1st PPP project up for bidding

MANILA, Philippines -  The government is expected to open the bidding for construction of the P10.6-billion Ninoy Aquino International Airport (NAIA) Expressway Phase II this year under the Public-Private Partnership (PPP) scheme.

A ranking government official, who requested anonymity, said over the weekend that the detailed engineering for the project is nearing completion.

The official said the expressway, the first to be opened for bidding under the PPP scheme, is a priority infrastructure project of the administration.

Projects under the PPP scheme are entitled to tax incentives as stipulated in the 2011 Investments Priorities Plan.

The expressway project is a component of the Metro Manila Urban Expressway System and the Manila International Airport Access Improvement Project.

A feasibility report prepared by professional service firm Ernst & Young showed that government subsidies and higher toll rates are needed to attract more bidders for the project.

The financial evaluation of the project showed a financial internal rate of return (FIRR) of only 5.41 percent, if a basic toll rate of P6 is imposed.

To make it attractive to investors, a toll of P9.50 per kilometer and with a 36 percent government subsidy should be imposed. The FIRR then would be 9.8 percent.

“On the other hand, government intervention is required to enhance the viability of the project through provision of additional funds that will cover the civil works and the right-of-way acquisition,” the study stated.

Ernst & Young said doing this will cut the P10.6-billion project cost dramatically. The civil works cost for the project is estimated at P8.6 billion while right-of-way acquisition cost is estimated at P1 billion.

The firm, however, is in favor of the implementation of the project because of its economic benefits.

Ernst & Young estimates the implementation of the project to take five and a half years.

Phase II of the NAIA expressway projects is proposed to supplement the recently completed phase I, which interfaced with the existing Manila South Skyway.