Jul-20
AC ENERGY AND MARUBENI PARTNER FOR PHILIPPINES THERMAL PROJECT
AC Energy and Marubeni Corporation agreed to jointly develop a 150MW diesel-run power project in the Philippines. The subsidiaries signed a shareholder’s agreement to jointly own, develop and operate the project, called Ingrid, in the Pililla district of Rizal province.
Marubeni subsidiary Axia Power Holdings will acquire 50% of the stake and economic rights in the thermal power project, while Philippines-based AC Energy will hold the remaining stake and 45% economic rights. Endevor, another subsidiary of AC Energy, will hold the remaining economic rights in the project.
The project is slated to be operational in the first quarter of 2021 and will supply peaking and reserve power to the Luzon grid in the Philippines. AC Energy, which used to own the project, has invested a total of PHP 570m (USD 11.5m) to develop it till date.
PHILIPPINES ENERGY FIRMS' PROFITS TUMBLE AMID PANDEMIC
Philippines energy majors Aboitiz Power and Meralco reported steep declines in H1-2020 profit, with demand stifled by the country's COVID-related lockdown.
Manila-listed Meralco, the country's largest energy distributor by market share, reported a 43% on-year drop in net income to PHP 6.8bn (USD 138m) for the Jan-Jun period. The company flagged a 7% decline in electricity sales, including a 17% drop in demand in the commercial and industrial sector due to quarantine measures imposed by the Philippines government in mid-March. Income was also impacted by a PHP 2.7bn first-quarter impairment on Singapore unit Pacific Light, due to unfavorable conditions in that country's energy trading market. The company claimed force majeure to reduce its purchase of contract capacity from power plants during the lockdown. Savings from the curtailment were valued at more than PHP 1.8bn.
Aboitiz Power, the power division of Philippines conglomerate Aboitiz, said in a stock filing that its net income for H1-2020 fell 57% on year to PHP 3.7bn. Aboitiz Power, which owns a 15% share of the national grid generation, filed that energy sold during H1-2020 declined by 6% to 10,764 GWh. The company flagged a decrease in demand and several power outages in its plants that offset the revenue increase coming from two new plants and other sources of income.
The Philippines' Department of Energy has proposed fines and penalties for energy players that suffer recurrent power outages at their power plants.
MANILA WATER TO ISSUE SUSTAINABILITY BONDS FOR INFRA EXPANSION
Manila Water is set to issue US dollar-denominated bonds to finance and refinance different infrastructure projects. The proceeds of the issuance will be used to refinance debt and finance programmed capital expenditure for 2020 and 2021, including water and wastewater management projects, affordable and basic infrastructure projects, and biodiversity conservation projects.
The notes will qualify as both sustainability bonds from the International Capital Market Association - bond instruments linked to certain sustainability and ESG objectives - and ASEAN sustainability bonds, focused on projects offering environmental and social benefits.
BPI Capital, Citigroup Global Markets Singapore, Credit Suisse (Singapore), HSBC Singapore, Mizuho Securities, and UBS AG Singapore Branch have been mandated as joint lead managers and joint bookrunners for the transaction.
Manila Water is the water supply concessionaire for the Eastern part of Manila. The company runs other water supply projects in the Philippines and owns interests in projects in Vietnam, Thailand, and Indonesia, according to its latest annual report.
MEGAWIDE-GMR EMERGES AS NEW PREFERRED BIDDER FOR NINOY AQUINO INTERNATIONAL AIRPORT
The Department of Transportation, Philippines has awarded the original proponent status to consortium comprising the Philippines construction firm Megawide and Indian conglomerate GMR to upgrade Manila's Ninoy Aquino International Airport (NAIA).
The PHP 102bn (USD 2bn) upgrade of the airport, one of the major infrastructure projects in the country, was expected to be officially awarded during the second quarter of 2020.
The decision arrives after two years of negotiations between the government and a consortium formed by major Philippines conglomerates, which was awarded the original proponent status in 2018, but the original proponent subsequently rescinded since multiple changes were submitted by that consortium.
The original consortium submitted that due to the impact of COVID-19 on passenger traffic, it was necessary to review plans to ensure the project's bankability. However, the Philippines government rejected most of the amendments to the project. In May-20, the number of daily flights at the airport averaged 10 per day, compared with 768 before the pandemic, according to the Manila International Airport Authority (MIAA).
The original consortium comprised:
1. Aboitiz Infracapital;
2. Alliance Global Group;
3. Asia’s Emerging Dragon - part of the LT Group;
4. AC Infrastructure Holdings - part of the Ayala Group;
5. Filinvest Development; and
6. JG Summit Holdings.
In Dec-18, the North Luzon Airport Consortium, comprising Filinvest Development, JG Summit, Philippines Airport Ground Support Solution and a Philippines subsidiary of Changi Airports International, was awarded a 25-year contract for the operation and management of the Clark International Airport, which is in the northern part of Luzon island.
METRO GROUP IN DISCUSSIONS FOR WASTE-TO-ENERGY PROJECT
The Metro Global group of companies had discussions with authorities in Baguio city to develop a waste-to-energy project, which will be built jointly with a bus terminal proposed in Jun-20 by the Philippine construction firm Megawide.
The projects will be partially funded by the firms and a government grant. The project cost has not been determined yet.
Infrastructure investment firm Metro Global Holdings indirectly owns a 29% interest in the Metro Manila LRT-Line 1. In 2018, the firm decided it will expand into renewables and waste-to-energy projects, as per its annual report.
Jun-20
FRANCE'S ADF COMMITS USD 150M TO BOOST PHILIPPINES PPPS
The Agence Française de Développement (ADF) has signed a USD 150m credit facility agreement with the Philippines to boost private sector participation in infrastructure finance. The loan will be used to co-finance the Expanding Private Participation in Infrastructure Program (EPPIP), launched by the Asian Development Bank to promote PPPs in the Philippines.
The loan is being granted to strengthen government support for PPPs, expand and efficiently implement the pipeline of projects and reform the legal and regulatory framework of the sector. The Department of Finance said that it aims to secure a grant from the European Union's Asian Investment Facility to encourage the development of PPP projects.
The additional funding will be channelled through the Philippines' PPP Center and one of its focuses will be the development of the healthcare sector using public-private partnerships, the statement added.
The moves come amid an increased focus on PPPs in the Philippines, where President Rodrigo Duterte launched the “Build, Build, Build” infrastructure program, which currently includes 25 projects, in 2016. The government has stressed the need to use infrastructure to restart the country's economy amid the coronavirus pandemic.
KKR TO BUY 11.9% OF FIRST GEN
Investment firm KKR is set to make its first infrastructure investment in the Philippines with the purchase of
an 11.9% stake in First Gen Corporation. KKR-owned Valorous Asia Holdings will make the acquisition through a voluntary tender offer for a total value of PHP 9.6bn (USD 192m).
First Gen is engaged primarily in the generation of power through renewable energy as well as local energy sources such as natural gas, geothermal energy from steam, hydro-electric, wind, and solar power. It has 3.5 GW of installed capacity, which made up 21% of the Philippines’ total power generation last year.
KKR has increased its focus on the Asia-Pacific region, raising USD 1.76bn in commitments. First Gen is KKR’s third investment across asset classes in the Philippines, following its investments in Metro Pacific Hospitals and in technology company Voyager Innovations.
PRIME INFRA TO INVEST USD 30M IN PHILIPPINES SOLAR PROJECT
Philippines-based Prime Metroline Infrastructure Holdings Corp has agreed to invest PHP 1.5bn (USD 30m) for a 50% stake in a solar park owned by renewables developer Solar Philippines.
The investment will enable Solar Philippines to expand the 150 MW Concepcion solar park, the largest in the country, to a capacity of up to 200 MW.
Prime Metroline, also called Prime Infra, will also develop two other solar power projects with Solar Philippines to service the Luzon and Visayas grids in the country. Through the partnership, the two companies have teamed up for a total of up to 800 MW solar projects in advanced stages of development, and this is the largest solar joint venture in the country.
The transaction is expected to add to Prime Infra's power generation portfolio in the Philippines. The company is developing a 150 MW to 250 MW Chico hydropower project, a run-of river project in Lubuagan, which is in the Kalinga province of the Philippines. Prime Infra is also engaged in construction and water treatment businesses.
MEGAWIDE SUBMITTED BUS TERMINAL PROPOSAL FOR BAGUIO CITY
Philippines developer Megawide submitted an unsolicited proposal to develop a bus terminal in Baguio city, and the company is planning to discuss the project with bus operators in the city.
In Philippines, the original proponent status for the company could be awarded 30 days after receiving the unsolicited proposal, while a Swiss Challenge will be launched within 120 days from when the status is awarded
The project will be in Santo Tomas district in the southern part of Baguio city and will help ease vehicular traffic and reduce pollution.
Construction firm Megawide is currently upgrading and operating the Mactan-Cebu Airport in the Philippines' Visayas region with India's GMR Infrastructure. In 2015, a consortium formed by Megawide and WM Property Management won a PPP to build and operate the Parañaque Integrated Terminal Exchange in Parañaque city.
Baguio is a university town in the northern part of Luzon island with a population of approximately 350,000 people. In Feb-20, the local government signed an agreement with the Philippines’ Public-Private Partnership Center to receive technical assistance for developing new infrastructure projects.
PHILIPPINES PORT OPERATOR POSTPONES USD 90M EXPANSION AMID PANDEMIC
Philippines port operator Asian Terminals will delay its USD 90m expansion projects scheduled for 2020 until next year due to the COVID-19 crisis, as per a stock filing report. The Manila-listed company said that the international container volume of its operational ports suffered a 26% on-year drop during the first four months of 2020.
Asian Terminals operates the Manila South Harbour, the Port of Batangas, and complementary logistics facilities in the country. Manila South Harbour had a container output of more than 1.3 million TEUS in 2019, while the Batangas Container Terminal registered a foreign container throughput of 312,000 TEUS in 2019. The company's net profit in 2019 was PHP 3.7bn (USD 72.3m), a 32% year-on-year increase compared to the previous year.
May-20
SUMITOMO ACQUIRES 19.2% STAKE IN MANILA'S LRT LINE
Japanese trading house Sumitomo has acquired an indirect 19.2% stake in the Manila Light Rail Transit System Line 1 for about PHP 3bn (USD 59m).
Philippines conglomerate Metro Pacific Investments Corporation (MPIC) sold a 34.9% stake in its subsidiary Metro Pacific Light Rail Corporation (MPLRC) to the Japanese firm. MPLRC holds a 55% stake interest in Light Rail Manila Corporation, the concessionaire of the railway line. The remaining is held by AC Infrastructure and Macquarie Investment Holdings (Philippines).
The operation of Line 1 is set to benefit from Sumitomo’s global rail expertise. The Japanese firm said that this was its first investment in a passenger railway asset in Southeast Asia and stressed that the Philippines is one of the fastest-growing countries within the region.
Line 1, which is 20km, currently connects Quezon City and Pasay City in northern and southern Metro Manila, respectively.
In 2014, Light Rail Manila Corporation won a bid to build and operate an 11.7km extension of the line. The project has a total cost of PHP 64.9bn, with PHP 19.8bn being financed through official development assistance, according to the Philippines PPP Center.
ADB ISSUES LOAN TO BOOST PHILIPPINES' INFRA FINANCING
The Asian Development Bank has approved a USD 400m loan to boost capital growth and sources of infrastructure financing in the Philippines. The program is set to increase long-term funds for infrastructure through policy reform, according to a concept paper for the project. Among other objectives, the policy changes are aimed at increasing participation from the contractual savings sector - which includes pensions funds and life insurance companies - in infrastructure financing.
The reforms will include:
· Amendment of the charter of the Philippines’ Central Bank to boost financial market stability;
· The creation of a national registry of script-less securities to facilitate the entry of new institutional investors into the government securities market;
· Lowering of barriers to international participation in the capital markets, reducing and rationalizing tax rates; and
· Issuing guidance for local insurance companies to invest in infrastructure projects.
The Bangko Sentral Ng Pilipinas, the Bureau of the Treasury and the Securities and Exchange Commission will be the implementing agencies.
The paper said that the Philippines has been aiming to boost its GDP growth through infrastructure spending in recent years, especially through President Rodrigo Duterte’s “Build, Build, Build” infrastructure program. The program aims to increase public spending on infrastructure towards 7% of the country’s GDP by 2022 and has already been flagged as key for the country's post-coronavirus economic recovery.
PHILIPPINES TO CONSIDER MORE SOLICITED PPPS FOR FUTURE INFRA PROGRAMS
The Government of Philippines has increased focus on PPPs for infrastructure development in the form of solicited proposals, where the government conducts the preliminary studies and then invites interest from the private sector, as per National Economic and Development Authority (NEDA).
NEDA's list of infrastructure projects contains major projects to be carried out under the country's Build, Build, Build programme, which has taken on renewed vigor amid the coronavirus outbreak. The latest published version of the list contains 100 projects, including 29 PPP projects valued at PHP1.7trn (USD 33.4bn) -15 of which are unsolicited proposals, valued at PHP 1.2trn.
Multiple government officials have emphasised the need to accelerate its infrastructure modernization program to get the economy back on track at the earliest. Other measures include passing a new tax stimulus, which includes “flexible tax and non-tax incentives” to attract investors and manufacturing products with strong and inelastic demand, such as those in the food industry.
GOVERNMENT SIGNALS SOFTER STANCE ON MANILA WATER SUPPLY CONCESSIONS TO ATTRACT INVESTORS
In May-20, the Government of Philippines signaled a softer stance to the two Ayala Corporation and Metro Pacific Investments, which hold a stake in water management firms Manila Water and Maynilad, respectively.
Maynilad and Manila Water started renegotiating their contract agreement with the government in January, after an extension in their concession agreements was revoked in Jan-20. Since then, the government had criticized both companies over provisions included in their concession agreements to supply water to Manila, including threats to nationalize both companies.
Analysts have previously seen the attacks on both companies as increasing regulatory risk in the market. In Feb-20, Metro Pacific issued a statement that it would shift away from new investments in infrastructure, as it saw increased risk in long-term contracts with the government.
However, recent statements (including a statement from Presidential Communications Operations Office) indicate that the government will be reasonable in future negotiations with Ayala and Metro Pacific as the government recognizes it will need to attract private investment in the infrastructure sector after the COVID-19 crisis, in order to kickstart the economy.
BAGUIO CITY MARKET PPP
The Philippines' Baguio City will choose one of two unsolicited proposals to proceed with plans to upgrade a local market area. The authorities launch a Swiss Challenge in Jul-20 as per the Public-Private Partnership for the People Selection Committee at Baguio City, and the project will be awarded in latest Q4-2020.
The PPP project received two unsolicited proposals from real estate firms Robinsons Land Corporation and SM Prime Holdings in February. A third proposal did not qualify and was rejected.
Robinsons' proposal had an approximate cost of PHP 5.6bn (USD 110m), while the SP Prime project was valued at around PHP 4.5bn.
The concession period and revenue structure will be negotiated after one of the proponents receives the original proponent status.
Approximately 4,000 vendors of the market have formed a cooperative and are planning to participate in the Swiss Challenge. Other PPP projects in the city that were at an earlier stage of development, including a waste-to-energy facility and a transport project, have been delayed due to the COVID-19 crisis.
Apr-20
COVID-19 LEADS TO DELAY FOR PHILIPPINES USD 4BN AIRPORT PROJECT
Travel restrictions and a lockdown in the Philippines have impacted preparations to sign a PHP 208.5bn (USD 4bn) contract to develop the Sangley Point International Airport, in the province of Cavite.
The winning consortium, comprising MacroAsia and China Communications Construction Company (CCCC), asked for a 60-day extension to complete post-qualification requirements. The consortium received a notification of award on 14 Feb-20 and was granted a two-month deadline to fulfill post-qualification requirements before signing a joint venture contract with the government to jointly develop the facility.
The design, build, finance, operate and maintain project will be developed jointly with the Cavite government. The first phase is slated to be completed by 2022, with an annual capacity of 25 million passengers.
PHILIPPINES PUMPED HYDRO DEVELOPMENT STALLED BY COVID-19
COVID-19 has impacted pre-development activities for a USD 778m, 800 MW pumped storage hydropower project in the Laguna province of the Philippines being developed by GA Energy Holdings, wholly-owned subsidiary of Philippines investment holding Gregorio Araneta, Inc. Talks with potential investors in the project, which include Singapore-based fund manager Equis and China CAMC Engineering – a subsidiary of Shenzhen-listed China National Machinery Industry – have been put on hold.
Pre-development activities should be finished in 2021 according to the agreement reached with the Department of Energy. However, delays in the permitting process could be especially acute in the Laguna region, which was already hit in Jan-20by the Ta’al volcano eruption, located in nearby Batangas province.
Mar-20
BAGUIO CITY PREPARES TO LAUNCH TRANSPORT PPP SWISS CHALLENGE
The Philippines' Baguio City has received an unsolicited proposal to develop a cable car and a monorail system in the city and is set to launch a Swiss challenge in later half of 2020. The proposed cable car will not follow a previously announced route connecting Baguio City with the neighboring La Union province.
Baguio City has identified several projects to be developed as public-private partnerships, including the redevelopment of its local market, the construction of a waste-to-energy plant, the upgrade of its sewage system and sewage treatment plant, a smart city project, and the creation of an integrated transport terminal
FIRST GEN TO BUILD LNG TERMINAL
FGEN LNG, a subsidiary of power firm First Gen, applied to the Philippines' Department of Energy (DOE) for a permit to start building a LNG terminal in Batangas City. The project will expand the company’s existing energy complex, modifying its liquid fuel jetty, so it can receive large and small-scale LNG vessels and liquid fuel vessels, and adding an onshore gas receiving facility.
The project will be able to incorporate a floating storage and regasification unit - a vessel with an onboard regasification plant - allowing the company to provide fuel to existing gas-fired power plants. The company aims to start construction this May and says that the terminal could be operational in Q3 2022.The project is the initial phase of the FGEN Batangas LNG Terminal.
The facility is designed to bolster the energy security of the Luzon island power grid, and it will encourage the development of new gas-fired power plants. First Gen chose Japan’s JGC Corporation as the preferred tender to develop the LNG terminal.
In Dec-18, the company signed a preliminary agreement to pursue the development of the terminal jointly with Tokyo Gas, which will own a 20% interest in the project.
MERALCO TO RESTART 1,200MW CAPACITY BID
The Philippines energy distributor Meralco will restart a tender for 1,200 MW of capacity; and the utility is set to publish the tender's Terms of Reference (ToR) agreed with the Department of Energy (DoE). Meralco's Third Party Bids and Awards Committee will review the final ToR, and interested IPPs will be able to submit expressions of interest for the contract after they are published.
The firm will accept bids from brownfield and greenfield projects that can be linked to the power grid of Luzon island. There will be no limitations on the technology used to produce energy, and winning bidders will begin supplying electricity to Meralco over 20 years beginning in 2024.
The utility firm ran an unsuccessful bid for 1,200 MW of greenfield capacity last year. Meralco received only one bid, from Atimonan One Energy, a unit of Meralco Powergen Corp.
Feb-20
ADB TO INVEST USD 1.6BN IN PHILIPPINES INFRA PROJECTS
The Asian Development Bank (ADB) plans to invest approximately USD 1.6bn in projects included in the Philippines government "Build Build Build" plan. The commitments will be part of the multilateral lender's USD 3.3bn planned investments in the country for 2020.
The projects that the ADB is likely to finance include
· South Commuter Railway
· EDSA Greenway Pedestrian Walkways
· Angat Water Transmission Aqueduct 7.
The South Commuter Railway is a 54km extension of the Malolos Clark Railway project. The line is set to connect Calamba with Manila and the Clark International Airport to Manila and Calamba in 2025. The ADB is set to approve the co-financing the project jointly with the Japan International Cooperation Agency in 2020.
The ADB is also set to this year approve a USD 126m loan to build a seventh aqueduct as part of the Angat Water Transmission Improvement project, which will strengthen water supply to the Metro Manila area.
The Philippines government unveiled in 2016 its "Build Build Build program, which aims to increase public spending on infrastructure to 7% of the country’s GDP by 2022 from 5.1% in 2018. The program encompasses 100 projects, including 25 PPPs.
PHILIPPINES DRAFT LAW OPENS TRANSPORT ASSETS TO FOREIGN INVESTORS
The Philippines' House of Representatives approved a Bill that will remove restrictions on foreign ownership in the operation of transportation assets. The sector currently falls under the definition of public utilities in the country, which have to be at least 60%-owned by local citizens or corporations, according to the country's constitution.
The new legislation will limit the concept of public utility to electricity distribution and transmission, water pipeline distribution systems, and sewerage pipeline systems. The document also prescribes a 12% cap on the rate of return for public services.
The Senate needs to approve the Bill before it becomes a law.
PHILIPPINES TO DO FEASIBILITY STUDY FOR USD 66M ROAD UPGRADE in LUZON
The Philippines Department of Public Works and Highways is preparing a feasibility study for a road upgrade project in northern Luzon that will cost an estimated PHP 3.4bn (USD 66m). The cost estimate includes slope protection works and rehabilitation for the 33km Kennon Road, which connects the cities of Baguio and Rosario, between the provinces of Benguet and La Union.
In 2018, the annual average daily traffic near the entry point of the road was 10,733 vehicles. The Department of Public Works and Highways and the Philippines´ PPP Center conducted a market sounding event for the project through the PPP mode on 31 Jan-20. If the PPP moves ahead, the prequalification of potential private partners will happen in 2020 and bid submissions in Q1-2021. The notice of award and the signing of the contract are set for mid-2021.
WORLD BANK CONSIDERS BACKING USD 700M PHILIPPINES DAM PROJECT
The World Bank Group is considering lending USD 400m to a new flood management project in the Philippines, which will include the construction of a dam on the Marikina river. The loan could be extended by the International Bank for Reconstruction and Development, which is part of the World Bank Group. The total cost of the project is USD 700m, and the Philippines’ Department of Finance is set to invest an extra USD 35m.
The project includes the building of an 81 meter high dam with a total gross storage capacity of about 90 million cubic meters of water. The primary function of the dam will be flood management in the Metro Manila area, although about 10% of the reservoir can be used to increase water supply to the region.
The project will have a 6.5 years implementation period.
The Philippines’ Department of Public Works and Highways will oversee the project, while several teams of consultants are set to be hired to complete design aspects, supervise the construction and ensure the project’s quality.
The World Bank’s Board of Directors is set to review the project in March 2021.
Jan-20
PHILIPPINES SEEKS O&M BIDS
The Philippines' Power Sector Assets and Liabilities Management (PSALM) Corp has invited bids for operation and maintenance of the 650 MW Malaya Thermal Power Plant. The state-owned entity will use an approved budget of PHP 224.8m (USD4.42m) for the one-year contract to pay the winning bidder.
The winner will be selected through an open competitive bidding process, which will be open to local and foreign companies.
The Malaya Thermal Power Plant is located in Malaya, Pililia, Rizal runs on diesel and is designated as a must-run unit when operating power plants in the grid become unavailable. PSALM has attempted to privatise the thermal plant last year but failed due to lack of interest. It is looking to initiate another round of bidding for the plant in 2020.
ILOILO CITY TO LAUNCH MASS TRANSPORT PPP PROJECT
The Iloilo city is seeking private investors for a mass transport system (bus rapid transit project) as the city counts on PPPs to boost its infrastructure with the the assistance of the Philippines PPP Centre.
Iloilo City, located on the southeastern tip of Panay Island, serves as the regional centre of the Western Visayas region. The metropolitan area has a population of more than 940,000. Iloilo International Airport is the primary gateway to Iloilo, while the city also has ferry as well as bus transit services.
The announcement was made weeks after the city became the first province in the country to sign a memorandum of understanding with the PPP Centre under the National Economic and Development Authority. The Iloilo government has also passed a PPP ordinance.
Among the PPP projects being promoted are
· Iloilo Sports Complex in La Paz district
· Multiple district hospital expansion projects
· Sanitary landfill PPP project
In Oct-19, the Iloilo City invited proposals from private investors for an energy-from-waste PPP project. Sixteen companies expressed interest, three of which have already submitted project feasibility studies. The government is still in the preliminary stages of preparing the project and is being assisted by the PPP Centre.
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