southwest integrated transport system project

Project Information Memorandum

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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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Figure 2.1: Political Map of Metro Manila

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

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

Type of Service

As of December 2009

As of December 2010

As of December 2011

As of December 2012

As of October 2013

No. of Franchise

No. of Units

No. of Franchise

No. of Units

No. of Franchise

No. of Units

No. of Franchise

No. of Units

No. of Franchise

No. of Units

Public Utility Buses

City Buses 385 5,299 522 7,161 522 7,161 391 5,392 391 5,392

Inter-Regional Buses 1,515 10,238 1,215 8,872 1,215 8,872 1,212 8,561 1,212 8,561

Mini Buses

City Buses 2 30 2 30 2 30 - - - -

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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Figure 2.2: Location of the Project Site within Metro Manila

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


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2.2.1 Southwest ITS Project Site

Location of the

Project Site

The Project site is located in the southwestern part of Metro Manila and it

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.

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

TO CAVITE

TO MANILA

R-1 EXPRESSWAY

LOCATION OF PROPOSED LRT STATION

PROJECT SITE(2.9 HECTARE)

DIOSDADO MACAPAGAL BOULEVARD


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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)

Time Period

Direction 1 (Arrivals)

North bound buses via Manila-cavite expressway

Direction 2 (Departures)

South bound buses via manila-cavite expressway

Number of buses

Average passenger

occupancy/bus

Number of buses

Average passenger

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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Time Period





Number of buses

Average passenger

occupancy/bus

Number of buses

Average passenger

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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Time Period





Number of buses

Average passenger

occupancy/bus

Number of buses

Average passenger

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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Time Period





Number of buses

Average passenger

occupancy/bus

Number of buses

Average passenger

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


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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


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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.