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NAIA Expressway Project

NAIA Expressway Project. INVESTORS’ BRIEFING 24 June 2011. The Investment Opportunity .

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NAIA Expressway Project

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  1. NAIA Expressway Project INVESTORS’ BRIEFING 24 June 2011

  2. The Investment Opportunity • The NAIA Expressway Project, sponsored by the Department of Public Works and Highways (DPWH), is one of the priority projects of the Government of the Republic of the Philippines (GOP) under its Public-Private Partnership (PPP) Program. • The Project is one of the components of the Metro Manila Urban Expressway System that is intended to provide a high-standard expressway.

  3. Proposed HSH Network in MM and its 200km Sphere EXISTING : 300KM PLANNED/ON-GOING CONSTRUCTION : 127KM 6

  4. The NAIA Expressway Will facilitate the efficient flow of existing and future traffic to and from the country’s premier international and domestic airport, the NAIA Complex. Will link two major expressways serving Metro Manila. 7

  5. 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.

  6. Committed Government Support • Conduct of a fully transparent and competitive procurement process following the Philippine BOT Law and its Implementing Rules and Regulations. • Government grant contribution for CAPEX or the Government Financial Support (GFS)

  7. 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.

  8. Advisors • Transaction Advisors: • Development Bank of the Philippines (DBP) • International Finance Corporation (IFC) • Technical Advisor: • Japan International Cooperation Agency (JICA)

  9. 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

  10. Project Description • Constructionof an addition 4.6 km of 4-lane viaduct from NAIA Terminal 3 to Roxas Boulevard, over the existing roads of Sales Avenue, Andrews Avenue, Domestic Airport Road and NAIA Road. • Upgrading of Phase I (600m) to Phase II standards. • Provision of ramps to and from NAIA Road, Terminal 3 and other strategic locations.

  11. Project Description • Provision of toll plazas, plus additional toll operating equipment and safety facilities for the DPWH-constructed Phase I to standards compatible with those of Phase II. • Preparation of a Detailed Engineering Design. • The Operation and Maintenance of the entire NAIA Expressway (Phase I and Phase II) as an open-system tolled expressway.

  12. Project DescriptionMinimum Expressway Configuration

  13. Project DescriptionToll Booth Configuration

  14. Project DescriptionKey Characteristics

  15. 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.

  16. AVERAGE TRAVEL SPEED ALONG EXISTING NAIA ROADS

  17. Project Cost • The estimated civil works cost for NAIA Expressway is approximately Php9.3 billion. • The civil works cost was estimated based on similar Government and BOT projects implemented or tendered from 2010 up to the present.

  18. Bidding Framework for the TransactionCompetitive and Transparent Process • The international competitive bidding for the Project will be conducted strictly in accordance with the rules and procedures of the BOT Law and its Revised IRR • Two Stage System: • Pre-qualification of Bidders based on technical, legal and financial criteria

  19. Bidding Framework for the TransactionCompetitive and Transparent Process • Two Envelope System: • Only those Bidders who pre-qualify will be eligible to formally submit their technical and financial proposals • Technical Proposal • Financial Proposal • Selection of bidder with the lowest required GFS as winning bidder

  20. Concession Structure • Build-Transfer-Operate (“BTO”) variant under the BOT Law • Toll Concession Agreement Scheme: • Concessionaire will Finance, Build, and Operate and Maintain the adjusted Phase 1 and completed Phase 2 as one open system. • 35 year concession period, inclusive of construction period. • Legal transfer of ownership of NAIA Expressway to DPWH will be automatic upon issuance of Certificate of Final Construction • Toll Structure Competitive and Affordable: Opening tolls set by DPWH and approved by TRB. Periodic toll adjustments shall be made bi-annually and based only on a domestic inflationary index • DPWH to procure and deliver in a timely manner the required ROW and GFS to partially cover the capital cost of implementing the Project

  21. Key Commercial Terms • Concessionaire Obligations for the 35 year concession period: • raise financing for the balance of the Project cost (not covered by the GFS) and achieve financial close within 1 year from the signing of the TCA; • design the Phase I adjustments and Phase II works; • construct the Phase I adjustments and Phase II works within 2 years from approval of the Detailed Engineering Design;

  22. Key Commercial Terms • operate and maintain Phase I and Phase II to defined levels of performance standards; • collect the authorized toll from users of the NAIA Expressway which shall be operated as an open system; • assume the commercial risks; and • turn-over the NAIA Expressway in good condition to DPWH at the end of the concession period.

  23. Key Commercial Terms • DPWH Obligations for the 35 year concession period: • procure and deliver in a timely manner the required ROW; • subject to Concessionaire compliance with pre-defined obligations, ensure the grant of the TOC from the TRB

  24. Key Commercial Terms • assist the Concessionaire in securing necessary national government consents for the Project; • provide to the Concessionaire the agreed GFS based on pre-agreed milestones, which will be defined in the TCA; and • ensure the application of the toll adjustment formula prescribed in the TCA and provide compensation in the event of disallowances of authorized computed tolls.

  25. 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 to and from Terminal 3.

  26. 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. • A performance regime related to efficient flow of traffic, ride quality, safety, security and cleanliness will be defined in the TCA and payment obligations will be imposed on failure to meet Key Performance Indicators. • Force majeure shall be a risk that will be shared by both the Concessionaire and DPWH.

  27. 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

  28. Key Risk Allocation Matrix

  29. Foreign Ownership and Management • The Philippine Constitution, provides that no franchise, certificate or any other form of authorization for the operation of a public utility shall 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.

  30. Indicative Timetable 2011 July - Publication of Invitation to Participate and Bid August - Pre-qualification Conference September - Submission of Qualification Documents Notice of Pre-qualification Release of Draft Concession Agreement to Pre-qualified Bidders October - Pre-bid Conference December - Release of Final Concession Agreement to Pre-qualified Bidders 2012 January - Submission of Bid and Issuance of Notice of Award March - Signing of the TCA 2013 March - Approval of the Detailed Engineering Design and Delivery of ROW April - Start of Construction 2015 April - Start of Operations 2048 March - Turn-over of the NAIA Expressway to DPWH

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