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Infrastructure & PPPs in Philippines - Q1 2024 Update

PHILIPPINES is implementing multiple infrastructure projects through PPPs and private sector investments - we see implemetation of pipelines which were annouced in recent years by various agecies such as NEDA, BOI and PPP Centre. Focus sectors remains transport (including new expressways, airport developments/ explansion, rail links etc.) and clean energy transition (including solar, onshore/ offshore wind, geothermal etc.)

Read more about key developments in Infrastructure and PPPs in Philippines in our country insight.

 

January 2024 

PHILIPPINES EXPLORING PPP FOR BATAAN-CAVITE INTERLINK BRIDGE 

The Philippine government is exploring a possible public-private partnership (PPP) project for the Bataan-Cavite Interlink Bridge’s operations and maintenance (O&M) after the asset has been constructed.

In 2023, the Asian Development Bank approved USD 2.1 Bn in financing for the Bataan-Cavite Interlink Bridge. It is one of the flagship infrastructure projects of the Philippine government. The project will involve the construction of one of the world’s longest marine bridges, including two cable-stayed bridges, 24 km of marine viaducts, and a total eight km of approach road in the two provinces. Once completed, the project is expected to reduce travel time between Bataan and Cavite to 1.5 hours from 5 hours, and to about 2 hours from 4 hours between Bataan and Metro Manila. The government is pushing for PPPs for infrastructure development due to the state’s limited fiscal space.

 

PHILIPPINES TO LAUNCH SWISS CHALLENGE FOR BOHOL AIRPORT 

The Philippines is planning to start a Swiss challenge for the New Bohol-Panglao International Airport in the first quarter of year 2024. Aboitiz InfraCapital, a unit of Philippine diversified business Aboitiz Equity Ventures, has already made an unsolicited offer to maintain, expand, and operate the asset. Under the Swiss challenge, participants can submit proposals, although Aboitiz InfraCapital will have the right to match any rival bid. 

In 2018, the Aboitiz group secured the original proponent status for the airport’s operations and maintenance with a 25-year concession. Valued at PHP 4.5 Bn (USD 80.57 Mn), the public-private partnership upgrade project will expand the airport’s annual capacity to approximately 3.9 Mn passengers from 2 Mn passengers.

 

PHILIPPINES PORT OPERATOR OUTLINES NET ZERO COMMITMENT BY 2050 

Logistics giant International Container Terminal Services Inc. (ICTSI) has pledged to scale down its carbon footprint by 26% by 2030 as part of measures to become Net Zero. In a disclosure before the Philippine Stock Exchange, ICTSI outlined the steps it will take to get to net zero by 2050 as mandated by the Paris Agreement. ICTSI plans to achieve this target by reducing its carbon emissions in both the logistics business and power supply. The company is also assessing its carbon footprint across operations and aims to create an inventory by 2025. 

ICTSI likewise committed to review its actions on a regular basis, updating the targets based on discoveries in climate science to ensure that the company stays sustainable. ICTSI has attained carbon neutrality – or the balance between emitting and absorbing carbon from the atmosphere – in four terminals in the Americas. In particular, ICTSI is operating carbon neutral at the Contecon Guayaquil in Ecuador; Contecon Manzanillo in Mexico; and Tecon Suape and Rio Brasil Terminal, both in Brazil.

 

PHILIPPINES TO INVITE BIDS FOR RAIL PROJECTS

The Philippine government will invite bids for operations of the Metro Manila Subway Project (MMSP) and the North-South Commuter Railway (NSCR) in the second half of year 2024. Civil works are ongoing for the 36-kilometer Metro Manila Subway Project. With 17 stations, the project is set to reduce travel time between Valenzuela City and Ninoy Aquino International Airport (NAIA) Terminal 3 from 1 hour and 30 minutes to 35 minutes. The PHP 488.5 Bn project is also expected to serve around 370,000 passengers a day in its first year of full operations, with capacity to serve up to 1 Mn passengers a day in later years. 

Meanwhile, the NSCR is expected to begin partial operations from west Valenzuela to Malolos in the second quarter of 2027, while full operation will start in the third quarter of 2029. A flagship project under the Build Better More Program, the NSCR is a mega railway network spanning 148-km., with 37 stations and 464 train cars, and encompassing three segments—the PNR Clark Phase 1 (Tutuban-Malolos), PNR Clark Phase 2 (Malolos-Clark) and PNR Calamba (Solis-Calamba).

 

PHILIPPINES TO SPEND USD 133 Mn ON AIRPORTS IN 2024 

The Government of the Philippines has allocated PHP 7.5 Bn (USD 133 Mn) in the 2024 national budget to execute works under 22 airport projects nationwide. Funding will be provided under the government’s Aviation Transport Infrastructure Program. Key allocations are listed below.

  • PHP 1.64 Bn (USD 29 Mn) for a new Communications, Navigation and Surveillance – Air Traffic Management (CNS-ATM) System for the Ninoy Aquino International Airport (NAIA)

  • PHP 1.5 Bn (USD 26.59 Mn) for the expansion and development of the airport on Pagasa Island

  • Expansion and rehabilitation of the terminal building at the Kalibo International Airport was allocated PHP 581 Mn (USD 10.3 Mn)

  • Laoag International Airport project received PHP 500 Mn (USD 8.90 Mn)

  • Bukidnon Airport was allocated PHP 320 Mn (USD 5.67 Mn)

  • Puerto Princesa Airport allocated PHP 300 Mn (USD 5.32 Mn)

  • Works on the Central Mindanao (M’lang) Airport project received PHP 300 Mn (USD 5.32 Mn).

  • PHP 200 Mn (USD 3.54 Mn) was allocated to continue works on the New Manila International Airport. 

 

February 2024

PHILIPPINES SEEKS PRIVATE MONEY FOR WATER PROJECTS

The Philippines is seeking private sector investments in sustainable surface water sources. The government is committed to facilitating public-private partnerships (PPP) under the ‘Build Better More’ program, which consists of 198 infrastructure flagship projects (IFPs) worth PHP 8.8 Trn (USD 155 Bn). Of the total, 44 projects focus on water resources with an indicative investment amount of PHP 839.2 Bn. The Department of Finance has also called for the passage of a bill aimed at harmonizing water policies, programs, and projects.

 

PHILIPPINES TO AUCTION OFF 4.4 GW OF RENEWABLES PROJECTS

The Department of Energy (DOE) will conduct the Third Round of the Green Energy Auction (GEA-3) in 2024 as part of the Department’s push for increased utilization of the country’s renewable energy (RE) resources and attainment of energy security and reliability,

The GEA-3 will specifically cater to Non-Feed-In-Tariff (Non-FIT) Eligible RE Technologies, i.e., Geothermal, Impounding Hydro and Pumped-Storage Hydro. Department Circular No. DC2023-10-0029 provides specific auction policy and guidelines for these Non-FIT RE technologies in the Green Energy Auction Program. The GEA-3 will also include run-of-river (ROR) Hydro, which is a FIT-Eligible RE technology.

The estimated capacities for Non-FIT Eligible RE Technologies are: 699 MW from Impounding Hydro; 3,120 MW from Pumped-Storage Hydro; and 380 MW from Geothermal. The target Delivery Commencement Period (DCP) for both Impounding Hydro and Pumped-Storage Hydro shall be from 2028 to 2030 while for Geothermal, the DCP shall be from 2024 to 2030. An estimated 200 MW of RE capacity from ROR Hydro is expected to be auctioned, with a target DCP beginning 2026 to 2028.

 

SAN MIGUEL CONSORTIUM HIGHEST BIDDER FOR NINOY AQUINO AIRPORT

A consortium led by Philippines-based conglomerate San Miguel Corp has submitted the highest financial bid for the contract to rehabilitate, operate, expand, and transfer (ROET) the Ninoy Aquino International Airport (NAIA), the country’s main gateway. During the opening of financial bid, a ranking of the bid amounts showed that SMC-SAP & Company Consortium placed first with an 82.16% proposed revenue share with the Philippine government, followed by GMR Airport Consortium offering 33.3%, and Manila International Airport Consortium (MIAC) with 25.91%.

The financial proposal includes a bid amount, which reflects the "government’s percentage share of gross revenues, excluding passenger service charge revenue” on top of a PHP 30 Bn (USD 537 Mn) upfront fee and 2 Bn annuity payment. The DoTr had pointed out that the bidder proposing the highest percentage gross revenue share to the national government will be the winner of the NAIA concession.

 

PHILIPPINE CITY STUDYING POTENTIAL USD 284 MN PODCAR PPP

The local government of Iloilo City in the Philippines is carrying out a feasibility study on a potential PHP 16 bn (USD 284.55 Mn) podcar transport system. The planned project would be implemented through a public-private partnership. The local government recently signed a memorandum of understanding with Futran Philippines. The 20.7 km long project will aim to decongest traffic in the city. The podcars will run on solar energy.

There are two proposed routes for the podcar transport system.

  • The first route covers 13.3 kms. With 12 stations, it will be from Port of Iloilo to the transport terminal in the boundary of Pavia town.

  • The second route covers 7.4 kms.  With seven stations, this will be from Tagbak Transport Terminal in Jaro District to the plaza of Mandurriao District.

The Iloilo City government is providing Futran the data for the feasibility study: Traffic studies, population, and the latest Comprehensive Land Use Plan (CLUP).

 

PHILIPPINES SEEKS INVESTORS FOR USD 606 MN AIRPORT CITY PROJECTS

The Philippine government-owned Clark International Airport Corp (CIAC) will invite bids from potential investors for 7 flagship projects worth PHP 34 Bn (USD 606.42 Mn). The projects, to be developed through public-private partnerships, will be a part of the Clark Airport City.

They include:

  • PHP 21 Bn (USD 372 Mn), multi-use entertainment and events center;

  • PHP 8.5 Bn (USD 150.60 Mn) food hub;

  • PHP 1.6 Bn (USD 28.35 Mn) food gateway;

  • PHP 1.2 Bn (USD 21.26 Mn) Clark Direct Access Link Road network;

  • PHP 1.8 Bn (USD 31.89 Mn) urban renewal and heritage conservation program;

  • CIAC’s new headquarters; and a logistics hub.

This year, CIAC is conducting feasibility studies, designs, and market sensing. It is aiming to open bidding by 2025. Implementation is scheduled to begin between 2026 and 2028.

 

PHILIPPINES SIMPLIFIES CLEARANCE FOR OFFSHORE WIND PROJECTS

The Department of Energy (DOE) and the Department of Environment and Natural Resources (DENR) signed a memorandum of agreement (MOA) that will simplify the issuance of an environmental compliance certificate (ECC) for offshore wind energy projects.

RE projects, including offshore wind energy, are required to secure an ECC from the DENR during the development stage of the projects to ensure that their activities follow environmental laws, rules and regulations, and good international industry practice.

 

PHILIPPINES TO PROCEED WITH MINDANAO RAILWAY FEASIBILITY STUDY

The Philippines’ Department of Transportation will proceed with a feasibility study on the changes required to the Mindanao Railway project while the government looks for funding. The Philippine government withdrew its request to Beijing for official development assistance for 3 rail projects, including the Mindanao Railway, citing no progress on funding. Phase 1 of the project is estimated to cost PHP 83 Bn (USD 1.48 Bn). The Mindanao Railway will run from Tagum, Davao delNorte to Digos City, Davao del Sur. It is projected to transport 122,000 passengers daily

 

March 2024

MAINSTREAM TO DEVELOP 440 MW WIND PROJECTS IN PHILIPPINES

The Philippines’ Department of Energy (DoE) has signed contracts with Mainstream Renewable Power for the development of two onshore wind projects in Luzon and Visayas. The projects have a combined capacity of 440 MW and will be built in Cagayan Province and Leyte. The projects, with 25-year operating periods, represent Mainstream’s first wholly owned onshore wind service contracts in the Philippines.

Mainstream, backed by Aker Horizons and Mitsui & Co, has wind and solar assets in markets including Latin America, Africa and Asia-Pacific. In the Philippines, it has an existing partnership with Aboitiz Power Corporation to develop the 58 MW onshore wind project in Camarines Sur. This project has a 20-year offtake contract through the Green Energy Auction Program of the DoE. Construction is scheduled to start in late 2024, with commercial operations likely in 2026.


ACEN AND BRIGHTNIGHT FORM PHILIPPINE RENEWABLES PARTNERSHIP

ACEN has formed a partnership with Florida-headquartered BrightNight to advance the development, construction, and operation of its initial 1 GWac renewables power portfolio in the Philippines. The estimated capital deployment is USD 1.2 Bn over the next 5 years. This is the second partnership between the two companies.

In 2023, ACEN, the energy platform of the Philippine diversified business Ayala, formed a 50-50 tie-up with renewables developer BrighNight to develop, construct, and operate ~1.2 GW large-scale hybrid wind-solar and round-the-clock renewable power projects in India.


GERMAN RENEWABLES DEVELOPER SIGNS PHILIPPINES OFFSHORE WIND AGREEMENT

German wind and solar developer wpd GmbH has committed an investment of about PHP 392.4 Bn (USD 7 Bn) for offshore wind projects in Philippines’ Cavite, Negros Occidental and Guimaras provinces. These include BOI-registered offshore wind projects Cavite and Negros (1 & 2) projects with a combined capacity of 3,260 MW valued at PHP 400 Bn.

wpd GmbH is in the process of establishing five onshore projects in the Philippines with an estimated investment value of PHP 56 Mn. These are targeted for completion between 2027 and 2030.

 

List of key transactions - Philippines Q1 2024


Source: YOG INFRA analysis, Public Information

 

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YOG INFRA is an infrastructure focused financial advisory firm. We work with Developers and Development Finance Institutions (DFIs) and help them make informed investment decisions across infrastructure development lifecycle.

With our offices in Singapore, India and UAE, we work on projects globally, and the team brings strong experience in supporting development of infrastructure projects.


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