The province of Davao has been identified as one of the

INFRASTRUCTURE 49 Davao the main hub of Asean port connectivity The Association of Southeast Asian Nations (ASEAN) has grand plans to connect all 11-member nations via a seamless logistics of hubs of seaports and airports by 2015. The connectivity master plan has the goal of facilitating trade of goods and travel within the region. The province of Davao has been identified as one of the major port hubs that would connect the 11-nation members of the ASEAN. Davao, as the Philippine s main hub in the ASEAN connectivity project, will link up the country s seaports and airports to those in Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Vietnam, Singapore, Thailand and Vietnam (see box for details). The regional plan, expected to bring in increased commerce and tourism, was met with worry by the local government officials who were all concerned that the province s existing support infrastructure, as well as the over -capacity of its biggest commercial port Sasa port will not be addressed in time for 2015 implementation of the ASEAN project. There are several private-sector led port projects in Davao province (just this Feb 2012, 2 port development P50-million Hijo Resources and P2.7-billion ANFLOCOR projects were announced by the Department of Trade and Industry), but no concrete government plans to expand and improve the national ports. In 2009, the government had put in place some improvements on Sasa port, the biggest and busiest commercial port in Mindanao, but users of the port still complain that the wharf is too small. According to Davao s Regional Council, the failure of government to provide sufficient and efficient port services at Sasa has led to private firms engaged in the export and import business being forced to patronize private ports, if not build their own. This means lost revenues for the government, said Davao Bureau of Customs Collector Martiniano M. Bangcoy. Although the Sasa port has about 19 hectares in area, the berthing facility of the wharf, where the ships dock, is just 1,150 meters long with a controlling draft of 10.6 meters. The berthing facility can only accommodate between four to six vessels at a time, Bangcoy said. In January 2011, the Pilipino Banana Growers and Exporters Association (PBGEA) wrote the ports authority to complain that because the container yard is crowded, movement of cargoes has been delayed. It has been established that during peak hours, the process (in the wharf, whether loading or unloading cargoes) takes more than two hours to complete for every van, wrote PBGEA. The Philippine Port Authority (PPA) responded to the letter that there were already proposed expansion project for Sasa, but nothing was specified. If the Philippines is to fully realize the benefits of the ASEAN-led connectivity project, the government must ensure that improvement in Sasa happens before 2015. The potential for increase in trade and tourism was met with worry.

50 INFRASTRUCTURE Details under Maritime Transport Integration: MASTER PLAN FOR ASEAN CONNECTIVITY Maritime Transport. ASEAN has designated 47 ports as the main ports in the trans-asean transport Network. Key actions: Enhance the performance and capacity of the 47 designated ports, with the priority set in the studies undertaken and being undertaken under Measures 6, 7 and 8 of the Roadmap Towards an Integrated and Competitive Maritime Transport in ASEAN by 2015. The enhancement of capacity can include the improvement in associated services like warehousing as well as dredging of the water channels where needed. a) Establish efficient and reliable shipping routes (including RoRo) connecting mainland and archipelagic Southeast Asia including the related subregional initiatives such as BIMP-EAGA and IMT-GT. The emerging and/or potentially important international routes: Satun/Trang Penang Belawan, Malacca Dumai, Davao Bitung, Zamboanga - Sandakan, Muara nearby ports; b) Strengthen linkages with global and regional trunk routes and domestic shipping routes; and c) Conduct a feasibility study on the establishment of an ASEAN RoRo network. Clark Airport dev t finally underway After years of discussing plans to expand Clark Airport, real progress can finally be reported. The expansion project of the existing terminal has been officially rolled-out with 5 interested bidders vying for the P360-million contract. Award of the project is expected by April 2012 and completion slated by December 2012 (we highly doubt this). Five construction firms have submitted bids for the P360-million Clark Airport passenger terminal expansion project - E.M. Cuerpo Inc., Izumo Contractors Inc., Terp Asia Construction Corp., IPM Construction and Corp. and Marcbilt Construction Inc. The bidding was opened last March 05, with expected announcement of the winning bidder by April 2012. The project initially attracted 10 interested bidders, but only 5 eventually submitted bids. According to Clark International Airport Corporation (CIAC), target completion and start of commercial operations for the expanded passenger terminal is December 2012. We are now evaluating the lowest calculated bidder, which is the EM Cuerpo, Inc. After the post-qualification, if they passed, we will award the project, Darwin L. Cunanan, CIAC vice-president for commercial and business development group declared, noting that EM Cuerpo s bid was pegged at P307 million. The Clark Airport passenger terminal expansion project will expand the current capacity of the airport to 4 million passengers annually, and will entail the doubling of check-in counters, expansion of pre-departure and arrival areas, and the installation of a baggage conveyor for the arrival area. The funding for the project will come from the recently approved P1-billion loan that CIAC received from the LandBank of the Philippines. The remainder of the LandBank loan will finance the purchase of new navigational equipment and the construction of other support infrastructure. The Clark Airport passenger terminal expansion is phase 2 of an earlier plan to transform Clark Airport into the country s biggest international gateway. The Clark Airport Project, conceived in 2000, have had several pronouncements of project underway, only to be stalled at the last minute. This recent development is the most promising of all discussions, and likely to go beyond the blueprints and negotiation stage. The Department of Transportation and Communication (DOTC) Secretary Mar Roxas had placed the development of Clark Airport on top of DOTC s priority list under his watch. Apart from the expansion of the existing terminal at Clark, the government is looking to build a P12-billion new terminal that would serve the budget airlines. This budget terminal will be connected to the existing terminal facility and will have Commercial operations slated in December 2012.

INFRASTRUCTURE 51 QUICK FACTS AND STATS ON CLARK AIRPORT Property Area: 2,367 hectares Passenger Traffic: 2.5 million per year Facilities: 2 runways (primary & secondary), 4 taxiways, and 1 passenger terminal Airline Operators: 8 Operators 1. AIR ASIA 2. ASIANA 3. CEBU PACIFIC 4. JIN AIR 5. PACIFIC FLYER 6. SEAIR 7. SOMA 8. TIGER AIRWAYS Airline Routes: Domestic - Cebu, Kalibo, Caticlan; International- Malaysia, Bangkok, Hong Kong, Incheon, Kuala Lumpur, Macau, Singapore, Palau, and Taipei. the capacity to serve 10 million passengers annually. DOTC Secretary Roxas expects the new budget facility to be in full commercial operations by 2015. This plan may be pushed back, however, given the recent set-back that Asia Foundation, the agency tapped to conduct the feasibility study on the Clark budget terminal, backed out. The government is currently searching for financing for the feasibility study for the Clark budget terminal. Once approved, the P12-billion Clark budget terminal project will be included for bidding under the privatepublic-partnership (PPP) scheme of the Aquino administration. Sec. Roxas mulls over co-existing NLEX-SLEX Link roads Transportation Secretary Manuel Roxas II hinted at the possibility of having 2 roads that would link the North Luzon Expressway (NLEX) with the South Luzon Expressway (SLEX) in the midst of a verbal sparring between toll road developers Metro Pacific Tollways Corporation (MPTDC) and Citra Metro Manila Tollways Corporation (Citra) over the tollway project. Metro Pacific and Citra are insisting on the superiority of their respective proposals, while also arguing over project ownership. If possible, why not approve both, said Sec. Roxas referring to the 2 proposals for the NLEX-SLEX Link project. According to Sec. Roxas, the 2 projects may co-exist since these are not redundant as they pass through different alignments and cater to different markets. MPTDC is proposing the construction of the NLEX-SLEX Connector Road, while Citra is pitching for Skyway Stage 3 (please see table). The NLEX-SLEX Connector would cater to motorists, primarily cargo trucks, seeking to bypass major thoroughfares, while Skyway Stage 3 is designed to accommodate the traffic patterns of regular commuters with its entry and exit points located in major population centers. Metro Pacific, through its other subsidiary the Manila North Tollways Corporation is the builder and concessionaire of the NLEX, while Citra is the developer of the South Metro Manila Skyway Project. The pronouncement from Sec. Roxas came amid heated exchange between MPTDC and Citra. In April 2011, the Public Works department granted original proponent status to MPTDC for its unsolicited proposal for the NLEX-SLEX Connector Road that would stretch from Skyway-Buendia to Caloocan. Not long after this, the Justice department handed down a legal opinion stating that pursuant to its subsisting franchise on the Skyway project, Citra has the right and authority to construct extension and linkages to the Metro Manila Skyway. In effect, the legal opinion gave the Toll Regulatory Board (TRB) the go-signal to evaluate and process Citra s Skyway Stage 3 proposal that would extend the Skyway from Buendia to Balintawak in Quezon City. Citra is insisting it has a lawful claim to the NLEX-SLEX link project, while MPTDC argues that the legal opinion merely grants Citra the right to submit a proposal and not the right to an exclusive contract. As original proponent, MPTDC s proposal would be subjected to a Swiss challenge, where it only needs to match competing offers for it to be awarded the contract. The NLEX-SLEX Link project is among the infrastructure projects identified by the government to have the highest impact on gross domestic product (GDP) growth and employment generation. The project contract is deemed highly-coveted as it is said to guarantee high value traffic. Another point of contention between the 2 firms involves the superiority of their project proposals. MPTDC is capitalizing on the assessment made by the Japan International Cooperation Agency (JICA) which found the NLEX-SLEX Connector Road the best among 4 alternative alignments, including Citra s Skyway Stage 3, in terms of transport efficiency, initial investment requirement, social and environmental impact, construction difficulty, and economic and financial aspects. For its part, Citra is claiming that it has a better proposal as Skyway 3 requires no government subsidy, and covers the larger market comprised of regular commuters, with lower end-to-end tariff. Both MPTDC and Citra have expressed their support to Sec. Roxas suggestion on co-existing link roads. Citra President Shadik Wahono had stated that the approval of complementing road projects will further hasten the flow of traffic between the north and the south of Metro Manila. Meanwhile, Metro Pacific chairman Manuel Pangilinan welcomed the secretary s statement, saying They (government) kept saying that competition is good for the consumer. So, let s prove it. Final decision on the project rests with the TRB, an attached agency of the Department of Transportation and Communications in charge of regulating all toll roads in the country. The 2 proposals for the NLEX-SLEX Link project are not redundant.

52 INFRASTRUCTURE Gov t taps private sector to address classroom backlog The Aquino administration is turning to the private sector to assist in efforts to address the long-standing problem of classroom shortage in the country. The government recently unveiled to the business community the 1 st phase of the Public-Private Partnership for School Infrastructure Program (PSIP), which is a 3-phased social infrastructure program for the construction of public school classrooms nationwide. In late February, the Department of Education (DepEd) held an investor conference for the PSIP where it unveiled the 1 st phase of the program (please see box) involving the construction of 9,332 classrooms in the Luzon area. Phase 1 of PSIP is a P10-billion project comprised of 3 contract packages for the construction and delivery of fully-equipped classrooms in Regions I (Ilocos Region), III (Central Luzon), and IV-A (CALABARZON). Each contract package will be bid out and awarded separately. According to DepEd Undersecretary for Finance Francisco Varela, the use of the public-private partnership (PPP) framework for classroom construction will allow the government to harness private sector resources and expertise. He explained that the PSIP will not only reduce costs for the government, but will also fast-track construction and delivery of classroom with the private proponents allowed to introduce innovations in the design, construction methods, and materials for classroom construction. While the conventional procurement system only allows the government to undertake classroom construction according to a pre-defined program of work, the PSIP allows private proponents to introduce their preferred programs of work subject only to the minimum performance standards set by the DepEd. Classroom construction is expected to start in August 2012 and be completed within 1 year. Implementing Agency: Department of Education (DepEd) Project Cost: P10.04 billion Contractual Scheme: build-lease-transfer under the PPP scheme Status: Submission of qualification documents extended to April 11, 2012 PPP FOR SCHOOL INFRASTRUCTURE PROJECT (PSIP) Project Details: This project involves the construction of 9,332 classrooms, with furniture and fixtures, in various school sites in Regions I, III and IV-A using a range of school-building technologies subject to the Minimum Performance Standards and Specification set by the DepEd. The contract covers the design, financing, construction and maintenance of 1-storey and 2-storey school buildings. The project is divided into 3 contract packages: CONTRACT PACKAGE Contract Package A Contract Package B PROJECT/REGION COVERAGE Region I (Ilocos Region) Region III (Central Luzon) NUMBER OF SCHOOL SITES NUMBER OF SCHOOL BUILDINGS NUMBER OF CLASSROOMS 660 686 2,050 656 745 2,999 Contract Package C Region IV-A (CALABARZON or 946 1,097 4,283 Cavite-Laguna-Batangas-Rizal-Quezon) TOTAL 2,262 2,528 9,332 Each school building will consist of the 3 project components: Component I school buildings / cluster of classrooms Component II toilets (separate toilets for girls, boys, and handicapped) Component III classroom furniture PPP FOR SCHOOL INFRASTRUCTURE PROJECT TIMELINE* ACTIVITY SCHEDULE Submission of qualification documents April 11, 2012 Pre-bid conference May 14, 2012 Deadline of submission of technical and financial proposals July 18, 2012 Signing of contract agreement August 8, 2012 Within 2 months from contract Issuance of notice to proceed signing Construction completion deadline August 14, 2013 *Revised timetable, Source: PSIP Bid Bulletin No. 4 dated March 9, 2012, Department of Education Will the government honor its contract?

INFRASTRUCTURE 53 Classroom shortage is 120,240 rooms, plus 44,000 more needed for the K+12 program. Upon completion, a 10-year lease agreement between the government and the private proponent will start. During this period, the government s lease payment will be covered by a Multi-Year Obligation Authority that will require the DepEd to set aside from its yearly budget the amount necessary to settle the lease payments over the 10-year period. Despite this guarantee, industry observers expressed anxiety over the possibility that the government, especially in the event of a change in leadership, may renege on the contract. Administration officials assured, however, that the contracts will be honored as these are legal commitments entered into by the government. Based on government estimates, the country s classroom backlog is 66,800 at a classroom-student ratio of 1:45. At the ideal ratio of 1 classroom per 25 students, the shortage jumps to an estimated 120,240 rooms. This is further expected to increase with the implementation of the K+12 program that would expand the current 10-year basic education cycle by 2 years. With this, schools would have to retain 1.1 million students who would move into the newly-introduced senior high school level starting with grade 11. This would call for an additional 44,000 classrooms at the ideal classroom-student ratio. To address classroom requirements for these, the government would need some P107 billion, at a cost of about P650,000 per classroom. However, even this will not be sufficient, bearing in mind that the classroom requirement is a moving target, with student enrolment rising by 2.2% annually. Usec. Varela has revealed that all modes of financing considered annual government appropriation, local government provisions, and local and international donors contributions the government could only build about 15,000 classrooms annually. Thus, the administration came up with the PSIP to allow the private sector to supplement government s efforts in classroom-building. As of late March, DepEd disclosed that there are 18 prospective bidders for the 1 st phase of the PSIP, including 3 foreign firms. Solicitation of bids is scheduled to begin in May. Meanwhile, Phase 2 of the PSIP for the Visayas region and Phase 3 for Mindanao that would each deliver 10,000 new classrooms are expected to be auctioned in late 2012. Classroom requirement is a moving target.

54 INFRASTRUCTURE STATUS OF BIG TICKET INFRASTRUCTURE PROJECTS AS OF MARCH 2012 PROJECT TITLE IMPLEMENTING AGENCY FUNDING SOURCE CIVIL WORKS TIMEFRAME PROJECT COST LRT-1 South Extension DOTC/LRTA PPP/ODA 2012-2015 P60 billion LRT-2 East Extension DOTC/LRTA PPP/ODA 3 years $251 million MRT-3 Privatization DOTC/LRTA PPP -- P6.3 billion CALA Expressway DPWH PPP 2014-2017 P19.69 billion NAIA Expressway Phase II NLEX-SLEX Connector Road Project Clark Airport (Terminal expansion) Puerto Princesa Airport Laguindingan Airport NAIA-3 Upgrading and Full Operationalization New Bohol Airport DPWH PPP 2012-2015 P13.58 billion DPWH PPP 2014-2016 P19.98 billion DOTC/CIAC PPP -- P360 million (Phase II) DOTC ODA/PPP 2012-2014 P4.5 billion (const.) DOTC ODA-NG/ PPP 2008-2012 P7.85 billion (const.) P1.5 billion (O&M) DOTC PPP 2 years P2.2 million DOTC PPP -- P7.6 billion NorthRail Project DOTC ODA -- $2 billion Project for the Bridge Construction for Expanded Agrarian Reform Communities Mactan Airport (Terminal 2) Samar-Pacific Coastal Road Project Iloilo Port Expansion Project Angat Dam Rehabilitation Project Cebu Bulk Water Supply Project New Water Supply Source Project Batangas-Manila (BatMan 1) Pipeline DAR ODA/NG -- P798.56 million (Phase 2) DOTC PPP -- P10.15 billion STATUS / ISSUES Project has been approved by NEDA Board. Design-and-build and O&M contract to be auctioned under PPP scheme, while rolling stock will be financed through ODA. Terms of reference for PPP component to be finalized before auction, which is expected to take place in mid-april. Still under NEDA review. Earlier identified for hybrid financing where project construction will be funded through ODA, while O&M will be privatized through PPP. DOTC still awaiting legal opinion on whether to auction O&M contract or just maintenance contract. NEDA Board approval expected by May 2012. Bidding for Cavite section slated for the latter part of the year, while awarding of contract is eyed for February 2013. Project awaiting NEDA approval. Project may be bid out by September with a revised scope of work. Locators at PAGCOR s Entertainment City have requested to extend the planned road from terminating at Roxas Blvd., to go all the way across this and instead terminate at Diosdado Macapagal Blvd. Citra, SMC, and MPIC reportedly interested. ROW confirmation from DOTC still pending. Negotiations ongoing between original proponent MPTDC and DPWH. Possibility of co-existing Connector Road and Skyway Stage 3 to link NLEX with SLEX also being studied. NEDA Board approval is expected by July, while tentative issuance of notice for postponed Swiss challenge is Feb. 2013. CIAC presently evaluating lowest bidder EM Cuerpo Inc., which posted a bid of P307 million. EM Cuerpo is due for post-qualification before awarding of the contract scheduled in April. CIAC has also earlier secured a P1-billion loan facility from Landbank for the project. Construction of airport, to be financed by Korean ODA, approved by Pres. Aquino on Dec. 2011. Meanwhile, O&M contract under the PPP scheme is still awaiting NEDA approval. Civil works is 98.93% complete, but air navigation system has yet to be auctioned. Airport completion expected in December. O&M component awaiting NEDA approval. Solicitation of bids for O&M eyed before June, while awarding is slated in 3Q/4Q shortly before the facility is turned over to the government. The government has said that no bidding may be expected until all legal issues are resolved. The Court of Appeals recently affirmed contractual claims of contractors against Piatco, while the Transportation department has signed an agreement with Takenaka for the completion of NAIA-3 s civil works. However, there are at least 2 other cases involving NAIA-3 that are still pending resolution. The draft of the feasibility study conducted by JICA was already submitted to DOTC. Business case presently being prepared and is expected to be completed in Sept. 2012, as indicated in the contract. DOTC has, however, requested its advisor to complete the business case within 4 months. Project is back in the drawing board, as the administration expressed its commitment to a high-speed rail link. Suspended project described as slow, old technology commuter system. Details of proposed high-speed rail have yet to be ironed out, but final decision not expected soon given the upcoming leadership change in China. Phase 2 for the construction of the Umiray Bridge was recently approved by the NEDA ICC CabCom and the NEDA board. The planned Umiray Bridge is a 358-lineal meter bridge that will cross Umiray River to improve the distribution of goods and the mobility of people in the provinces of Aurora and Quezon. The previous studies made for the project are being reviewed by DOTC s transaction advisor to repackage the project for PPP. The target schedule for the project s bidding is in the 2nd half of 2012. DPWH ODA -- P1.81 billion The project was recently approved by the NEDA-ICC and the NEDA board. DOTC/PPA NG 1.5-2 years P500 million DPWH/MWSS PPP 2013-2017 P5 billion Metropolitan Cebu Water District (MCWD) PPP 2012-2013 P702 million MWSS PPP -- P25 billion DOE NG 2013-2016 $200 million The PPA is now designing the details of the project based on the sample analysis made in the soil investigation, which was completed in March. After the design is completed, a program report will be submitted for approval before bidding starts. The feasibility study conducted by Tonkin & Taylor is almost complete. The draft of the final report has already been presented and is slated for completion in May 8. The project implementation is expected to begin in Sept. 2013. The feasibility study for the project will start in May 2012. Meanwhile, the project engineering design is eyed for approval in June 2012. The Manila Water Consortium has scheduled to secure an Environmental Compliance Certificate (ECC) by October and begin the civil works right after. A pre-investment study for the project is currently being conducted to determine the project s structure and other details. DOE has finished designing the project with JICA. DOE said that Philippine National Oil Co. (PNOC) will construct, own and operate the pipeline in order to avoid monopoly. Bidding for the engineering and procurement contract of the project is scheduled for the first quarter of 2013.