republic of the philippines department of public works...
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NAIA Expressway Project
INVESTORS’ BRIEFING24 June 2011
Republic of the Philippines
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
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The Investment Opportunity
• The NAIA Expressway Project, sponsored by theDepartment of Public Works and Highways (DPWH),is one of the priority projects of the Government ofthe Republic of the Philippines (ROP) under itsPublic-Private Partnership (PPP) Program.
• The Project is one of the components of the MetroManila Urban Expressway System that is intended toprovide a high-standard expressway.
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Will facilitate the efficient flowof existing and future traffic toand from the country’s premierinternational and domesticairport, the NAIA Complex.
Will link two major expresswaysserving Metro Manila.
The NAIA Expressway
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The Investment Opportunity
• The Republic of the Philippines (ROP), represented by DPWH, will be the direct counterparty in the Toll Concession Agreement (TCA).
• The Project features a toll rate structure that is competitive and affordable.
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Committed Government Support
• Conduct of a fully transparent and competitive
procurement process following the Philippine
BOT Law and its Implementing Rules and
Regulations.
• Government is prepared to provide financial
support for CAPEX = Government Financial
Contribution
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Committed Government Support
• ROW provided free and clear to
Concessionaire by the pre-agreed timeline to
be defined in the TCA
• Guarantee on the issuance of the Toll
Operations Certificate (TOC) from TRB
• Guarantee on Toll Adjustment application.
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Advisors
• Transaction Advisors: – Development Bank of the Philippines (DBP)– International Finance Corporation (IFC)
• Technical Advisor:– Japan International Cooperation Agency (JICA)
• With assistance from:– Public-Private Partnership Center (PPP Center)
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Advisors• IFC in turn hired specialized consultants to complement
the services offered by the Transaction and Technical Advisors of DPWH:
– expressway technical specialists (LeighFisher),
– international legal consultants (Hogan Lovells Singapore), and
– local legal individual consultants
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Project Description
• Preparation of a Detailed Engineering Design.
• Construction of an additional 4.6 km 4-lane viaduct, including ramps, toll plazas and operating equipment, from NAIA Terminal 3 to Roxas Boulevard, over the existing roads of Sales Avenue, Andrews Avenue, Domestic Airport Road and NAIA Road.
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Project Description
• Adjustments to Phase I (600 meters) to make it compatible with Phase II.
• The Operation and Maintenance of the entire NAIA Expressway (Phase I and Phase II) as an open-system tolled expressway.
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Project DescriptionToll Booth Configuration
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Project Rationale
• Vehicles travelling from the South Luzon Expressway or Skyway to Roxas Boulevard or the Manila-Cavite Expressway have to pass through the existing NAIA roads or EDSA.
• Roads around NAIA are already congested.
• There is a need to ensure efficient travel to and from the airport terminals this will support both business travelers and tourism.
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AV
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Less than 10km/hr
10km ~ 20km/hr
20km ~ 30km/hr
Over 30km/hr
L E G E N D
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Terminal 1
Terminal 2
Terminal 3
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EDSA
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Project Cost
• The estimated civil works cost for NAIA Expressway is approximately Php9.3 billion (USD 214 million).
• The civil works cost was estimated based on similar Government and BOT projects implemented or tendered from 2010 up to the present.
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Bidding Framework for the TransactionCompetitive and Transparent Process
• Two Stage System: Pre-qualification of Bidders based on technical,
legal and financial criteria
Submission of Bids
• Technical Proposal
• Financial Proposal
Selection of bidder with the lowest required GFS as winning bidder
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Prequalification RequirementsCompetitive and Transparent Process
• Technical Qualifications:– Construction Experience:
• Similar Projects (expressways, viaducts, flyovers) totaling Php6B in last 10 years including at least 1 project with value of at least Php2B
• Can be fulfilled by:– any Consortium Member with at least 10% interest
– a Contractor (can propose up to five)
– Toll Road Operation and Maintenance Experience and Interest in project & O&M company
• 5 years of experience operating and maintaining toll roads
• Minimum 10% interest in the project company and 20% interest in the O&M company
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Prequalification RequirementsCompetitive and Transparent Processments
• Financial Qualification– Lead Member must be largest member and have
at least 33% stake in the Consortium
– Lead Member’s Net Worth: P 1.2 billion
– Lead Member’s Taxable Income: P 580 million
– Ability to borrow at least P 4.8 billion
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Concession Structure• Build-Transfer-Operate (“BTO”) variant under the
BOT Law
• Toll Concession Agreement Scheme:
– Concessionaire will Finance, Build, Operate andMaintain Phase 1 and Phase 2 as one open system.
– 35 year concession, inclusive of design andconstruction.
– Legal transfer of ownership of NAIA Expressway toDPWH after construction.
– DPWH to procure and deliver in a timely manner therequired ROW and GFS.
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Key Commercial Terms• Concessionaire Obligations for the 35
year concession period:– raise financing and achieve financial close within 1
year from the signing of the TCA;
– Prepare the Detailed Engineering Design (DED) within 10 months from signing of the TCA;
– construct the Phase I adjustments and Phase II works within 2 years from approval of the DED;
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Key Commercial Terms
– operate and maintain Phase I and Phase II;
– assume the commercial risks of the Project; and
– turn-over the NAIA Expressway in good condition to DPWH at the end of the concession period.
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Key Commercial Terms
• The bid parameter will be the lowest required GFS.
• The selection of the Independent Consultant (IC) will be done by DPWH from a shortlist of firms to be approved by the Concessionaire. The cost of the IC shall be borne equally by DPWH and the Concessionaire.
• There will be two (2) sets of tolls for the Expressway, one applied on the main expressway and the other for the segment between Terminal 3 and the Skyway.
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Key Commercial Terms
• Opening tolls will be set by DPWH and approved by TRB. The approved toll rates will be disclosed during the tender process.
• Periodic toll adjustments shall be made bi-annually and based only on a domestic inflationary index
• A performance regime on O&M will be defined in the TCA with payment obligations for not meeting KPIs.
• Force majeure shall be a risk that will be shared by both the Concessionaire and DPWH.
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Key Risk Allocation MatrixRisk/Responsibility Allocation Remarks
Traffic Concessionaire No traffic guarantee
Toll & Adjustment Implementation DPWH Compensation provided for disallowance of adjustment based on agreed formula
Project Financing Concessionaire and DPWH Private financing and GFS, respectively
Inflation & Foreign Exchange Concessionaire Relief provided for domestic inflation through Toll Adjust formula
Basic ROW Acquisition & Delivery DPWH Free and clear, delivered by pre-agreed timeline
Design/Construction Concessionaire Performance Security for Construction posted in favor of DPWH
Operation/ Maintenance ConcessionaireKPIs set with corresponding penalties for non-compliance, Performance Security for Operations posted in favor of DPWH
Political Risks DPWH Limited events
Force Majeure Concessionaire and DPWH
Relief provided to Concessionaire on O&M performance of obligations, procedure and mechanism for addressing impact of FM events to be provided in the TCA
Turn-over at the end of Concession Concessionaire At pre-agreed conditions, testing & acceptance regime included in TCA
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Foreign Ownership and Management
• The Philippine Constitution, provides that no franchise, certificate or any other form of authorization for the operation of a public utilityshall be granted except to citizens of the Philippines or to 60/40 companies.
• Foreign ownership and management is NOT PROHIBITED on the level of the Concessionaire.
• However, the Facility Operator MUST BE at least 60% Filipino owned and controlled.
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Indicative Timetable2011July - Publication of Invitation to Participate and BidAugust - Pre-qualification ConferenceSeptember - Submission of Qualification Documents
Notice of Pre-qualificationRelease of Draft Concession Agreement to Pre-qualified Bidders
October - Pre-bid ConferenceDecember - Release of Final Concession Agreement to Pre-qualified Bidders
2012January - Submission of Bid and Issuance of Notice of AwardMarch - Signing of the TCA
2013March - Approval of the Detailed Engineering Design and Delivery of ROWApril - Start of Construction
2015April - Start of Operations
2048March - Turn-over of the NAIA Expressway to DPWH
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THANK YOU
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Toll Rate Adjustment
Periodic toll adjustments shall be made bi-annually and based only on a domestic inflationary index based on the following formula:
TRn= TRo [(CPIn/CPIo)]
where:
TRn = new Toll Rate as adjusted
TRo = old Toll Rate as of the last adjustment
CPIn = CPI for month of the new review date issued by the NSO
CPIo = CPI for the month of the last review date issued by the NSO