Bidding for $3.8-B North-South rail Project in Q3
By KRIS BAYOS
Local and foreign railway construction companies, rail line operators, rolling stock firms and investors have until the third quarter of the year to form consortiums and to strategize in joining the auction of the Philippine government’s biggest infrastructure project to date: $3.8-billion ( 170.7 billion) North-South Railway Project (NSRP).
The government is now inviting bidders for the opportunity to design, build, finance, operate and maintain a 56-kilometer commuter rail from Manila to Laguna and a 653-kilometer long-haul passenger rail from Manila to Legazpi City in Albay with extensions to Batangas City and Matnog in Sorsogon.
Although the government is yet to announce the exact deadline for the submission of prospective bidders’ qualification documents, the notice of prequalified bidders is scheduled for release within the third quarter as well as the bid documents and draft concession agreement. Based on the indicative timeline stated in the NSRP project brief, bid submission and notice of award are targeted by the first quarter of 2016.
Helping the Department of Transportation and Communications (DOTC), the Philippine National Railways (PNR) and the Public-Private Partnership (PPP) Center, to craft “bankable” terms for the NSRP are transaction advisers from the Asian Development Bank (ADB) and the Development Bank of the Philippines (DBP).
According to the NSRP project brief, the bid parameter is “based on lowest total infrastructure fees such as the milestone payments during construction and availability payments during operation.”
The winning concessionaire will construct double tracks from Tutuban in Manila to Calamba in Laguna and restore track structures from Laguna to Batangas and Laguna to Legazpi City, as well as extend the tracks by 117 kilometers from Legazpi City to Sorsogon.
It will also modernize train stations and depot facilities; repair rail bridges; provide electric multiple unit-based rolling stock as well as the electromechanical, signaling, communication, and automatic fare collection systems. The concessionaire will also have to construct pedestrian overpasses along railroad crossings so as to meet the design speed of 75 kilometers-per-hour.
The winning concessionaire will be granted a 34-year concession period covering four-year construction and 30year operation and maintenance period. For its part, the government will shell out periodic milestone payments during construction of the infrastructure and availability payments during operation.
“Presently, the transaction is structured using availability payments although the concessionaire will additionally have access to fare box revenues. The concessionaire will also have access to ancillary business, for example through advertising and commercial development at station locations and right-of-way where allowed,” the NSRP project brief published at the PPP Center website states.
Sought for clarification, Ryuichi Kaga from the ADB’s Office of PPP said they are still discussing the revenue structure with the government.
“The pre-qualification documents, which we are still in process of documentation, will specify the revenue structure. [For now,] the only thing I can say is that the project structure will accommodate a certain mechanism of risk mitigation in revenue streams,” Kaga explained.
Citing the findings of CPCS Transcom Limited, which conducted a detailed feasibility study for the NSRP, the government claimed that the ambitious multibillion-dollar project to revive the interprovincial operations of the PNR, is “technically feasible.”
The government also assured bidders that while the NSRP requires heavy investment, it is backed with “solid support from investment grade sovereign.” Considered as one of the 15 key projects for ASEAN connectivity by the World Bank, the NSRP has a “strong demand” projections along its alignment with 316,000 trips per day forecast for the commuter rail in 2020; rising to 485,000 trips by 2030.
Aside from the secured right of way from the PNR, the NSRP is also integrated with existing urban rail systems as well as future transport systems such as the planned Integrated Transport System South Terminal in Taguig, the C5 Modern Bus Transit System, the Light Rail Transit (LRT) 2 West Extension, among others.
Valued at 170.7 billion, the NSRP was approved by the National Economic and Development Agency Board, chaired by President Benigno Aquino III last February 16. It will be tendered under the Philippine Build-Operate-Transfer Law and and its Revised Implementing Rules and Regulations.
Among local companies, Ayala Corp. and Metro Pacific Investment Corp. have publicly expressed interest to join the NSRP auction.