UPCOMING / ONGOING INFRASTRUCTURE PROJECTS

In spite of the Philippines constant growth, the country is still lacking in terms of its infrastructure developments. Investors say that poor infrastructure is what’s keeping them from investing in the Philippines. Insufficient infrastructure has been a major constraint to economic growth and poverty reduction in the Philippines. Though the country has relatively high access levels to water, sanitation, and electricity, service levels have failed to keep up with rapid population growth and urbanization.

To address this problem, the Aquino administration has ramped up its spending on airports, roads, and flood control projects since taking office in 2010. Before stepping down, President Benigno Aquino plans to solicit bids for $6.5 billion worth of projects from roads to airports.

According to the Department of Budget and Management (DBM), a total of P243 billion was spent for infrastructure and other capital outlays from January to September 2015, a 24.3 percent year-on-year increase, but still 16 percent behind the P289.3 billion target.

Upcoming major Public-Private Partnership (PPP) projects that will greatly affect Metro Manila are:

1. The NAIA Expressway Project (Phase II). It is a PhP 17.93 billion (US$ 0.39844 billion) project by the Department of Public Works and Highways (DPWH). The project is a 4-lane, 7.75 km elevated expressway and 2.22 km at-grade feeder road that will provide access to NAIA Terminals I, II and III, and link the Skyway and the Manila-Cavite Toll Expressway.  It starts at the existing Skyway then follows the existing road alignments over Sales Avenue, Andrews Avenue, Domestic Road, and NAIA Road, and has entry/exit ramps at Roxas Boulevard, Macapagal Boulevard, and PAGCOR City.

2. LRT Line 1 Cavite Extension. It is a PhP 64.9 billion (US$ 1.44222 billion) project by the Department of Transportation and Communications (DOTC). The current LRT Line 1 will be extended starting from its existing Baclaran Station to the future Niog Station in Bacoor, Cavite which is approximately 11.7 kilometers. Of this length, 10.5 kilometers will be elevated and 1.2 kilometers will be at-grade. The whole stretch of the integrated LRT 1 will have a total length of approximately 32.4 kilometers and will be operated and maintained by the private proponent. The new stations will be Aseana, MIA, Asia World, Ninoy Aquino, Dr Santos, Las Piñas, Zapote and Niog. The intermodal facilities will be located at Dr. Santos, Zapote, and Niog.  

The Light Rail Manila Corporation (consortium of Ayala Corporation, Metro Pacific Light Rail Corporation and Macquarie Infrastructure Holdings) won the bid for the LRT-1 Cavite extension back in 2014.

The construction will begin in June 2016 and is expected to be operational by the year 2020.

3. LRT Line 6. It is a PhP65.09 billion (US$ 1.44644 billion) project by the Department of Transportation and Communications (DOTC). The LRT Line 6 Project is a proposed 19 kilometer railway from Niyog, Bacoor (the terminus of the LRT 1 CAVEX extension) to Dasmariñas City. The proposed ROW alignment is along the Aguinaldo Highway with 7 stations, namely: Niyog, Tirona, Imus, Daang Hari; Salitran, Congressional Avenue, and Governor’s Drive.

Ayala Corp., San Miguel Corp., Metro Pacific Investments Corp., and Malaysia’s MTD Group have expressed their interest to pre-qualify for the project.

4. LRT Line 4. It is a PhP42.89 billion (US$ 0.95311 billion) project by the Department of Transportation and Communications (DOTC).The LRT 4 project is a proposed 11km rail line running west from the SM City in Taytay to the intersection of Ortigas Avenue and EDSA in Ortigas. The proposed ROW alignment is along Taytay Diversion Road and Ortigas Avenue with six stations, namely: EDSA (transfer station with the MRT), Meralco Avenue, Pasig, Bonifacio Avenue, L Wood Road, and SM Taytay. Ayala Corp., Aboitiz Equity Ventures, San Miguel Corp. (SMC) and DMCI Holdings, Inc. are considering joining the bidding for the said project.

5. NLEx-SLEx Connector Road. It is a PhP23.2 billion (US$ 0.51556 billion) project by the Department of Public Works and Highways (DPWH). The project involves the construction and operation and maintenance (O&M) of a 8 km. 4-lane elevated expressway over the Philippine National Railway (PNR) right of way. It starts from C3 Road in Caloocan through Manila crossing Espana towards PUP, Sta. Mesa connecting Metro Manila Skyway Stage 3 (MMSS3). The project proponent is Metro Pacific Tollways Development Corporation (MPTDC).

The National Economic and Development Authority (NEDA) Board approved the terms of the offer last December 2015. DPWH may now proceed with the Swiss challenge and is scheduled in the second quarter of 2016. Awarding and contract signing is targeted before the current administration ends on June 30.

6. Metro Manila Skyway (MMS) Stage 3. It is a PhP37.43 billion (US$ 0.83178 billion) project by the Toll Regulatory Board. The project is a 14.82 km. 6-lane elevated toll road and the last of three (3) stages of Metro Manila Skyway (MMS) System. It is intended to connect South Luzon Expressway (SLEX) at Alabang to Balintawak in Quezon City before North Luzon Expressway (NLEX) through Central Metro Manila Area by using predominantly median of Quirino, G. Araneta and A. Bonifacio road networks.

Skyway-3 is being undertaken by Citra Central Expressway Corp. (CCEC) – a joint venture of Indonesia’s Citra Lamtoro Gung Persada and state-run Philippine National Construction Corp. (PNCC) in partnership with San Miguel Corporation.

7. MRT 7. It is a PhP69.3 billion (US$ 1.54 billion) project by the Department of Transportation and Communications (DOTC).The project involves the financing, design, construction, operation & maintenance of the 23-kilometer elevated railway line with 14 stations from San Jose Del Monte, Bulacan to MRT 3 North Avenue in Quezon City and the 22-kilometer asphalt road from Bocaue Interchange of the North Luzon Expressway (NLEX) to the intermodal terminal in Tala. The road component will divert northern provincial buses operation to San Jose Del Monte, thereby decongesting EDSA.

DOTC and Universal LRT Corp. BVI Ltd. (ULC), a San Miguel Corporation Subsidiary, signed the contract to build the MRT-7 in 2008. ULC has already completed the financial closure requirements of the MRT-7 concession agreement and is scheduled to finish the construction by August 17, 2019.

8. Laguna Lakeshore Expressway – Dike. It is a PhP122.8 billion (US$ 2.72889 billion) project by the Department of Public Works and Highways (DPWH). The project will provide a high standard highway with a dike that will ease traffic flow and mitigate flooding in the western coastal communities along the Laguna Lake. The highway will run from Taguig in Metro Manila through the towns of Calamba to the Los Banos-Bay boundary in Laguna.

Alloy-PAVI-Hanshin LLEDP Consortium (composed of Alloy MTD Capital BHD, Prime Asset Ventures Inc., Hanshin Engineering Constructions), San Miguel Holdings Corp.; and Team Trident (composed of Trident Infrastructure and Development Corp., Aboitiz Equity Ventures Inc., Ayala Land Inc., Megaworld Corp., and SM Prime Holdings Inc.) are the ones prequalified to bid for the project.

The government held its bidding for the said project last March 28, 2016, but it did not find any takers.

The Department of Public Works and Highways (DPWH) was forced to terminate the project, after all 3 qualified bidders did not submit offers.

One of the problems encountered is that the project proponent, Department of Public Works and Highways (DPWH), had wanted the prospective private sector partner to cough out two-thirds of the total equity requirement.

9. North-South Railway. It is a PhP170.7 billion (US$ 3.79 billion) project by the Department of Transportation and Communications (DOTC).The proposed NSRP South Line PPP covers Metro Manila to Legazpi City, Albay, plus a number of existing and proposed branch lines totaling to approximately 653 km. It consists of commuter railway operations between Tutuban and Calamba and long haul railway operations between Tutuban and Legazpi, including extended long haul rail operations on the branch line between Calamba and Batangas and extension between Legazpi and Matnog.

The Philippines and the Japan International Cooperation Agency (JICA) have already signed the Loan Agreement for the North-South Commuter Railway Project (running from Malolos, Bulacan to Tutuban, Manila) last 2015.

Ayala Corp., Metro Pacific Investments Corp., San Miguel Corp., IL&FS, and Fluor Daniels are the prospected bidders for the south line of the project.

The deadline for submission of the pre-qualification documents for the NSRP South Line project is on March 31, 2016.

Status of PPP Projects (As of February 26, 2016)

Importance of Infrastructure in the Economy

The importance that infrastructure plays in people’s everyday lives is often taken for granted though it is one of the biggest issues that governments across the globe need to address in their public policies. Infrastructure investment in the development of communications, IT, roads, schools, ports and hospitals is important to both economic development and quality of life. Failure to invest means a failure to sustain and develop our social and economic wellbeing.
Delmon, an infrastructure specialist with the World Bank, wrote the following: “Poor infrastructure impedes a nation’s economic growth and international competitiveness (The World Bank 2006). Insufficient infrastructure also represents a major cause of loss of quality of life, illness and death (Willoughby 2004). This raises [the importance of] infrastructure services from [a] good investment to a moral and economic imperative.”

The above statement highlights that, as well as being a necessity, in many respects; infrastructure has a bearing on a country’s attractiveness to foreign investors and on its ability to compete with other jurisdictions. It includes the basic services and facilities required for businesses to compete and grow. Business requires infrastructure; therefore, business growth can be limited by poor infrastructure development. Surveys by The World Bank reveal investors citing reliable infrastructure as an important consideration in their investment decisions.

Infrastructure is a key measure of a country’s position on the global stage; it is the second pillar that is assessed by the World Economic Forum when determining the competitiveness of a nation (institutions, being the first).

Improving infrastructure has always a positive effect on property prices – both commercial and residential.

There’s often a speculative increase in property prices around the time an infrastructure project is announced by government. But it is only when the project is completed that the true effect and benefit can be seen.

A new train station within a 10 minute walk or an improved road system, bridge or tunnel reducing travel times is likely to have a long-term positive effect on the value of property. But there won’t always be a price increase if it’s so close to your property that it impacts on daily life. In fact the opposite could be true.

These improvements and new developments will also help in the further development of the affected provinces, and in hopes of decongesting the Metro. These projects will provide easier access in and out Metro Manila and will give opportunities for developers to invest outside central business districts.