Posts Tagged ‘public-private partnership’

PPP program: Of 54 deals, 7 awarded; 20 more at P900B

Philippine Daily Inquirer, 24 July 2014

By Miguel R. Camus

 

MANILA, Philippines–It has been battered and bruised but the Aquino administration’s public-private partnership (PPP) program, whose implementers admit is still a work in progress, remains committed to getting crucial infrastructure projects off the ground.

PPP projects have continuously drawn the spotlight given the crucial roles they play in driving economic growth today and in the decades to come. Reassuring the public and investors in President Aquino’s State of the Nation Address (Sona) on Monday, as the administration had done in the past, would help the program.

This reassurance is critical as the program has its fair share of critics—from impatient bidders to those who feel the process favors certain personalities—but the PPP Center that oversees the massive infrastructure drive says the criticism has not dampened investors’ interest thus far, according to its executive director, Cosette Canilao.

She said the lessons learned and reforms implemented over the last three-and-a-half years meant that the PPP deals could be ramped up until President Aquino steps down in 2016.

Going faster

“We are going faster now,” Canilao said. “We have a healthy pipeline of projects and everything is now moving.”

Canilao said a total of five PPP projects would be completed in two years.

These include the 4-kilometer Daang Hari-SLEx Road project, 7-km Ninoy Aquino International Airport (Naia) Expressway project, a smart-card system for Metro Manila’s railways and deals for the construction of new classrooms, she said.

The number of projects may seem small relative to the program’s overall scale and the administration has refrained from mentioning targets, preferring instead to mention specific projects and how they would benefit the public, based on last year’s Sona of the President.

Aquino’s previous address noted key airport deals like the P17.5-billion Mactan-Cebu International Airport, which has been awarded to a Filipino-Indian consortium, Megawide Construction Corp. and GMR Infrastructure.

The government got a P14.4-billion premium payment for this project, meaning Aquino was expected to highlight this PPP deal in his Sona on July 28.

While bagging a significant premium payment was noteworthy, the government may also highlight the robust participation for the PPP by other groups, both local conglomerates and global airport operators.

Sanctity of contracts

This is also to underscore the growing investors’ confidence in a country, where there is still some concern over the sanctity of contracts.

The President made reference to this in last year’s Sona, when he said the public “seemed to have lost confidence in the contracts the government undertook.”

He assured the public that transparency was observed in awarding contracts to PPP projects.

“We have no plans of entering into questionable contracts today just to bequeath problems to the next administration. Each project has to go through the correct process to ensure that our taxpayers’ hard-earned money will be spent the right way,” Aquino said.

Despite the heavy criticism on the slow pace, some in the private sector said the seeds sowed in the current administration were important for future projects.

Roman Azanza III, Aboitiz Equity Ventures first vice president for business development, said the recent successful projects under the program signaled that the Philippines was a safe place to invest and he “hoped” this could be sustained even under future administrations.

“This administration and the people that devised the BOT [build-operate-transfer] law made real efforts, deal by deal, and project by project, to get to a state where a process can be run that attracts the confidence of not just local investors but foreign players,” Azanza said.

More PPP projects, meanwhile, were on the way.

Canilao noted that getting a steady pipeline was the key in ensuring the program’s sustainability and keeping investors interested.

Indeed, the sheer scale of the program highlights how much work still needs to be done for government and on the other side of the fence, for investors, the pool of potential opportunities.

7 deals so far

As of July 10, the government had awarded seven deals out of a total of 54 identified projects. Those seven, including a P17.5-billion contract to expand and operate Cebu’s main international airport, have a combined value of over P60 billion.

The amount, however, is relatively small compared with about 20 more projects valued at P900 billion ready for awarding or to be rolled out.

Part of these are a P135-billion “subway” project in Metro Manila, a P271-billion commuter rail in Luzon, both of which are under study, and a P24-billion bulk water project for Bulacan province.

The remaining 28 projects, which include more seaports, expressways and a natural gas pipeline, are in various stages of development, the agency’s data showed.

Canilao said the list did not include new projects being considered, including the privatization of the operations of Manila’s Naia, the country’s busiest air gateway.

15 more contracts by 2016

All told, she said the government was still aiming to have 15 PPP contracts signed by the end of Aquino’s term, with 10 turned over to the private sector. Over the next 12 months, the PPP Center is planning to roll out another 20 projects, she said.

“We are now at this sweet spot in the next 12 months,” she said.

Most of the deals are being implemented by the Department of Transportation and Communications and the Department of Public Works and Highways.

Strengthening the capabilities of the two agencies is important to the program’s success, according to Canilao. Timing is also an issue and as the 2016 deadline looms, the PPP Center is keen on what happens beyond Aquino’s term amid concerns the future administration would take a different direction from what was started.

Amend BOT law

“What we need now is to institutionalize the changes that we have started. Part of this is amending the BOT (build-operate-transfer) law to reflect these changes to make the program more sustainable,” Canilao said as she hoped lawmakers would approve these revisions within the year.

She said recent reforms included beefing up its project development and monitoring facility, crucial in ensuring “a steady deal flow.”

Government units and agencies are now more used to dealing with PPPs and processes have been “streamlined,” while measures have been taken to address risks through the creation of a contingent liability fund, Canilao said.

“All of that creates a good environment to attract investor participation,” she said.

This was very different from how the program started out, Aquino said in last year’s Sona as he shared that “studies on which the projects were based were outdated; and the bureaucracy lacked the sufficient knowledge to implement them.”

Controversy

The projects, given their large size and potentially lucrative nature, have also attracted some controversy.

Recently, the awarding of the 45-km Cavite Laguna Expressway deal has stalled after San Miguel Corp. sought the intervention of Malacañang last month to reverse its disqualification, which it said was due to a typographical error.

The front-runner for the project is a tandem between Ayala Corp. and Aboitiz Equity Ventures.

Canilao said that despite these issues, investors’ interest had not waned.

Local conglomerates like Ayala Corp., Metro Pacific Investments and San Miguel are PPP regulars. They said they would continue to bid for projects they found attractive.

Larger projects

But Canilao noted that drawing foreign groups would be crucial in the months and years to come as the PPP Center introduced ever larger projects like the planned subway and commuter railway.

Foreign participation, which also comes with expertise, has been limited, thus far.

Apart from the foreign groups that participated in the P17.5-billion Mactan-Cebu International Airport, only Malaysia’s MTD Group has consistently shown interest in Philippine PPPs. But this has not deterred the agency.

Marketing abroad

“We’re putting forward a system to deliver marketing abroad on our PPP projects,” Canilao said, adding that she was optimistic more international groups would participate.

“We have done our homework in making the process transparent. With the big projects we have conducted, those call the attention of foreign bidders. It says we are open for business,” she said.–With a report from Inquirer Research

 

Philippines Facing the Global Trade Challenges – ASEAN Integration 2015

Stock Market Trading Strategy For New Filipino Investors, 22 July 2014

By Josef Panerio

 

The Philippine economy cannot compete with China, United States and Europe market. But the Philippine market is brewing something bigger to be able to put a flag in the global trade.

One very striking quote that hit me during the PLDT SME Nation FutureTalks about the ASEAN Integration 2015 last July 18, 2014 at Solaire Resort and Casino was

“Big fish is coming to the small ponds, scary right? Yes it is very scary, especially for the small businesses (Small-Medium Enterprises) in the country (Philippines). However the dam is broken.”

The Philippines need our ally countries to join together as one nation and that is what we call the ASEAN Integration 2015 also known as ASEAN Economic Community (AEC). This vision will start next year December 2015 and no matter what, whether we (Philippines) are ready or not it will happen next year.

Philippines may not be ready yet to compete in the global market especially the small and medium enterprises but with the ASEAN integration it helps prepare the small and medium enterprises how to get ready and how to make it happen to enter in the global market.

And according to Joey Concepcion III President and CEO, RFM Corporation for us to make it happen the Philippines government needs to award all the Public-Private Partnership (PPP) to give way and gear-up of the upcoming change.

Once the Public-Private Partnership projects are awarded, many companies stock prices will appreciate higher as this is the much awaited event to happen. Like for the infrastructure improvement and development many companies will benefit from it like EEI, SM, SMC, Ayala Corp, SM Holdings, Megaworld.

We (Philippines) cannot compete to the challenges of the global trade, the global market is too scary for the Philippines to face, we are too small and too vulnerable if we do it alone. With the ASEAN nations united as one, challenges in the global market can be addressed with great and perfect solution, because we are not alone.

The Philippines may face great challenges ahead, but we are not alone in facing those challenges in the global market. We only just have to be educated of the upcoming events and financially educated. Everything starts with awareness and the nation will take action.

 

Allow me to share this story I got from the web, which perfectly fit why the ASEAN is necessary to happen and it goes like this.

There once was a farmer who grew award winning corn. Each year he entered his corn in the state fair where it won a blue ribbon.

One year a newspaper reporter interviewed him and learned something interesting about how he grew it. The reporter discovered that the farmer shared his seed corn with his neighbors.

“How can you afford to share your best seed corn with your neighbors when they are entering corn in competition with yours each year?” the reporter asked.

“Why sir,” said the farmer, “didn’t you know? The wind picks up pollen from the ripening corn and swirls it from field to field. If my neighbors grow inferior corn, cross-pollination will steadily degrade the quality of my corn. If I am to grow good corn, I must help my neighbors grow good corn.”

(Source: http://www.inspirationpeak.com/)

 

PPP projects and the voter map

Business World, 21 July 2014

By Agbayani P. Pingol II

 

ONE of the fundamental principles of democracy is that one person gets one vote. That makes everyone politically equal, in theory. But when voters choose to live in certain places in large concentrations, the outcomes are less equal, at least in terms of their enjoyment of the economic spoils.

A few weeks ago we published a map that showed how the government concentrated on Luzon when it came to distributing projects under its signature Public-Private Partnership (PPP) program. The private sector’s involvement means that the projects which come to the fore will tend to have strong profit potential. One of the implications of this selection process is that only the richer sections of Luzon and major cities in the Visayas and Mindanao have the ability to pay the tolls and the charges demanded by investors. It seems clear on an intuitive level that the in-built bias for potential payoffs will lead to the widening of the gap between developed areas of Luzon and the rest of the country.

Here is a second map that presents the PPP from another angle, which shows the voter-rich areas of the country getting an outsized share of the infrastructure. While it is a staple of democratic thinking that government decisions should benefit the most number of people, it is equally difficult to be a resident of a neglected area and watch other provinces corner the spoils.

Let us take a stab at the possible electoral logic behind this uneven distribution. The Philippines has 44,269,792 registered voters in more than 80 provinces, according to the 2010 Census. Nineteen of the top 20 vote-rich provinces also belong to the top classification for local government revenue, with sixteen of the top 20 vote-rich provinces to be found on Luzon. So far, so good. But it is also possible to be voter-dense while also having a small voter population in absolute terms – the top examples here are Camiguin, Tarlac and Bataan, three electorally insignificant provinces that have also not managed to attract a PPP project. Meanwhile, La Union, with a similar demographic profile, bagged a project under the PPP for reasons that have more to do with the strategic location of its airport, and should be counted as a notable exception.

It all seems quite unfair, but the reality is that, all things being equal, businessmen will go where the money is, and the politicians will go where the votes are. When their interests converge it will sometimes produce a concentration of investment in areas that already enjoy a development head start on the rest of the country. It is possible that a future government will redress the balance by implementing vitally-important projects with little consideration for electoral factors and no hope of a payoff, but that does not seem to be where the policy winds are blowing right now.

 

DOTC vows to address infra backlog in 5 to 10 years

Rappler, 21 July 2014

 

To do this, the agency says fairness, openness, and transparency in the bidding process must be maintained

MANILA, Philippines – Department of Transportation and Communications (DOTC) Secretary Joseph Emilio Abaya said they intend to erase the backlog in transportation infrastructure in the next 5 to 10 years, to meet the country’s needs in the 10 to 20 years that will follow.

In doing this, he stressed that fairness, openness, and transparency must be upheld in bidding and procurement processes.

DOTC has cornered 28 PPP projects worth P529.41 billion ($12.19 billion*) out of 57 Public-Private Partnership (PPP) projects in the pipeline.

The government has so far awarded about P68 billion ($1.56 billion) PPPs, among them are the following:

Apart from the AFCS and Mactan airport projects, DOTC is set to award the P65-billion ($1.50 billion) LRT 1 Cavite Extension Project to the Light Rail Manila Consortium led by infrastructure giant Metro Pacific Investments Corporation and conglomerate Ayala Corporation.

Investor trust

Abaya said vital in addressing the infrastructure backlog is maintaining the trust of investors in the bidding process.

Like in a romantic relationship, he said a crack in the trust would be difficult to recover from.

“If we do any act or make any decision which would sow distrust or shake investor confidence in our processes and practices, we may lose all potential bidders for our future projects altogether,” he said.

He made this statement following a slew of cases filed by losing and disqualified bidders for PPP projects.

The secretary also expressed gratitude that despite the controversies arising from project biddings, numerous companies – both foreign and local – continue to participate in the government infrastructure projects.

“We take this as a vote of confidence in our work, both in terms of structuring projects, as well as in ensuring fairness, openness, and transparency in our bids.” – Rappler.com

 

(*$1 = P43.50)

 

 

DOTC vows to wipe out transpo backlog in 10 yrs

The Philippine Star, 21 July 2014

By Lawrence Agcaoili

 

MANILA, Philippines – The Aquino administration aims wipe out the backlog in transportation infrastructure in the Philippines over the next five to 10 years.

“We envision erasing the backlog in transportation infrastructure over the next five to 10 years. In such a way that the infrastructure we build will meet the country’s needs for the 10 to 20 years that follow,” Transportation Secretary Joseph Abaya said.

Abaya pointed out that fairness, openness, and transparency are the hallmarks of bidding and procurement processes under the Aquino administration.

“We realize how any crack in the trust between the public and the private sectors will be difficult to recover from if there’s strain on the relationship. If we do any act or make any decision which would sow distrust or shake investor confidence in our processes and practices, we may lose all potential bidders for our future projects altogether,” he said.

Abaya made the statement amid the slew of cases filed against the government with regard to the bidding of public private partnership (PPP) projects including the proposed P1.4 billion Metro Rail Transit and Light Rail Transit (MRT-LRT) common station, the P35.4 billion Cavite-Laguna expressway project, the P65-billion LRT1 Cavite extension project, the P3.8-billion MRT3 capacity expansion project, among others.

“Thankfully, despite all these controversies which have been raised against the bidding out of our projects at the transportation department, numerous companies – both foreign and local – continue to participate in our bids.  We take this as a vote of confidence in our work, both in terms of structuring projects, as well as in ensuring fairness, openness, and transparency in our bids,” he explained.

The PPP Center earlier reported that the DOTC has cornered 28 PPP projects worth P529.41 billion out of the 57 PPP projects in the pipeline.

 

 

DOTC aims to plug transport gap in 5-10 years

InterAksyon, 21 July 2014

By Darwin G. Amojelar

 

MANILA – The Department of Transportation and Communications (DOTC) expects the Philippines to suffer from a transportation gap at least in the next 5 years.

“We envision erasing the backlog in transportation infrastructure over the next 5 to 10 years, in such a way that the infrastructure we build will meet the country’s needs for the 10 to 20 years that follow,” Transport Secretary Joseph Emilio Abaya said.

“Fairness, openness, and transparency are the hallmarks of bidding and procurement processes under the law. They are the hallmarks of the procurement process under the Aquino administration,” Abaya said.

Out of the 57 projects worth P530 billion under the government’s public-private partnership (PPP) program, DOTC is set to undertake 28.

It has awarded the P1.72 billion Automated Fare Collection System to a consortium of the Ayala and Metro Pacific groups, and the P17.5 billion Mactan-Cebu International Airport Project to the GMR-Megawide consortium.

The department is also set to award the P64.9 billon LRT Line 1 Cavite Extension Project to another joint venture between the Ayala and Metro Pacific groups, and will soon bid out the P2.5 billion Integrated Terminal System Southwest Project.

PPP projects to be bid out under DOTC include the operations and maintenance (O&M) contracts of the following airports: Laguindingan, New Bohol (Panglao), Puerto Princesa, Davao, Bacolod , and Iloilo. Also up for auction are the Motor Vehicle Inspection Project, Mass Transit System Loop and the North South Commuter Rail, which would start from Malolos in Bulacan to Calamba in Laguna.

Other projects are the O&M and extension of the LRT2, the Davao Sasa Port and the Integrated Terminal System North and South projects.

Since launching its PPP Program in 2010, the Aquino administration has awarded the following 7 projects:

  • P2.01 billion Daang Hari-SLEX Link Road;
  • P15.52 billion NAIA Expressway;
  • P16.42 billion PPP for School Infrastructure Phase 1;
  • P8.80 billion PPP for School Infrastructure Phase 2;
  • P5.69 billion Modernization of Philippine Orthopedic Center;
  • P1.72 billion  Automatic Fare Collection System; and
  • P17.5 billion Mactan-Cebu International Airport Passenger Terminal Building.

The government is banking on the PPP projects to plug the country’s infrastructure gap and create jobs in the process.

The National Economic and Development Authority (NEDA) had said the PPP initiative would require up to P739.78 billion in investments through 2016 to boost the economy and the country’s investment rate.

Under its medium-term development plan, the government expects the economy to grow between 7-8 percent through 2016. The Aquino administration also aims to raise its investment rate to 18 percent of gross domestic product by the end of its term from 14 percent at present.

 

SONA | Aquino administration implements massive infrastructure spending in Central Luzon

InterAksyon, 21 July 2014

By Zorayda S. Tecson, Philippines News Agency

 

SAN FERNANDO, Pampanga, Philippines - The government’s infrastructure spending is a manifestation of the Aquino administration’s determined efforts to accelerate development in the region through the construction of the major roads, highways and flood control projects under the Public-Private Partnership (PPP) initiative.

Other projects being implemented in the region are under the convergence program such as the tourism infrastructure in coordination with the Department of Tourism and the construction of farm to market roads with the Department of Agriculture and Department of Agrarian Reform.

Severino Santos, regional director of the National Economic Development Authority (NEDA), said the government wants to pursue infrastructure development to help boost economic growth, attract investors and create more jobs.

One of these infrastructures is the 88.85-kilometer Tarlac-Pangasinan-La Union Expressway (TPLEX), which is seen as a vital road project in Luzon, connecting the Central and Northern Luzon provinces to Manila and beyond through the Subic-Clark-Tarlac Expressway (SCTEX) and the North Luzon Expressway (NLEX).

Currently, a 49.30- kilometer stretch of the TPLEX from Tarlac City to Rosales, Pangasinan is operational.

On progress is the 13.72 kilometer stretch from Rosales to Urdaneta, including construction of the 950-meter Agno viaduct.

The remaining 25.83-kilometer section from Urdaneta to Rosario, La Union will be completed in 2018.

From end to end, the TPLEX will traverse 17 towns and two cities (Tarlac and Urdaneta) across four provinces: Tarlac, Pangasinan, La Union and Nueva Ecija.

The government, through the Department of Public Works and Highways (DPWH) has also completed the first phase of the Plaridel By-Pass Road which involved 14.65 kilometers road, 2.40 kilometers access road, and seven bridges starting from North Luzon Expressway via a new interchange in Barangay Burol, Balagtas to the junction of Alejo Santos Road in Bustos, Bulacan.

It realized travel time savings of 20-23 minutes and directly benefitting the towns of Balagtas, Plaridel, Pandi, Bustos, Baliuag, Angat and San Rafael.

Also in the pipeline is the proposed North Luzon Expressway(NLEX) East project and the Central Luzon Link Expressway (CLLEX), Phase 1 (Tarlac-Cabanatuan, Nueva Ecija)

The NLEX East project will form an important transport access in the eastern area of Central Luzon.

With a length of 92.1 km., the project consists of Phase I and Phase II which is up to Cabanatuan City starting from the end point of La-Mesa Parkway and/or junction of C-6 in San Jose del Monte via Norzagaray, Angat, San Ildefonso, San Miguel, Gapan, and Sta. Rosa in parallel with the Pan Philippine Highway.

The CLLEX Phase I, on the other hand, will form an important lateral (east-west) link for the overall expressway network of the region.

With a total length of 30.7 kilometers, the construction of a four-lane expressway will start from Subic-Clark-Tarlac Expressway (SCTEx) at 2.5 km north of Luisita Interchange and will end in Cabanatuan City.

Likewise, the Regional Development Council (RDC) in Central Luzon has began to roll up its sleeves to implement important projects that will further boost socio-economic development projects in the region.

“We will prioritize projects based on the benefits of the region and we will see to it that no province in Central Luzon will be left behind,” RDC-3 chairman and Bulacan Governor Wilhelmino M. Sy-Alvarado earlier said.

Alvarado said the RDC-3 will be pushing for what they termed as the “missing link” in further boosting the Clark International Airport –the mothballed Northrail project which will connect the region’s premiere international airport to Metro Manila and that will also compliment the Ninoy Aquino International Airport.

Among the projects that the RDC-3 will focus on are the revival of the Pampanga River Control System; the Bataan Expressway connecting the province to the Subic Freeport; the western river flood control project in Zambales; the Balog-balog project in Tarlac; costal roads and the conversion of the Bayabas river into a dam in Bulacan.

Meanwhile, the government has prioritized the flood control projects to ease flooding in the low-lying areas in the region.

These include the restoration and rehabilitation of San Fernando- Sto. Tomas-Minalin Tail dike with a cost of P139 million and the construction of spillway No. 1 and spillway no. 3 including clearing and desilting/excavation of tributary rivers (P637 million); rehabilitation works on Del Carmen – Balimbing creek in San Fernando and the rehabilitation of the Apalit-Arayat breached dike (P124 million), all in Pampanga.

In Bataan, five flood mitigation projects worth P55 million are being undertaken by the DPWH in Pilar town and dredging works along Orani channel worth P50 million.

Other ongoing projects in the region include the Valenzuela-Obando-Meycauayan project costing P1.53 billion and the dredging of Labangan Channel in Hagonoy, Bulacan .

Under the Department of Agrarian Reform (DAR) Agrarian Reform Infrastructure Support Project – Phase 3 (ARISP-III), the DPWH said that 19 projects having total road length of 49.54 kilometers, at a cost of P224 million were completed in the region.

Likewise, the government is continuously upgrading the Clark International Airport that include the expansion of its passenger terminal building from 11,000 to 17,000 square meters.

There are also plans to build a new budget terminal which is expected to be approved by the National Economic Development Authority (NEDA) this August.

However, the “biggest development” in the region as what President Benigno Aquino earlier said would be the proposed Clark Green City, a project of the Bases Conversion and Development Authority.

Recently approved by NEDA, the Clark Green City project is envisioned to become the country’s most modern and the first technologically-integrated city.

The Clark Green City is located within the Clark Special Economic Zone (CSEZ) and at the heart of the bustling urban centers and major infrastructures in Central Luzon.

The first phase of the Clark Green City, which comprises 1,300 hectares of the 9,450-hectare land, will be up for bidding by the third quarter of this year.

Meanwhile, the construction of vital infrastructure and tourism projects needed for the upcoming Asia Pacific Economic Conference (APEC) slated to be held in major areas in the region in 2015 are ongoing.

These projects include the upgrading of the Pandan-Magalang Road costing P60 million; the Mac-Arthur Highway in the Balibago commercial district (P41.5 million); and the Friendship Road (P60 million); and the widening and upgrade of the drainage system along Don Bonifacio Road (P19 million), all in Clark and Angeles City in Pampanga.

 

Philippines heads for construction boom

Oxford Business Group, 15 July 2014

 

The government in the Philippines is giving a new push to major construction projects awarded under a public-private partnership scheme, putting the building sector on a strong growth path after last year’s Typhoon Haiyan wrecked havoc in the southeast Asian country.

The construction industry has already shown impressive growth so far this year. Residential building and reconstruction efforts have been driving the surge after the tropical cyclone, known as Typhoon Yolanda in the Philippines, hit the Visayas islands in November 2013. One of the strongest typhoons ever recorded in terms of wind speed, it caused total losses estimated at $12bn-$15bn, according to Kinetic Analysis Corp, a US-based hazard research company.

President Benigno Aquino’s government seems determined to move forward with mothballed developments, while simultaneously rolling out major new roads and utilities projects as part of the PPP scheme, which has been hit by severe delays since its launch in 2010.

Reconstruction after Haiyan

The Philippines Statistics Authority (PSA) announced in June that the total number of approved building permits had grown by a fifth during the first quarter of 2014 year-on-year to reach 29,468. The total project value was PHP61bn ($1.4bn), a 4.3% increase over the first quarter of 2013. The number of residential building projects, which accounted for the bulk of new building permits, increased 17% year-on-year.

Meanwhile, the number of construction permits issued for additions, alterations and repairs of existing structures totalled 5,474 during the first quarter, a 42% year-on-year jump, with part of this hike attributed to reconstruction efforts following Typhoon Haiyan.

Reconstruction works and major infrastructure projects are expected to continue to fuel the growth of the construction industry. The National Economic and Development Authority (NEDA) approved a PHP123bn ($2.81bn) highway and dyke project in June, which will be put to tender before 2015.

The Laguna Lakeshore Expressway-Dyke project involves the construction of a 47-km dyke on top of which will be a high-speed six-lane motorway. It is expected to protect an estimated 200,000 households, or 1m Filipinos, living in low-lying, flood-prone communities. The motorway was deemed an urgent priority following extensive flooding in Laguna and south Metro Manila caused by Typhoon Ondoy in 2009, and a long period of damaging monsoon floods in 2012 and 2013.

New push with PPP

Previous PPP projects have been hit by severe delays with The Economist Intelligence Unit reporting two years ago that none of the government’s 10 original planned projects had yet been put to tender. Recognising the need for timely delivery of new infrastructure, the government has begun a new push to implement PPP projects, announcing in June that it will shortly award a PHP65bn ($1.5bn) contract for a railway linking Manila to Cavite, as well as a PHP35.4bn ($809m) project for a toll road located south of Metro Manila. At the same time, NEDA recently approved a bid by Ayala Corp and Metro Pacific Investments Corp to build the planned Light Rail Transit (LRT) line, a contract worth PHP9.35bn ($214m), PPP Centre Executive Director Cosette Canilao told local media.

The Transportation Department’s biggest PPP project yet, a PHP271bn ($6.2bn) North-South commuter railway in Luzon is expected to be offered to investors towards the end of this year or early next year with a hybrid PPP structure being studied, Transportation Secretary Joseph Abaya told reporters at the end of June.

Two major water supply projects, the first time utility projects have been included in the PPP scheme, are also on the cards. Bidding for the two contracts, which are worth a combined total of PHP43bn ($983m), opened in June, with a final decision expected during the first half of 2015. The first of these is a PHP24.4bn ($558m) contract to supply water to Bulacan, in the north of Manila, and the second involves construction of a dam in the northeast of Manila, worth an estimated PHP18.7bn ($428m.)

Cement challenge

With President Aquino fast-tracking major infrastructure projects, private contractors are set to see considerable activity. However, the increased demand for cement could pose a major problem. The Iloilo province has experienced a serious cement shortage following the launch of several major construction and real estate projects in the area, Worldcement.com reported in June. Projects including a PHP1bn ($22.86m) convention centre, as well as continuing road and infrastructure projects, have driven suppliers to limit the amount of cement sold in one transaction to ten bags according to reports.

Cement shortages are reportedly worst in the northern part of the province, which was heavily damaged during Typhoon Haiyan. This shortage, while highly localised, nonetheless underscores the need to ensure steady supply of new materials; a 2010 cement shortage, for example, saw cement prices surge from PHP205 ($4.69) per bag, to PHP270 ($6.17).

 

Megawide shelves export plan to focus on PPP

The Philippine Star, 15 July 2014

By Neil Jerome C. Morales

 

MANILA, Philippines – Megawide Construction Corp., one of the country’s top building contractors, has temporarily shelved its plan to export pre-fabricated construction materials to Southeast Asian neighbors.

Instead, the listed construction company will return to the drawing board for its export plans as it focuses on Public-Private Partnership (PPP) projects and existing contracts, a ranking company executive said.

“We bumped into some obstacles but we are still keen on exporting,” Megawide chief financial officer Oliver Tan said in an interview.

“We still have to go back to the drawing board.”

Megawide earlier targeted to start the shipment of pre-fabricated construction materials to a Southeast Asian residential project contractor this year, in line with the company’s plans of diversifying its revenue stream in the long run.

The firm’s P1-billion pre-cast production plant in Taytay, Rizal is the biggest one-stop shop of pre-cast concrete building systems in the country and one of the largest in Southeast Asia. Construction materials such as beams, columns, stairs and walls are produced in the plant.

In the meantime, Megawide will focus on big-ticket infrastructure projects and existing contracts to maximize its production capacity.

“There’s so many things going on locally,” Tan said, adding that pre-fabricated slabs are increasingly being used in local construction projects.

He said their current projects are sufficient to keep the pre-fabrication plant busy with a utilization rate of around 70 percent.

Megawide has bagged four PPP projects to date: the P17.5-billion Mactan-Cebu International Airport, the P5.7-billion new Philippine Orthopedic Center, PPP School Infrastructure Project Phase One (PSIP-1) and PSIP-2.

“Infrastructure is needed in the country to facilitate the delivery of basic services to the population,” said Megawide president Edgar Saavedra, adding that the company has the technology to deliver infrastructure projects.

Megawide, which started as a contractor for residential towers, particularly those of SM Development Corp., corners between 15-17 percent of the high-rise construction business in the Philippines.

Last month, Megawide announced it is venturing into $100 million worth of power generation projects.

 

PPA eyes privatization of 4 southern ports

The Philippine Star, 14 July 2014

By Lawrence Agacaoili

 

MANILA, Philippines – State-run Philippine Ports Authority (PPA) is looking at privatizing four major ports as part of efforts to transform major ports into world-class facilities to complement the operations of the congested Ports of Manila.

PPA general manager Juan Sta. Ana said the agency is awaiting the completion of the feasibility study to determine the mode of privatization of major ports in Iloilo, Cagayan de Oro, Zamboanga, and General Santos.

Sta. Ana said the PPA is looking at installing cranes at the four major ports to complement the operation at the Manila North Harbor.

If viable, he explained that the PPA would tap the Aquino administration’s public private partnership (PPP) scheme to privatize the four ports.

According to him, the privatization of the Sasa Wharf in Davao is now pending before the National Economic and Development Authority (NEDA).

He pointed out that the two consultants hired by the PPA to conduct the feasibility study for the privatization of the port has concluded their study and have submitted their respective recommendations to the PPA.

“The PPA Board, on the other hand, is busy harmonizing the two results to come up with a win-win solution on how to carry out the privatization to pave the way for the modernization of Sasa Wharf, the country’s major port for Banana exports,” he explained.

The PPA, which is currently celebrating its 40th Anniversary, has successfully privatized major ports in Manila as well as Batangas.

Listed International Container Terminal Services Inc. (ICTSI) of port and gaming mogul Enrique Razon has poured in P20 billion into the operations of the Manila International Container Terminal (MICT) that now has the capability to handle post-panamax vessels while port capacity has already reached at least 2.5 million 20-foot equivalent units (TEUs).

On the other hand, Asian Terminals Inc. (ATI) likewise has committed to invest $500 million until 2030 to modernize the operations of the Manila South Harbor that has the capability to handle post-panamax vessels and its capacity has already reached one million TEUs.

Manila North Harbour Port Inc. (MNHPI), a joint venture between the Harbour Centre Port Terminals Inc. and diversified conglomerate San Miguel Corp. (SMC), is sinking in P14 billion to modernize the Manila North Harbor that now boasts of a world-class passenger terminal building while its cargo terminal is likewise being upgraded.

ATI has also committed to invest more at the Batagas port after the government poured P5 billion to groom the port facility as an alternative port with a capacity of 450,000 TEUs to handle spillover cargo of Asia’s cargo hubs like Singapore, Hong Kong, Malaysia, among others.

Aside from the four major gateways, Sta. Ana said the PPA was also able to upgrade to world standards seven more ports to make sure that the Philippines is able to accommodate the increasing demand in the international markets.