: Project Information Memorandum Project Information Memorandum for Bacolod-Silay Airport LIST OF ABBREVIATIONS

BSP Bangko Sentral ng Pilipinas or Central Bank of the Philippines CAAP Civil Aviation Authority of the Philippines CAB Civil Aeronautics Board DOT Department of Tourism of the Philippines DOTr Department of Transportation EO Executive Order GDP Gross Domestic Product IRR Internal Rate of Return ICAO International Civil Aviation Organization ILS Instrument Landing System IRR Implementation Rules and Regulations ITB Instructions to Bidders ITPB Instructions to Prospective Bidders LGU Local Government Unit NEDA National Economic and Development Authority OAT Operate-Add-and-Transfer O&M Operations and Maintenance PBAC Pre-Qualification, Bids and Awards Committee PIM Project Information Memorandum PPP Public Private Partnership RA Republic Act ROW Right of Way

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Disclaimer

The information contained in this Project Information Memorandum (PIM)or subsequently provided to Prospective Bidder(s), whether verbally or in documentary or any other form, by or on behalf of DOTr/CAAP or any of its employees or advisors, is provided to the Prospective Bidder(s) on the terms and conditions set out in the Instructions to Prospective Bidders(ITPB) and such other terms and conditions subject to which such information is provided.

This document is not an agreement and is neither an offer nor invitation by DOTr/CAAP to the Prospective Bidders (parties interested in bidding for the Project) or any other person. The purpose of this document is to provide interested parties with information that may be useful to them in consideration of the Bacolod-Silay Airport Development, Operations and Maintenance Project (the “Project”). This document includes statements, which reflect assessments arrived at by DOTr/CAAP in relation to the Project. Such assessments and statements do not purport to contain all the information that each Prospective Bidder may require. This document may not be appropriate for all persons, and it is not possible for DOTr/CAAP, its employees or advisors to consider the investment objectives, financial situation and particular needs of each party who reads or uses this document. The assessments, statements and information contained in this document may not be complete, accurate, adequate or correct. Each Prospective Bidder should therefore, conduct its own investigations and analysis and should check the accuracy, adequacy, correctness, reliability and completeness of the assessments, statements and information contained in this document and obtain independent advice from appropriate sources.

Information provided in this document to the Prospective Bidder(s) 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. DOTr/CAAP accepts no responsibility for the accuracy or otherwise for any interpretation or opinion on law expressed herein.

DOTr/CAAP, its employees and advisors make no representation or warranty and shall have no liability to any person, including any Prospective Bidder, under any law, statute, rules or regulations or tort, principles of restitution or unjust enrichment or otherwise for any loss, damages, cost or expense which may arise from or be incurred or suffered on account of anything contained in this document or otherwise, including the accuracy, adequacy, correctness, completeness or reliability of the document and any assessment, assumption, statement or information contained therein or deemed to form part of this document or arising in any way with pre-qualification of Prospective Bidders for participation in the bidding process.

DOTr/CAAP also accepts no liability of any nature whether resulting from negligence or otherwise howsoever caused arising from reliance of any Prospective Bidder upon the statements contained in this document.

DOTr/CAAP may, in its absolute discretion but without being under any obligation to do so, update, amend or supplement the information, assessment or assumptions contained in this document and any of the Invitation Documents, comprised of i) the Invitation to Pre-Qualify and Bid, ii) this Project Information Memorandum (PIM) and iii) the Instructions to Prospective Bidders. Further, the DOTr, its employees and advisors shall not be liable to any Prospective 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 InvitationDocuments; or (iii) provide any information regarding any inaccuracy, error, omission, defect orinadequacy in the Invitation Documents.

The issuance of this PIM and the Instructions to Prospective Bidders does not imply that DOTr/CAAP is bound to select and shortlist pre-qualified bidders for bid stage or to appoint the selected bidder or private sector proponent, as the case may be, for the Project and DOTr/CAAP reserves the right to reject all or any of the pre-qualification documents or bids without assigning any reason whatsoever.

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The Prospective Bidder shall bear all its costs associated with or relating to the preparation and submission of its Pre-Qualification Documents including but not limited to preparation, copying, postage, delivery fees, expenses associated with any demonstrations or presentations, which may be required by DOTr/CAAP or any other costs incurred in connection with or relating to its Pre- Qualification Documents. All such costs and expenses will remain with the Prospective Bidder and DOTr/CAAP shall not be liable in any manner whatsoever for the same or for any other costs or other expenses incurred by a Prospective Bidder in preparation or submission of the Pre-Qualification Documents, regardless of the conduct or outcome of the bidding process.

In purchasing the Invitation Documents, each Prospective Bidder accedes to the bid parameters, terms and obligations provided therein. In no case shall any Prospective Bidder be allowed to modify the bid parameters even if, in its opinion, it offers better terms than that provided herein.

Page 4 of 16 ______Project Information Memorandum for Bacolod-Silay Airport Scope and Structure of the Project

Introduction

The DOTr and CAAP propose to appoint a private sector proponent under an appropriate PPP arrangement to undertake the operations and maintenance of the Bacolod-Silay airport along with constructing required additional facilities for a defined concession period. Key objectives of appointing a private sector proponent are: • Increased operating efficiency of the airports; • Increased networking and marketing of the airports; • Improved net financial benefits to government; and • Improved customer amenities.

The details of the scope of project, legal framework for the project and proposed contractual arrangements are detailed in the following sections.

Scope of the Project The scope of the Project for the private sector proponent under the PPP arrangement would cover: a. Taking-over the operations and maintenance of the existing facilities from CAAP; b. Expansion/construction of new passenger terminal(s), along with all associated infrastructures and facilities as per applicable standards; c. Installation of all the required equipment and associated facilities as per applicable standards; d. Provision of required works with respect to the existing terminal along with all associated infrastructures and facilities as per applicable standards, to handle operations until the development of the new passenger terminal(s); e. Operations and maintenance of the passenger terminals (new and existing, as may be decided by DOTr/CAAP) during the entire concession period; f. Enhancement/development of airside facilities to meet the enhanced scale of operations at the airport; and g. Operations and maintenance of all enhanced airside facilities, including, among others, the apron, runway and taxiway.

The following would be excluded from the scope of the private sector proponent and DOTr/CAAP would continue to be responsible for: a. Air Traffic Control and associated services b. Air Navigation Services and associated services c. Provision and operations of ATC and ANS facilities d. Necessary upgrade and maintenance of ATC and ANS facilities

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e. Existing CAAP administration building f. Existing CAAP staff house

Legal Framework applicable to the Project Republic Act No. 6957, as amended by Republic Act No. 7718 ("BOT Law”), and its 2012 Revised Implementing Rules and Regulations (“Revised IRR”), is the primary legal framework for Public-Private Partnerships (“PPP”) in the Philippines. The BOT Law enunciates the policy of the state to recognize the indispensable role of the private sector as the main engine for national growth and development. It further declared that the government shall provide the most appropriate incentives to mobilize private resources for the purpose of financing the construction, operation and maintenance of infrastructure and development Project normally financed and undertaken by the Government of the Philippines.

Proposed Specifications of Contractual Arrangements

The sections below provide a brief outline of various aspects that are being considered in terms of the structuring of the Project. The final details shall be provided as part of the draft contract during the bid stage after the Pre-Qualification process:

PPP Structure An Operate-Add-Transfer arrangement is being evaluated / considered for the Project. Under this proposed structure, the private sector proponent shall take over the operations and maintenance of the Bacolod-Silay Airport, undertake immediate expansion of various facilities and also undertake required capacity augmentation at the airport that may be required to cater to future demand throughout the contractual term. At the end of the concession period, the private sector proponent would transfer the airport facilities to DOTr and CAAP.

Concession Period

The PPP concession shall be for a period of 30 years.

Implementing Agency The implementing agencies for the Project would be DOTr and CAAP. As highlighted earlier, CAAP would continue to provide Air Navigationand Air Traffic Control and associated services at the Bacolod-Silay Airportthroughout the concession period.

Performance Specifications DOTr/CAAP proposes to include Minimum Performance Standards and Specifications (MPSS) in the concession agreement. The private sector proponent would be required to operate the Bacolod-Silay Airport as per such defined MPSS. Further, the private sector proponent would also be required to undertake capacity augmentation at the respective airports to ensure compliance with the defined MPSS.

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Tariffs at the Airport When the operation and management of the respective airports will be ceded to the private sector proponent, DOTr/CAAP will concession the levying of various charges to the private sector proponent. DOTr/CAAP will state in the concession agreement with the private sectorproponent, the manner by which airport fees and charges will be levied by the private sectorproponent, consistent with applicable laws as well as industry standards and practices. Broadly, DOTr/CAAP contemplate specifying a base tariff as identified upfront and also specify tariff increments with reference to a parametric formula.

Incentives Section 10 of the BOT Law extends to private sectorproponents the Investment Incentives under the Omnibus Investments Code upon registration with the Board of Investments (“BOI”), depending on the level of capital requirements.

Continuation of Existing Contracts When the private sectorproponent takes over the operation of the airports, subject to final approvals, it is currently proposed that the existing contracts will be novated by CAAP to the private sectorproponent and once the private sectorproponent assumes CAAP’s existing contracts, it would have the option to allow the contracts to expire, renegotiate the contracts, or terminate the contracts on various grounds, within the boundaries of legal requirements. The private sectorproponent would also be allowed to enter into new contracts for the provision of services should there be a need to provide additional services to the airport clientele or should there be additional space to lease out.

Page 7 of 16 ______Project Information Memorandum for Bacolod-Silay Airport Bacolod-Silay Airport Background

Bacolod-Silay Airport commenced operations in 2008 and is one of the recently completed airports in the Philippines with modern facilities.The Airport is located in Silay City, ( region) and generally caters to traffic for - including Bacolod-Silay city - which is one of the most populous cities in the Western Visayas region.

Bacolod-Silay Airport presently provides direct connectivity to 4 domestic destinations. The airport does not currently operate any international flights, but is soon expected to commence international operations.

Figure 1: Location and Connectivity at Bacolod-Silay Airport

Source: CAB Schedule

Catchment Area for Bacolod-SilayAirport Bacolod-Silay Airport mainly caters to a catchment area including the Negros Occidental province and the Bacolod-Silay city. The province is in the newly formed (NIR) which is located in central part of the country.

Negros Island Region and Negros Occidental Province

As indicated earlier, the newly formed Negros Island Region (NIR) is located in the central part of the Philippines and lies between the islands of and to the west and to the east. Spread over a total area of 13,309.6 square kilometers and is comprised of two provinces and one urbanized city namely: • Negros Occidental – Province

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• Negros Oriental – Province • Bacolod-Silay – Urbanized City

The Province of Negros Occidental is located in the western side of Negros Island with a total land area of 7,926.06 square kilometer. The Negros Island is the fourth largest island in the Philippines. The length of the province – north to south is approximately 375 kilometers. Negros Occidental is bounded by: • Visayan in the north • in the south • Province of Negros Oriental and Tanon Strait in the east • Panay Gulf in the west

The province is comprised of 6 districts namely, First District, Second District, Third District, Fourth District, Fifth District and Sixth District, 19 Municipalities and 12 cities. Bacolod-Silay City is the city capital of the province of Negros Occidental. Bacolod- Silay City lies on the northwestern part of the Province and on the western side of Negros Island. The Bacolod-Silay airport is located in the Silay City and is approximately at a distance of 5.5 kms from Silay City and 25 kms from Bacolod- Silay City.

Population – Bacolod-Silay City and Negros Occidental Province The province of Negros Occidental is the more populated province in Negros Island region contributing 57% of the region’s population. Bacolod-Silay City accounts for a population of approximately 0.5 million and is the most populous city. The population of the provinces in Western Visayas region in 2010 is highlighted in the table below.

Table 1 : Population of Provinces / Cities in the Negros Island Region of the Philippines Province / Cities Population (2010) % Share

Negros 2,396,309 57% Occidental Negros Oriental 1,286,666 31%

Bacolod-Silay 511,820 12% City Total 4,194,795 Data on province wise population is available only upto 2010 Source: Philippine census data available at http://www.census.gov.ph/ The population of the Province of Negros Occidental grew at a CAGR of ~ 1.15% over the period 2000–2010. The population growth of the capital city - Bacolod-Silay City has been higher as compared to the Province, with the capital city growing at a rate of 1.78% over the period of 2000-2010.

Economy – Negros Island Region and Negros Occidental province The regional economy of Visayas grew at a CAGR of 5.44% over the period 2003 to 2012, which is broadly in line with the GDP growth of Philippines (5.17% over the same period). Trends in the economic growth of Visayas have been presented in the following figure.

Figure 2: GRDP of Visayas

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1000.0 7% 8% 6% 5% 5% 6% 6% 800.0 4% 3% 600.0

Php Billions 400.0 200.0 0.0 12345678910

Visayas GRDP % Growth

Source: National Statistics Coordination Board, http://www.nscb.gov.ph/grdp/2012/dataCharts/default.asp Western Visayas region (where Negros Occidental used to be part of) and region are the largest contributors to the regional economy accounting for 32% and 50% of the GRDP of Visayas region respectively. The Province of Negros Occidental is home to many industries and an established agriculture sector. The province is one of the largest producers of sugar in the country and is known as “Sugar-bowl of Philippines”. The region houses few of counties’ largest sugar mills. Apart from sugar, other the key industries in the region including Bacolod-Silay City include: • Business Process Outsourcing • Tourism • Mining • Agri-business Tourism – Bacolod-Silay City and Negros Occidental Province Tourism is one of the main industries in Negros Occidental province and is fast growing. Tourist arrivals in Bacolod-Silay are as shown in the figure below. Domestic tourists have increased at a CAGR of 8.58% in the past decade.

Figure 3: Tourist Arrivals in Bacolod-Silay

300 400 250 350 300 200 250 150 200 Thousands Thousands 100 150 100 50 50 0 0

Foreign Domestic

Source: DOT and local tourism offices

Few of the tourist locations at Negros Occidental are as follows: • Museum • Chapel of Cartwheels • Chapel of Sta. Clara • Church of Vito • Hofileña Heritage House

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• Lacawon Island • Mag-aso Falls • Mt. • Mt. Malapantao • Negros Museum • San Sebastian Cathedral • Shay Steam Train • St. Joseph the Worker • Church • The Ruins • Tinagong Dagat

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Airport’s Location and Existing Layout

Bacolod-Silay Airport is located 5.5 km north west of Silay City in the Province of Negros Occidental (Western Visayas Region). The existing layout of the airport is presented below. Figure 4: Existing Layout of Bacolod-SilayAirport

Existing Layout

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Bacolod-Silay Airport – Historic Traffic Assessment

Over the last 15 years, total passenger traffic at Bacolod-Silay airport have grown from about 0.53 million in 2001 to about 1.53 million in 2016. The historical traffic at Bacolod- Silay airport is presented in the table below.

Table 2:Historic Traffic at Bacolod-Silay Airport Year Passenger Traffic Cargo Traffic (in MTs)

1998 454,453 5,853 1999 455,199 6,415 2000 578,960 6,268 2001 533,139 6,410 2002 509,708 7,097 2003 523,312 6,391 2004 572,368 7,115 2005 551,922 6,991 2006 663,881 7,443 2007 781,454 8,105 2008 840,711 8,268 2009 1,041,619 11,674 2010 1,041,709 11,674 2011 1,198,637 12,555 2012 1,305,790 10,789 2013 1,329,799 11,778 2014 1,449,655 13,702 2015 1,465,656 16,221 2016 1,530,280 16,534 CAGR last 5 Years 4.05% 11.26% CAGR last 10 years 7.75% 8.24% Source: CAAP

Existing Airport Facilities

Passenger Terminal Building The passenger terminal at Bacolod-Silay Airport is located to the East of the runway. The building has a total floor area of 6,187 sqm (3,273 sqm of footprint) and consists of three levels: • Ground floor with check-in area and arrivals area • 2nd floor with administration offices and three departure holding area with 3 PBBs (Passenger Boarding Bridges) • 3rd floor with retail areas, a viewing deck and airport plant rooms

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Project Information Memorandum for Bacolod-Silay Airport

Table below details the areas of the existing passenger terminal facilities dedicated to passenger processing.

Table 3 - Existing passenger terminal processing areas Area

Ground floor Public concourse 1,800 sqm Baggage inspection area (entrance) 68 sqm Check-in area 395 sqm Airline offices 330 sqm Baggage Reclaim 800 sqm Arrival lobby 314 sqm Second floor Departure hall 90 sqm Security Check (queuing area in 36 sqm Departure hall) Pre-departure lounge 810 sqm CIP lounge 76 sqm VIP room 67 sqm Concession 25 sqm Roof deck floor (public) Concession 43 sqm Observation deck 180 sqm Source: CAAP Airside Facilities The information of the existing airside facilities at the Bacolod-Silay Airport is presented below: Table 4: Existing Airside Information # Particular Description 1. Area 187 hectares 2. Runway Orientation 03/21 direction 3. Runway Length 2002 m 4. Runway Width 45 m 5. Runway Strip Length 3,400m (for both runway ends 03 and 21) 6. Runway Strip Width 315m 7. Stop-way 60m x 45m Asphalt

8. Clearway 640m x 300m for Runway 03 280 x 300m for Runway 21 9. Taxiway 23m Concrete 10. Turning Pads 60m x 67.5m 11. Apron Area 25,300 sqm 12. Passenger Boarding Bridges 3 Passenger Boarding Bridges Source: CAAP

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Project Information Memorandum for Bacolod-Silay Airport

Other Core Airport Facilities

A brief overview of various other core facilities at the airport is given below:

• Car Access and Car Parking

Access to the airport is directly from J.Pitong Ledesma Street, north west of the facilities.The total approximate area dedicated for car parking in Bacolod-Silay Airport is 12,000 sqm and includes more than 400 parking slots: for passengers (350 slots), and ATC staff, taxi stands, etc.

• Cargo

The cargo terminal building (CTB), with 1,660sqmfootprint, is located South of the terminal. The building is located on the landside/airside boundary providing air cargo service to Bacolod-Silay city.

• ATC

The control tower and operations building (CTO) is a 6 storey building located to the North of the passenger terminal. The ATC and technical staff are located within the ATC facility. The total footprint of the facility is approximately 140 sqm.

• Administration Building

The Administration Building (ADM) is a one storey building located next to the CTO building, with a foot print of around 874 sqm. It houses administration (Airport managers, finance and HR) as well as concession units.

• ARFF

The aircraftrescue and firefighting (ARFF) station is located further north of the CTO building with direct road access to the taxiway B. The total facility comprises a one and a half storey with a footprint of 738 sqm. The facility can accommodate 3 rescue fire fighting vehicles fire trucks and one command car, providing category IX (Source: AIP, 3rd May 2012).

• Fuel farm

Regarding the fuelling facilities, Jet A1 or AVGAS are provided on request to Petron.

• Maintenance and utilities

The Power House Building (PHB) is located southwest of the CTO area and has a total floor area of 343 sqm. West of this facility is a Permanent Shed Building (PSB) and to the East is a 154 sqm water tank.

• Sewage treatment plant

The Sewage Treatment Plant (SWP) is sited southwest of the General Aviation facility, with a 122 sqm footprint.

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Project Information Memorandum for Bacolod-Silay Airport

• General Aviation

There are General Aviation facilities on site located South-east of the cargo area, with a dedicated GA building of approximately 1,000 sqm.

Historical Financials Following are the historical financials for Bacolod-Silay Airport:

Table 5: Historical Financials

2010 2011 2012 2013

Total Revenues PHP 168 Million PHP 183 Million PHP 178 Million PHP 200 Million

% of Aero Revenues 91% 92% 93% 85%

Expenses PHP 56 Million PHP 57 Million PHP 99 Million PHP 112 Million

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