LRT Line 1 Extension Project. Version NEDA, April 2009

Transcription

1 LRT Line 1 Extension Project Revised Feasibility Study Version NEDA, April 2009

2 Presentation Outline Objectives & Project developments & Implications of North Extension Implementation Framework & Transaction Changes to Project Cost Components ICC Approved vs. 1

3 Objective The Objective To improve access to central Manila by providing off-street public transport connections to and from the rapidly growing southern section of Metro Manila To create an enabling environment and model for public private partnerships in transport infrastructure through the development of a financially sound PPP project The Means To invite private sector participation for this design, build, finance, operate and maintain project thereby limiting Govt. financial contribution and achieving equitable risk allocation 2

4 Project Benefits Supports the President s strategy to promote international competitiveness of the Metro Luzon Urban Beltway Modernize infrastructure at least cost to efficiently transport people Significant environmental and social benefits through Decongested road traffic and reduction in road casualties Reduced air pollution Improved transit access/connectivity to under-developed land Affordable transportation Improved productivity and quality of life for thousands of commuters Increased employment local labor requirement during construction and operation phases 3

5 Project Implementing the LRT Line 1 South Extension Project which has been in the Government s pipeline of priority projects, as presented in various public fora, will send strong signal of Government s commitment to meet current infrastructure challenge. Launching the Project under a PPP arrangement through a transparent, open competitive tender process is the fastest track to complete the Project and presents the least cost/risk exposure to the Government. The World Bank Group remains fully committed to the Project and is ready to support the Philippine Government in immediately bringing this strategic transport infrastructure investment to the international PPP market. 4

6 Why implement the project now? Most developed Investment Opportunity Project is the most well-developed PPP infrastructure project in the pipeline --- Project READY for bidding, ROW procurement and public financing component are in advanced stages. Government/LRTA is supported by a high-caliber, global transaction advisory & lending team led by the WB-IFC. Transaction structure is a model PPP arrangement with a fair and balanced sharing of risks between public and private sectors. No market guarantee from the govt. Transparent, Competitive Bidding Track Supports Good Governance Agenda --- protects public interests. Provides opportunity for the widest local and international attention to the Philippines as an attractive investment destination in the Region. Expected Impact Project/public service is provided at the earliest possible time. Least fiscal impact and risk exposure to the Government --- Government contribution to the project is carefully managed and minimized through competition. Creates stable PPP contract that promotes investor confidence. Strengthens credibility of GoP to deliver on committed infrastructure program. 5

7 Project Line 1 to be extended south by 11.7 km traversing the cities of Paranaque and Las Pinas to Bacoor, Cavite 8 new stations with the option of adding another two [at Manuyo Uno & Talaba] Most sections elevated (two stations at grade) addition of a satellite depot at Zapote Minimum Required Works Civil Works guideway, trackworks, m1 8 new stations, 3 intermodal facilities, satellite depot, expansion of Baclaran depot, rehab of exisitng assets Electrical & Mechanical 156 new LRVs, 87 LRVs refurbished, signals, power, ticketing, elevators System Enhancement Works fleet acquisition & replacement, refurbishment [92 LRVs acquired, and another 204 refurbished over concession period] 6

8 Slide 7 m1 check if still accurate with accelerated satellite depot construction mbaclagon, 8/5/2008

9 Project Alignment 7

10 Construction of North Extension Construction of the North Extension 6 km extension connecting Monumento to North Station 2 [potentially 3] new stations, Balintawak and Congressional Proposed commercial operation date May 2010 Ridership to increase to 535,000 riders per weekday for existing Line 1 & North extension in 2010 Implications of Integration with Existing LRT Line 1 and future South extension Project costs and Govt. financial contribution to be revised to reflect passage of time, increase in cost of materials, and integration with North extension Existing fleet deemed sufficient to service additional ridership generated by North extension through end of South ext. construction period (2012) North extension to be handed over at end 2012 to concessionaire to operate as integrated Line 1 inclusive of both extensions Rolling Stock requirement Immediate need to procure 156 additional cars and refurbish the 63 BN-Acec vehicles and 28 Adtranz LRVs 8

11 Activities undertaken since Dec ICC approval WB loan to fund project s public component as requested by LRTA/DOF in March 2007 World Bank-IFC missions in April & Dec. 2007, April & July 2008 DOTC endorsement of project to DBM to seek MYOA issued in April 2008 Project documentation Project feasibility study, information memorandum, concession agreement, and prequalification documents drafted Aug May 2007 [IFC, White & Case, PJC, Halcrow] Thirty entities registered interest as potential bidders Technical services Ridership forecast and revenue optimization models revised & updated July 2008 Fleet acquisition and refurbishment program revised & updated July 2008 Capex, and opex estimates revised & updated July 2008 Project costs updated and revised Govt. financial contribution determined July 2008 [WB-IFC] Presentation to DBM, DOF and other oversight agencies Advise on an off-budget arrangement for the public financing support, i.e., DOF to borrow then on-lend to lrta Presentations to the LRTA Board last August 1, 2008 and October 13, 2008 No decision reached to endorse revised proposal to NEDA-ICC 9

12 Implementation Framework Implemented on solicited mode under the BOT Law Firm legal basis and transparent process for selecting private partner Should attract more investors, ensuring competition and lower project cost ODA funding can be considered, this isn t possible under unsolicited scheme Contractual arrangement structured on Contract-Add-Operate (CAO) scheme Project proponent adds to the existing line then operates the integrated line over a 30-year concession period, inclusive of 4-year construction period Facility, including integrated line and all upgrades transferred at no cost to LRTA at end of concession period Public Private Partnership model Optimal balance to minimize public cost and achieve private sector participation Public contribution financed using ODA funds, private sector finances balance of initial capital requirement and its share of all future capital investments (new rolling stock, upgrades & refurbishments) Project structure ensures more equitable risk allocation between public & private sector Results in lower/affordable fares for users over the concession period Criteria for concessionaire selection Prequalification legal qualification, technical capability, management capability, financial capacity, experience of similar projects and operations Ability to deliver assessment of ability to achieve financial close and meet performance standards, supported by a performance bond Financial Parameter - least upfront Government contribution to project capital costs 10

13 WB Shareholders Lenders Equity Debt Sovereign Guarantee Loan for Project EPC contractor for CW & E&M Government of the Philippines/DOF LRTA Relending Private aire Contracts 30-year Contract O&M contractor Government Performance Undertaking LRTA Grant concession, including commercial devt Provide capital funds for project Secure ROW Build North extension Operate Existing Line & North extension until handover Regulate fares & performance All LRTA Contractual obligations deliver Existing Line deliver North Ext Implementation of agreed fares No competing rail service aire Finance share of Investment Costs Operate & Maintain integrated line to standards Procure single EPC contractor Post performance bonds Transfer assets at end of concession 11

14 Institutional arrangements Private sector responsibilities To enter into 30 year concession agreement with LRTA To design, build, & partly finance the construction of the Line 1 South extension To raise balance of project costs through private finance, ECA, bilateral and other sources To operate, and maintain the integrated Line 1 inclusive of the North extension, existing line, and South extension post construction for remaining duration of concession [26 years] using best international practices To meet minimum performance standards by performing scheduled & major maintenance, fleet acquisition, repair, & refurbishment Handover of integrated Line 1, at no cost, at the end of the concession period in good working order [asset condition to allow for five years of continuous operation post concession end date] 12

15 Institutional Arrangements Public sector responsibilities To enter into 30 year concession agreement [inclusive of 4 yr. construction] with private concessionaire To partly finance through Govt. financial contribution the construction of the Line 1 South extension final amount of subsidy to be determined through competitive bidding To procure the right of way for the 11.7 km alignment, including requirements for stations and satellitte depot of the South extension To complete construction of the North extension latest by end 2012 [planned completion mid-2010] To supervise construction & operation of the South extension through services of independent engineer, LRTA staff To handover post construction of the South Extension - the integrated Line 1 to concessionaire to operate, and maintain for duration of concession [26 years] To approve & implement fare increases as per the terms of the concession agreement To supervise concessionaire performance during concession period To ensure that no competing rail lines are built along alignment 13

16 Performance Regime Basis of performance standards Common basis for bidders to develop their proposals Minimum service level to meet economic objectives of Government/ LRTA Defined fare structure and levels, including mechanisms and methodology for review and adjustment Promotes better performance using a commercial framework for service delivery Performance includes Construction: delivery of the extension to a fixed schedule and Government contribution Operational performance: running an efficient and reliable train service Service quality: operation to a timetable, cleanliness, station staffing, availability of station facilities, and availability of information on the service Asset preservation: planning maintenance/renewals for a sustainable service Operational safety: ensuring a safe system for passengers and staff Required performance standards Specific financial penalties, backed by operational performance bond, when standards are not achieved Higher levels of operational performance, service quality, asset preservation 14

17 Risk Allocation Risk Responsible Party Remarks Ridership aire Sufficient to support debt repayment, O&M, and return on investment Fare Implementation Government Performance Undertaking to implement fare & adjustment formula Inflation & Forex Fluctuation aire Relief provided during operatoions through fare adjustment formula Existing line condition prior to turnover to Private proponent Government Pre-agreed condition upon turn-over, including construction of North ext. & delivery of CEP ROW procurement & delivery Government Delivery of required ROW, free & clear Project Financing Government/ aire Public and private components Construction of Extension aire Fixed govt contribution, date-certain delivery supported by performance security System Integration aire Compatible technology, through trains Operation & Maintenance aire Per concession performance standards System Enhancement/Upgrades Government/ aire Political Risk Government Limited events Financing, construction & integration 15

18 Fare Optimization Existing fare structure is flat 12 Pesos for 3 km Pesos/ km Average fare was approx. Php 20 over 12.6 km Extension provides the opportunity to optimize revenues within acceptable limits Optimized fare raises revenue if corresponding decrease in ridership is not disproportionate (below gains realized from optimized fares), and results in fares that are affordable and reasonable when compared to other modes of transport. Fare optimization Tested the revenue generated from a series of different fares Highest revenue from new fare structure: 9.0 Pesos Pesos/ km (2005 prices) Average fare is approx. Php 36.8 in 2013 over an average distance of 12.6 km (nominal prices) Compares favorably with existing fares on FX taxis & aircon buses of Php 10 (for 5km) + Php 1.75 per km 16

19 Ridership & Revenue Forecast ICC approved vs. Revised ICC approved Two-part fare structure [2005 prices] Boarding Fare 8.0 Pesos Distance fare 0.8 Pesos/ km; Real fare increases Fares increase 1% to 1.5% above inflation (assumed at 4%) Average fare of Pesos by 2013 Ridership projections 350,000 weekday riders in 2005; 640,000 weekday riders in 2015; 760,000 weekday riders in Average distance travelled 11.2 km Farebox Revenue projections (nominal prices) 4,523 million Pesos in 2013 Revised Two-part fare structure [2005 prices] Boarding Fare 9.0 Pesos; Distance fare 0.9 Pesos/ km; Real fare increases Fares increase 1% to 1.5% above inflation (assumed at 6%) Average fare of Pesos by 2013 Ridership projections 350,000 weekday riders in 2005; 675,000 weekday riders in 2015; 750,000 weekday riders in 2030 (demand capped by system technical constraints) Average distance travelled 12.6 km Farebox Revenue projections (nominal prices) 8,558 million Pesos in

20 Ridership & Tariffs - Analysis Ridership assumptions are sound and enable Government to make prudent decisions on resource allocation Past MRTs have made over-optimistic projections of ridership/revenues and have failed to meet forecasts Over-optimistic projections have made investors wary and have undermined previous government attempts to attract private sector participation ridership study has considered fare structure at levels that are socially acceptable and politically reasonable to implement Ridership on the Integrated Line is expected to double current levels 10 years into its operation However, if a bidder finds ridership projections to be conservative, then under proposed concession structure and bid terms this should translate into Higher investments put in by private sector to improve efficiency Could lead to more aggressive proposals for higher private sector share of upfront capital costs; and therefore, Lower Government contribution (financing) of capital costs 18

21 Capital Expenses: ICC Approved vs. Cost Categories ICC Approved [USD mln, 2005 prices] (excluding IDC & fees) Revised Cost [USD mln, 2007 prices] (excluding IDC & fees) Reasons for cost increases Site Acquisition Increase in zonal valuation of properties, number of informal settlers and in related costs for relocation Civil Works Increase in steel prices, inflation, contingencies, immediate expansion of Baclaran depot, construction of satellite depot, cost of utility relocation and rehab of existing CW assets Electrical & Mechanical 44 (No LRVs procured or refurbished) System Enhancement Works (SEW) 238 (72 cars acquired) 542 Procure156 LRVs, refurbish 87LRVs, and increased by escalation in related component costs, inflation, contingencies, and refurbishment of existing line E&M assets 574 Comprise future investments over the concession period, includes procurement of 92 LRVs for replacement & 204 LRVs refurbished, further expansion of Baclaran depot, regular rehabilation of existing line 1 Sponsor Development Costs Increased for inflation, costs related to LRV procurement and higher contingency estimates comparable with projects of similar investment size and complexity Estimated Total Investment over period 683 1,884 Estimated Total Upfront Investment (excludes SEW) 445 1,310 LRTA share 30 [4%] 68 [4%] Govt. share 260 [38%] 675 [36%] Private sector share 393 [58%] 1,141 [60%] 19

22 process 2 stage / 2 envelope competitive procurement First stage: Investor pre-qualification based on technical capability, management capability, financial capacity, experience of similar projects and operations Second stage: (Open only to pre-qualified bidders) First envelope technical proposal: Pass / fail based on approach, work plan and methodology Second envelope financial proposal: Lowest upfront government financial contribution to the Project (Note: BOT Law allows government to share up to 50% of total project cost.) 20