Bidding: 25 firms keen on ₱60 Billion LRT 1 extension project -PPP

More than 20 Firms both local and foreign firms have expressed interest in the 60-Billion Light Rail Transit (LRT) Line 1 Extension, Operations and Maintenance Project under the Aquino administration's Public-Private Partnership (PPP) program.

The Department of Transportation and Communication (DoTC), during the pre-qualification conference on July 10, 2012; said it was reviewing the rules to determine whether 100 % foreign-owned entities could be allowed to operate the LRT 1 project extension.

The Constitution provides that operators of "Public utilities" should be at least 60 percent Filipino-owned.

The project, one of the largest in the infrastructure portfolio of the government, will extend the existing LRT Line 1—which now runs from Roosevelt in Quezon City to Pasay City—to Bacoor, Cavite.

The project is meant to "capture a large population base that regularly travels between Cavite and Manila," said Transportation Secretary Mar Roxas. When completed, the estimated travel time from end-to-end would be one hour and 10 minutes which would slash up to 50% off travel time.

The firms that purchased pre-bid documents, according to the DoTC, include the following firms:

  1. San Miguel Corporation – Infrastructure (Philippine Company)
  2. Macquarie Group (Australian Firm)
  3. Mitsubishi Corporation (Japanese Firm)
  4. Marubeni Corporation (Japanese Firm)
  5. D.M. Consultant Incorporated
  6. Hanjin Heavy Industries and Construction Co. Ltd.  (Korean Company)
  7. Sumitomo Corporation (Japanese Firm)
  8. Leighton Contractors (Australian Firm)
  9. Sycip Salazar Hernandez & Gatmaitan (Philippine Company)
  10. FSG Capital Incorporated
  11. EFC Enterprises
  12. FF Cruz & Co. Incorporated
  13. BPI Capital Corporation
  14. ING Bank (Netherlands)
  15. Jorgman Planning Development Corporation
  16. RATP Development (France)
  17. Benchtel Overseas Corporation (USA)
  18. Commbuilders and Technology Philippines Corporation  (Philippines)
  19. Lenvoisa Construction Incorporated
  20. APT Global Incorporated
  21. Makati Development Corporation (Philippines)
  22. Tranzen Group
  23. Serco Group(Australian Firm)
  24. Cathay Energy Service Corporation
  25. Systra Group (France)

The 11.7-kilometer extension, seen to increase ridership by 500,000 passengers daily, will have eight stations and three intermodal facilities.

Transportation Secretary Mar Roxas said "The cost of travel to work will be cheaper. The quality of life of the people will be better and the project will help the development of the countryside".

Secretary Mar Roxas said the pre-qualification conference was held to ensure that companies would have the required financial, technical and management capability to undertake the project.

The Department of Transportation and Communication (DoTC) will identify the prequalified bidders and issue bid documents in October 2012. The bidding will be held in the first quarter of 2013. The project will likely be awarded in the second quarter 03 year 2013.

The project

Discussed during an investors' briefing and pre-qualification conference held Tuesday morning, July 10 are the project's two components.

First, the operation and maintenance of the existing 20.7 kilometer (km) LRT line 1 from Baclaran to Quezon City. It had transported 69 million passenger-riders as of June 30, 2012. Over 500,000 passengers ride the rail line daily.

Second component is the construction of an additional 11.7-km elevated railway system from Baclaran station of Line 1 all the way to Bacoor in Cavite City. It will have 8 stations inclusive of 3 intermodal facilities, with an option for two future stations. A satellite depot in Zapote will also be constructed.

Below are the expected timelines for the project:

  • August 2012 - The government will hold a series of roadshows in London, Madrid, Japan and South Korea to entice more foreign investors to take part in the project. "We want the countries in Europe and Asia to know about this project. How many projects worldwide amount to about US$ 800 million?" said Roxas, adding that the cost of the project is expected to go down as more investors bid for it. He said foreign firms are welcome to partner with local groups to participate in the auction.
  • August 22, 2012 - Deadline for those that have purchased the pre-qualification documents worth 10,000.00 to submit their requirements. That is also the time the parties reveal what are the parties or the members of of a concessionaire that are vying for the contract.
  • October 2012- Schedule for the pre-qualification of interested bidders and the issuance of bid documents to those who will pre-qualify. The pre-qualification process ensures that the companies or the consortia to be formed have the required financial, technical, and management capability to carry out the project.
  • 1st quarter 2013 - Deadline for submission of bids.
  • 2nd quarter 2013 - DOTC will issue notice of award.

This project was initially planned to be bidded out last year. After a long wait, the Transportation Department issued an invitation to interested private sector players to pre-qualify and bid on June 4.

Roles of government and contractor

The government and private contractor will equally split the estimated 60 billion project cost. The government will spend its 30 billion share to purchase up to 39 new car train sets, construction of the satellite depot, among others.

Roxas said the government's obligation include the

  • Turn-over of the existing line 1 assets for rail operation and maintenance
  • Acquisition and delivery of right of way
  • Implementation of the automated fare collection system (AFCS) project
  • Ensure the application of periodic fare adjustments

The winning bidder, on the other hand, is responsible for:

  • The finance, design and construction of the Cavite extension
  • The immediate operation and maintenance of existing system and the integrated system upon completion of the extension project
  • Undertaking the future system maintenance and upgrades
  • Assuming ridership risk
  • Receiving fare box
  • Undertaking an approved commercial development

Automated fare collection

Roxas said the government will hold another auction for the centralized AFCS. "For the LRT fares, we will move from zone-based fare to boarding-plus-a-distance fare scheme. There will also be periodic fare adjustments over the concession period. But the government will hold a separate bidding for the AFCS. This project shall be tendered parallel to line 1."

The Transportation Department has taped the International Finance Corporation (IFC) as its transaction advisor. IFC, in turn, has tapped URS and Pinsent Masons as its technical and legal specialists.

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