Infrastructure & PPPs in Philippines - Q3 2023 Update
PHILIPPINES is undertaking multiple reforms to boost PPPs and private sector investments in infrastructure sector - including major project pipelines and investment plans notified by various government agencies - DOTR, PPP Centre, NEDA etc. There are encouraging developments for private sector participation in clean energy transition and connectivity sectors both via unsolicited and bidding route.
Read more about key developments in Infrastructure and PPPs in Philippines in our country insight.
CHINA ENERGY PLANS PHILIPPINES SOLAR PROJECTS
China Energy Engineering Corporation (CEEC) has identified at least 2 solar project development opportunities worth USD 350 Mn in the Philippines. It has decided to take up the developments in the engineering, procurement, and construction (EPC) model.
CEEC is looking at setting up joint ventures with local partners for greenfield projects. It is also open to new build opportunities as well as acquisitions in Southeast Asia. CEEC has been building renewables projects in the Philippines as a contractor, and its work there includes a 115 MW solar farm and another 75 MW asset owned by Shizen Energy.
PHILIPPINES EXPLORES METRO RAIL PRIVATIZATION OPTIONS
The Philippine transport department will take a decision on bundling the privatization of the Light Rail Transit Line 2 (LRT-2) and the Metro Rail Transit Line 3 (MRT-3) within a year. The Department of Transportation (DOTr) is looking to privatize MRT-3 after its build-lease-transfer (BLT) agreement expires in 2025. The department has not finalized its decision on bundling the maintenance and operations of LRT-2 and MRT-3. For bundling, the DOTr will need to transfer the oversight of MRT-3 to the operator and owner of LRT-2, the Light Rail Transit Authority, and seek approval from the National Economic and Development Authority.
PHILIPPINES CLEARS USD 3.3 Bn IN ADDITIONAL INFRA PROJECTS
The National Economic Development Authority (NEDA) has cleared 3 additional infrastructure projects worth PHP 190 Bn (USD 3.3 Bn) to improve connectivity. The 3 projects are aligned with the objectives and goals of the Philippine Development Plan 2023-28.
Project highlights include:
A PHP 170 Bn (USD 2.9 Bn) solicited proposal to rehabilitate, operate, expand, and transfer the Ninoy Aquino International Airport Public-Private Partnership (PPP) Project. It is expected to commence in 2024.
The PHP 7.4 Bn (USD 131.9 Mn), 15 km Samar Pacific Coastal Road II Project, which involves the construction of 2 marine bridges as well as the improvement of existing roads between Laoang Island and mainland Samar Island.
An unsolicited proposal for the upgrade, expansion, operation, and maintenance of the Laguindingan International Airport Project through a PPP. With an estimated cost of PHP 12.7 Bn (USD 224.9 Mn), this initiative focuses on integrating sustainable and digitally advanced features into the design and operation of the airport in Misamis Oriental.
PHILIPPINES PROPOSES BIDDING RULES FOR NON-FIT RENEWABLES PROJECTS
The Philippines Department of Energy (DoE) has drawn up guidelines on bidding for renewables projects excluded from the feed-in-tariff (FIT) system in the Green Energy Auction Program (GEAP).
A draft circular issued by the DoE, outlines the specific auction policy and guidelines for non-FIT eligible renewable technologies in consideration of the potential contribution and capacity of these technologies to meet the government’s targets. The Philippines has set a target of ensuring that the share of renewable energy in the total power generation reaches at least 35% by 2030 and 50% by 2040.
PHILIPPINES CONDUCTS SECOND ROUND OF GREEN ENERGY AUCTION
The Philippine Department of Energy (DOE) has conducted the second round of the Green Energy Auction (GEA-2). In the bidding, a total capacity of 1.96 GW has been committed for the construction of ground-mounted solar for 2024 to 2026.
A total of 9.39 MW was committed for rooftop solar for 2024 and 2025, while for floating solar, 90 MW has been committed for the construction in 2026. For onshore wind, a total of 1.51 GW has been committed for 2025 and 2026. In relation to that, the Philippine Department of Energy (DOE) has issued notices of awards to 105 winning bids in the second round of the government’s Green Energy Auction (GEA-2). The department recently conducted the GEA-2, committing to construct a total of 1.96 GW of ground-mounted solar between 2024 and 2026.
GOVERNMENT OF THE PHILIPPINES LAUNCHES FIRST SOVEREIGN FUND
The Government of the Philippines has launched its first sovereign wealth fund to accelerate the modernization of the country’s infrastructure. The Maharlika Investment Fund (MIF) will reduce reliance on borrowing to finance infrastructure development.
To raise capital, the fund will be allowed to issue USD 9.1 Bn worth of preferred and common shares which can be purchased by the national government, state-run firms, and banks. Initially, concerns were raised, including those from the central bank, regarding the transparency in the fund’s governance. However, revisions have been made to address these concerns and provide clarity on how the fund will be managed and financed.
NEW WAVE AND EMISSARY CAPITAL PARTNERS PLAN REINVESTMENTS IN THE PHILIPPINES
New Wave Strategic Holdings Incorporated and Emissary Capital Partners Sdn Bhd have plans to invest USD 50 Mn into the renewable energy (RE) sector in the Philippines. The investment will be dedicated to financing renewable energy projects, the electric vehicle industry, as well as clean energy and smart grid enablers. This is expected to generate 1,000 MW of bankable capacity.
Initially, the companies will focus on financing solar and wind projects in Northern Luzon. The partners will also support the Government of the Philippines’ plan of increasing the share of RE energy in the country’s total power mix to 35% by 2030.
CHINESE HYDROGEN FIRM MAKES ASEAN PUSH THROUGH SINGAPORE VENTURE
Jiangsu Guofu Hydrogen Energy is making a foray into the Southeast Asian market through a new joint venture to be launched in Singapore. The private-sector Chinese group signed an agreement with Singapore-based IT services provider Evvo Labs and Wai Asia Network Pte on a cooperation agreement to form the new vehicle in Singapore focusing on hydrogen energy projects.
They will focus on Singapore, Malaysia, Vietnam, Indonesia, and the Philippines markets. The plan was rolled out at a time when hydrogen has become a critical clean energy service facilitating the clean energy transition. The tie-up will help facilitate the use of hydrogen energy technologies in transport, industrial and power sectors and help with the energy asset diversification of Southeast Asia.
CMEC DISCUSSES SOUTHEAST ASIAN TIE-UPS WITH INFRA INVESTORS
China Machinery Engineering Corporation (CMEC) is interested in working with a group of international companies on the co-development of renewables projects in Southeast Asia. The state-owned engineering giant held talks with Macquarie's Green Investment Group-owned blue leaf Energy as well as Singapore-headquartered developer Gurin Energy backed by listed New Zealand investor, Infratil about project collaboration in the Philippines as well as in other countries around the world. The interest was expressed during a business trip by CMEC General Manager Fang Yanshui to Singapore.
The Chinese group also met with senior executives with General Electric Power about their existing projects and potential cooperation opportunities in the Philippines, Indonesia, Singapore, and other Southeast Asian countries.
The CMEC delegation also held meetings with the renewables arm of Keppel Infrastructure over tie-ups on green projects in surrounding countries.
JICA TO FUND CREATION OF 30-YEAR RAIL MASTERPLAN FOR GREATER MANILA
The Japan International Cooperation Agency (JICA) has committed around PHP 125.6 Mn (USD 2.2 Mn) for the development of a 30-year railway masterplan for the Greater Manila Area (GMA) in the Philippines. The plan will be formulated over a period of 36 months and will be presented by the Q4 of 2026. The masterplan will be formulated by the Department of Transportation (DOTr) with technical support from JICA.
The master plan aims to expand the existing railway network and promote sustainable urban development. By 2055, it aims to increase the number of rail passenger trips and double the average distance covered by all trips within one hour during peak hours.
EU LAUNCHES GREEN ECONOMY INITIATIVE IN THE PHILIPPINES
The European Union (EU) has launched an initiative worth EUR 466 Mn (USD 506.1 Mn) for the green economy in the Philippines. As a part of the Team Europe Initiative on Green Economy, the EU will develop a circular economic policy and an industrial alternative to the existing plastic waste management system.
The Governments of France, of The European Commission, France, Spain, Germany, Finland, Austria, Netherlands, and Sweden will also contribute their expertise in the initiative, promoting technology transfer. The initiative is expected to reduce plastic and marine litter while developing sustainable plastic value chains. Efforts will include the development of green policies. In regard to marine litter, the initiative will streamline local regulations while boosting the capacity of central and local governmental bodies. Moreover, an information system will also be developed for collecting and reporting data.
DOTR EARMARKS PHP 176 BN FOR TRANSPORT INFRA SPENDING
The Department of Transportation (DOTr) has earmarked PHP 176.4 Bn (USD 3.1 Bn) for transport infrastructure spending in the Philippines, making this a substantial portion of the department’s proposed PHP 214.3 Bn (USD 3.7 Bn) budget for 2024. The allocation will be used to fund high-impact infrastructure flagship public transport projects approved by the National Economic and Development Authority (NEDA) Board.
The Rail Transport program will receive more than 76% of the total allocation. Key projects under this program include:
The North-South Commuter Railway (NSCR) project, which will receive PHP 76.3 Bn (USD 1.3 Bn) during 2024
The Metro Manila Subway Project Phase I, for which spending of PHP 68.4 Bn (USD 1.2 Bn) has been allocated during 2024.
Additionally, DOTr plans to spend:
PHP 4.7 Bn (USD 82.9 Mn) for the LRT Line 1 Cavite Extension project in 2024
PHP 3.1 Bn (USD 54.6 Mn) for the Philippine National Railways (PNR) South Long-Haul project
PHP 2.9 Bn (USD 51.1 Mn) for the MRT 3 Rehabilitation Project.
NEDA IDENTIFIES INFRASTRUCTURE FLAGSHIP PROJECTS UNDER “ BUILD BETTER MORE” PROGRAM
The National Economic Development Authority (NEDA) Board identified 194 high-impact Infrastructure Flagship Projects (IFPs) which cost PHP 8.3 Trn (USD 146.4 Bn).
Of the 194 projects, 119 are in the physical connectivity sector, 44 are in water, 1 in agriculture, while the rest are in digital connectivity, power and energy and other infrastructure. The Department of Public Works and Highways (DPWH) targets the implementation of 70,000 projects with an PHP 890 Bn (USD 15.7 Bn) budget in 2023.
PHILIPPINE TRANSPORT DEPARTMENT SIGNS CONSULTING CONTRACT FOR 4 PPPS
The Philippines’ Public-Private Partnership (PPP) Center and the Department of Transportation have signed contracts for consulting services regarding four transport projects. The projects - part of the government’s Build-Better-More infrastructure program - are the NCR EDSA Busway, operations and maintenance of the Cebu Bus Rapid Transit, the Manila Bay-Pasig River-Laguna Lake Ferry, and the North Long Haul Inter-Regional Railway.
The PPP Center will guide feasibility studies through its Project Development and Monitoring Facility - a revolving fund that was established to enhance the investment environment for PPPs - and develop a viable pipeline. The PDMF funding mechanism is available to agencies and local government units.
PHILIPPINES TO INVITE BIDS FOR CBK HYDROPOWER PLANTS
The Philippines government will be inviting bids for the 797.92 MW Caliraya-Botocan-Kalayaan (CBK) hydropower plants. The invitation to bid is targeted to be released in December 2023. The hydro facility is comprised of 22.6 MW Caliraya in Lumban, 20.8 MW Botocan in Majayjay, and 684.6 MW Kalayaan Iand II in Kalayaan, Laguna. The CBK power units are operated by Japanese companies Sumitomo and J-Power. The Asian Development Bank is the consultant for the privatization.
Power Sector Assets and Liabilities Management (PSALM) initially set the CBK HEPP’s privatization this year 2023 after the successful sale of the 165-megawatt Casecnan hydroelectric power plant in Pantabangan, Nueva Ecija to Fresh River Lakes Corp., a subsidiary of the Lopez Group’s First Gen Corp.
ACEN AND IB VOGT TO FUND ASIAN SOLAR PROJECTS
ACEN has formed a joint venture (JV) with German company ib vogt to fund large-scale solar power plants in Asia.
The JV, IBV ACEN Renewables Asia, will focus on shovel-ready plants with a minimum target operational capacity of 1 GW. It will look at projects in Bangladesh, Laos, Cambodia, Vietnam, Indonesia, and Malaysia, among other regions in Asia Pacific. Solar energy developer ib vogt is backed by infrastructure investment fund manager DIF Capital Partners.
PHILIPPINES OPENS BIDDING FOR NINOY AQUINO AIRPORT CONCESSION
The Philippines has launched the tender for a 15-year concession to operate the Ninoy Aquino International Airport (NAIA) by opening public bidding and granting access to the virtual data room. The PHP 170.6 Bn (USD 3 Bn) public-private partnership project will cover runways, 4 terminals, and associated facilities. The government is inviting interested parties to participate in a single-stage competitive bidding process to operate and rehabilitate the asset for 15 years, extendable by another 10 years.
Instructions to bidders are available on the websites of the Department of Transportation, the Manila International Airport Authority, and the PPP Center. The project is expected to improve overall passenger experience and increase the current annual passenger capacity of the NAIA to at least 62 Mn from 32 Mn.
BLUELEAF AND SUNASIA WIN ADDITIONAL PHILIPPINES FLOATING SOLAR CAPACITY
Renewables developers Blueleaf Energy and SunAsia Energy have secured additional contracts from the Philippine government to develop a large floating solar project in the Southeast Asian country. The Laguna Lake Development Authority, a Philippines quasi-government agency, awarded the lake lease agreements to the two partners for the development, which is one of the world’s largest floating solar projects.
Philippines-based renewables company SunAsia was the winning bidder for ten blocks of lake surface comprising a total of 1,000 hectares in Laguna Lake. The combined capacity of the 10 projects will be about 1.3 GW of installed floating solar energy. The partners got permits to build the 1.3 GW (1 GWac) capacity in multiple tranches. Construction of the floating solar project is expected to start in 2025 and operations are to begin progressively between the years 2026 and 2030.
ACEN TO INVEST IN 335 MW ONSHORE WIND PROJECT
ACEN Corporation, a subsidiary of Ayala Group, will invest in a 335 MW onshore wind power project in the Philippines. The project will cover Paete, Pakil, and Kalayaan in the Laguna province, and Mauban in the Quezon province. The approved investment amount has not been disclosed yet.
Moreover, ACEN has completed the first phase of the 160 MW Pagudpud wind farm in IlocosNorte. It is expected to be fully operational by December 2025. The 70 MW Capa wind project is also under construction.
NUCLEAR ENERGY ADDED IN REVISED ENERGY ROAD MAP FOR THE PHILIPPINES
The Department of Energy’s (DOE) revised energy roadmap for the Philippines will include the development of nuclear energy capacity. This will increase renewable energy (RE) targets under the clean energy scenario. DOE has conducted the first consultation of the Philippine Energy Plan (PEP) 2023 to 2050 which includes the reference scenario and the clean energy scenario. The reference scenario will be based on previously established RE targets. Meanwhile, the clean energy scenario will support the entry of additional capacities from nuclear energy and the reutilizing and retiring of coal facilities.
Under the reference scenario, the share of RE in the country’s total power mix will be increased to 35% by 2030 and to 50% by 2050. Additionally, 10% of all road transport will be electric vehicles (EVs) by 2040.
MPIC AND PARTNER TO DEVELOP RAIL PROJECTS IN THE PHILIPPINES
Metro Pacific Investments Corporation (MPIC) has partnered with Malaysia-based Hartasuma Sdn Bhd to develop PHP 3 Bn (USD 52.7 Mn) worth of rail projects in the Philippines. The partners will explore the feasibility of deploying cable-car systems and monorails for urban transport and tourism as well as rolling stock refurbishment projects.
Additionally, MPIC has plans to build a Center for Rail Excellence in the Philippines to upskill and re skill works in the transport industry.
PHILIPPINES BRIDGE AND PORT SEEK INTERNATIONAL INVESTORS
The Philippines' Subic Bay on the west coast of Luzon Island is seeking international investors that can develop transport infrastructure in the region. The region is seeking a developer that could develop, finance, build and operate the proposed Redondo Link Bridge project.
Subic Bay, about 100 km northwest of Manila Bay, was formerly the site of a major US Navy facility, and is now an industrial and commercial area known as the Subic Bay Freeport Zone under the Subic Bay Metropolitan Authority.
The local government has several options for the design of the project. They include a 6.5 km bridge connecting Nabasan Wharf, Grande Island Pier and the Redondo Peninsula at an estimated cost of about USD 360 Mn; and a 7.7 km bridge linking Kalaklan Sector Light to Redondo Peninsula, estimated to cost USD 340 Mn. The bridge is expected to connect Subic Bay’s hinterlands – where the government expects to develop solar and wind farms, manufacturing plants, leisure facilities, and logistics parks to Olongapo, a city in Central Luzon.
PHILIPPINES PROVINCE ACCEPTS SAN MIGUEL’S UNSOLICITED EXPRESSWAY PPP PROPOSAL
The Cavite provincial government in the Philippines has accepted an unsolicited proposal from San Miguel Holdings (SMHC) to build, operate and maintain a toll road. The 27 km stretch will run through the municipalities of Silang, Amadeo, Tagaytay, Indang, Mendez and Alfonso in Cavite and Nasugbu in Batangas province.
SMHC was awarded original proponent status and the two sides signed an agreement on 1 September. Cavite will now begin the Swiss Challenge process in line with its rules on public-private partnerships.
PHILIPPINES SEEKING INFRA INVESTMENT IN COUNTRY'S SECOND-LARGEST ISLAND
The Philippine government is looking for private investment in energy and infrastructure on Mindanao Island. The opportunities on the island include 79 infrastructure projects worth USD 45.9 Bn, and another USD 104 Bn in renewables projects across the country. This is required so that Philippines can achieve its goal of raising the share of clean energy to 35% of its overall power mix by 2024. Philippines introduced the Maharlika Investment Fund, the Philippines' new sovereign wealth fund and pledged high rates of return to investors. It wants the transition from the dirty source of energy to cleaner source of energy with a need for a lot of investment and it has opened up that area to let investments come in solar, wind and tidal. Those are critical. Plus, a growing economy needs a lot of power.
PHILIPPINES INVITES QATARI INVESTMENT IN PRIORITY INFRA PROJECTS
The Philippine government has invited investors from Qatar to explore opportunities in the Southeast Asian nation’s‘ infrastructure flagship projects’ (IFPs). The 197 IFPs require a cumulative investment of close to USD 155 Bn.
Of these, 39 will be implemented through public-private partnerships (PPPs). The projects include the Metro Manila Subway Project, the Cavite-Laguna Expressway Project, and the New Manila International Airport Project in the transport sector; the Wawa Bulk Water Supply Project in the water resources sector; and UP-PGH Diliman Project in the health sector. The government has also liberalized the renewables industry, allowing full foreign ownership as the country transitions to cleaner energy sources.
PHILIPPINES EYES 8 GW CAPACITY AUCTION IN RENEWABLES PUSH
Manila will request bids from developers of renewable energy to deploy about 8 GW of hydropower and geothermal supply in a fresh round of auctions for clean energy projects. The target capacity of 8 GW represents the unsubscribed portion of the 11.6 GW of extra supply from resources such as waste-to-energy, biomass, onshore wind, and solar, for the Department of Energy was seeking proposals at an auction in July 2023. Developers, at the time, had subscribed to a total of 3.58 GW or about one-third, due to a stringent timeline for installation and concerns regarding power transmission issues. The government had required the extra supply to be in place within the next 3 years.
At an industry forum, the energy department is considering issuing the auction notice and guidelines in November and will be the third round of bidding under its Green Energy Auction program. The government is working toward resolving the problems flagged by developers.
List of key transactions - Philippines Q3 2023
Source: YOG INFRA analysis, Public Information
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