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REGIONAL AIRPORTS DEVELOPMENT, OPERATIONS AND MAINTENANCE PROJECTS

Bacolod-‐‑Silay, Iloilo -‐‑ Bundle 1 Davao, Laguindingan, and New Bohol (Panglao) -‐‑ Bundle 2

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Pre-Qualification Conference 7 April 2015

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Outline of Presentation

Way Forward

Instructions to Prospective Bidders

Bidding Process

Project Description & Scope

Background of Airports

Development Objective

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Project Development Objectives

To improve services at the respective key regional airports including required enhancement of airside and landside facilities at the respective airports by concessioning the operations and maintenance to private sector proponents.

Airports have been divided into two bundles for the transaction:

Bundle 1- Bacolod-Silay, Iloilo

Bundle 2- Davao, Laguindingan, and New Bohol (Panglao)

Location- Airports

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Iloilo Airport Estimated Cost: PHP 30.4 Bn

Passenger Traffic (2013): ~1.8 Mn

New Bohol Airport

Estimated Cost: PHP 4.57 Bn

Passenger Traffic (Tagbilaran) : 0.8 Mn

Davao Airport Estimated Cost: PHP 40.57 Bn


Bacolod-‐‑Silay Airport



Laguindingan Airport



Bundle 1

Bundle 2

Iloilo International Airport: Bundle 1

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q  Iloilo International airport is located in Cabatuan, Province of Iloilo (Western Visayas region)

q  It commenced operations in 2007 and is one of the recently completed airports in Philippines with modern facilities

q  I n te rms o f passenger t ra f f i c throughput, it is the fifth largest airport in the Philippines

q  I t provides both domest ic and

international connectivity (7 domestic destinations and 2 international destinations)

Passenger Traffic (2013) in Mn ~1.8

CAGR for the period 2008-13 ~11%

Cargo Traffic (2013) in Mn Kgs 12.67

CAGR for last 5 years ~8%

Revenues (2013) in PHP Million 270

Bacolod-Silay Airport: Bundle 1

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q  Bacolod Airport is located in Silay City, Negros Occidental (Western Visayas region)

q  It commenced operations in 2008 and is one of the recently completed airports in Philippines with modern facilities

q  I n te rms o f passenger t ra f f i c throughput, it is the eighth largest airport in the Philippines

q  It provides direct connectivity to 4 domestic destinations. International operations are expected to commence soon


CAGR for the period 2008-13 ~9.6%


CAGR for last 5 years 0.22%


Davao International Airport: Bundle 2

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q  Davao airport is located in Catitipan, Barangay Buhangin, Davao C i t y and has been operational for more than 15 years

q  In terms of passenger traffic

throughput, it is the third largest airport in the Philippines

q  It provides both domestic and i n t e r n a t i o n a l c o n n e c t i v i t y (8 domestic destinations and 1 international destination)

q  Internat ional connect iv i ty is presently to Singapore


CAGR for the period 2008-13 ~10.5%


CAGR for last 5 years ~9.7%


Laguindingan International Airport: Bundle 2

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q  Laguindingan International airport is located on the northern tip of Misamis Oriental and is approximately 45 kilometers from Cagayan de Oro city and approximately 65 kilometers from Iligan city

q  It commenced operations in June 2013 replacing the old Lumbia Airport

q  It is the sixth largest airport in the Philippines in terms of passenger traffic handled


CAGR for 2008-13 ~15%


CAGR for last 5 years 5.72%


New Bohol International Airport: Bundle 2

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q  New Bohol airport is to be located in Panglao Island and shall replace the existing Tagbilaran Airport

q  The construction is expected to be completed by mid-2017

q  Tagbilaran airport is an important airport in the Philippines with largely tourist–driven traffic

q  The airport is expected to have a design capaci ty of 1 .7 mi l l ion passengers

Passenger Traffic (2013) in Mn (for existing Tagbilaran Airport)

~0.8

CAGR for 2008-13 ~14.6%

Terminal Design Capacity in Mn 1.7



Existing Facilities at the Airports

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Iloilo Bacolod-Silay Davao Laguindingan New

Bohol Total Area (hectares) 188 187 217 354 120

Floor Area (sq.m.) 13,700 6,187 22,683 7,184 8,281

Runway 2500 m x 45m

2002 m x 45m

3000 m x 45m 2100 m x 45m 2000 m

x 45m

Apron Area (sqm) 48,210 25,300 74,250 46,150 48,000

Passenger Boarding Bridges

3 Nos. 3 Nos. 4 Nos. 2 Nos. n/a

Bundle 1 Bundle 2

1. Taking-over the operations and maintenance of the existing facilities from CAAP excluding the Tagbilaran airport and the Davao airport’s former landside structures and facilities located East of the runway, and except as otherwise provided in the Bidding Documents. 2. Enhancement/development of landside facilities, including passenger and cargo terminal(s), along with all associated infrastructures and facilities 3. Enhancement/development of airside facilities to meet the enhanced scale of operations of the airports 4. Installation of all required equipment and associated facilities

Project Description: Scope of Work (1/3)

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5. Provision of required works with respect to the existing terminals (either facilities already in operation, as in the case of the Bacolod-Silay, Iloilo, Davao, and Laguindingan airports, or newly-constructed facilities, as in the case of the New Bohol (Panglao) airport), along with all associated infrastructure and facilities, necessary to handle operations until the expansion of the existing terminals and/or the development of new passenger terminal(s). 6. Operations and maintenance of landside facilities (including, among others, the passenger terminals) and associated airside facilities (including, among others, the apron, runway and taxiway), during the entire concession period 7. Necessary upgrade and maintenance of ATC and ANS facilities

Project Description: Scope of Work (2/3)

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Project Description: Activities not included in Scope of Work*

(3/3)

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Activities / Responsibilities of CAAP / DOTC: 1. Air Traffic Control (“ATC”) Services

2. Air Navigation Services (“ANS”) 3. Operations of ATC and ANS facilities

Further, the following services are not included in the scope of the Projects and would continue to be provided by the relevant agencies at the airports: 1. Customs 2. Immigration 3. Security 4. Quarantine 5. Services provided by the Philippine Overseas Employment Administration (POEA) and the Overseas Workers Welfare Administration (OWWA)

*The PBAC reserves the right to revise, expand, reduce, and/or further specify the above inclusions and exclusions to the scope of the Projects

Project Description: Contractual Framework

Legal Framework Republic Act No. 6957, as amended by Republic Act No. 7718 ("BOT Law”), and its 2012 Revised Implementing Rules and Regulations (“Revised IRR”)

PPP Structure Operate-Add-Transfer (“OAT”) Implementing Agencies

Department of Transportation and Communications and Civil Aviation Authority of the Philippines

Concession Period 30 years

Right of Way and Possession of Airport Land

Government will grant appropriate rights to project site and relevant existing assets as per the terms of the ITB

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Bidding Process(1/2)

q  Competitive public bidding - two-stage public bidding process q  Issue of Instructions to Prospective Bidders (ITPB) for Pre-Qualification

of Prospective Bidders through the current process q  Prospective Bidders may bid for either one or both bundles q  Evaluation of Pre-Qualification applications and announcement of Pre-

Qualified Bidders for the 2nd stage q  Instructions to Bidders (ITB) including Draft Concession Agreements and

Minimum Performance Standards and Specifications to be shared with Pre-Qualified Bidders

q  Post issuance of final documents, Bid Proposals, including technical and financial proposals, to be invited from Pre-Qualified Bidders.

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Bidding Process(2/2)

q  Evaluation of Technical Proposals q  Financial evaluation of Technically Qualified bidders as per the provisions of

the ITB documents q  Announcement of Winning Bidder as per the provisions of the ITB

documents q  Notice of Award to be issued to the Winning Bidder

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§ Limited to Airports, highways, expressways, power, ports, railways, metro rail, industrial parks/ estates, logistic parks, and real estate development

§ Projects in the Infrastructure Sector with minimum development costs of One Billion Pesos. Developments costs must be adjusted to current prices using the Philippine Statistics Authority’s Consumer Price Index.

§ A person, corporation or any entity effectively Controlled by or Controlling the Prospective Bidder or Consortium Member or associated with the Prospective Bidder or Consortium Member (as the case maybe) under common ownership and Control

ITPB: Key Definitions

AFFILIATE

ELIGIBLE PROJECTS

ELIGIBLE PERIOD

INFRASTRUCTURE SECTOR

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§ A period of last 10 years ending on 31st December 2014

§  The power to direct or cause the direction of the management policies and actions of a body corporate, whether through:

i.  ownership of at least fifty percent (50%) plus one (1) of either or a combination of the following:

(i.a) the total outstanding voting shares, or (i.b) the voting rights, in another entity

ii. the ability to elect a majority of the members of the other entity’s board of directors, as evidenced by a legal agreement including a voting trust or other voting agreements

In determining ownership of shares in a corporation, shares held both directly and indirectly will be counted.


CONTROL

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§  An individual, partnership, corporation, or any other juridical entity that is a holder of any of the following permits issued by the Civil Aeronautics Board ("CAB") of the Philippines: Ø  A valid and effective Permit to Operate Scheduled International Air Transportation

Services; or Ø  A valid and effective Permit to Operate Scheduled Domestic Air Transportation

Services; or Ø  A valid and effective Foreign Air Carrier's Permit and providing scheduled passenger

services.

For avoidance of doubt, an individual, partnership, corporation, or any other juridical entity providing dedicated cargo transport services shall not be deemed an Airline for the purposes of this amended ITPB


AIRLINE

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§  An individual, partnership, corporation, or any other juridical entity that: (1) is an Airline; or (2) is an Affiliate of an Airline

AIRLINE- RELATED ENTITY

ITPB: Qualification Requirements

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q  Legal Qualification Requirement

q  Technical Qualification Requirement

§  Development Experience

§  Design and Engineering Experience

§  Operations and Maintenance Experience, and

§  Qualified Key Personnel

q  Financial Qualification Requirement

Legal Qualification Requirement (1/2)

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q  Legal Qualification Requirement (Clause II-09 1)– A Prospective Bidder must be

§  An individual, partnership, corporation or any other juridical entity; or §  A Consortium whose members are individual(s), partnership(s),

corporation(s) or any other juridical entity(ies) §  Subject to the other provisions detailed in the ITPB

q  Participation of Airline Related Entities §  In the Consortium

Ø  Airline Related Entity/Entities cannot own or be proposed to own an aggregate of more than 33% total equity in the Consortium

Legal Qualification Requirement (2/2)

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q  Participation of Airline Related Entities §  Project SPC

Ø  Airline-Related Entity/Entities in the Project SPC/s cannot own or be proposed to own an aggregate of more than 33% total equity in any Project SPC (or all the Project SPCs in aggregate, as the case may be) for the duration of the Concession Period

§  In the Facility Operator Ø  Airline-Related Entity can own or be proposed to own no more than 33%

of the total equity in a Facility Operator/s if such Airline-Related Entity was the entity that fulfilled the Winning Bidder’s Operations and Maintenance Experience as provided in Section II-09 (2)(c);

Technical Qualifications: Development Experience

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q  Development Experience (Clause II-09 2.a): satisfactorily undertaken the development of Eligible Projects in terms of overall responsibility for designing, engineering, and construction of Eligible Projects during the Eligible Period, such that Ø  Sum total of the capital costs incurred for Eligible Projects is at least PhP

10.0 Billion; and there is Ø  At least one Eligible Project for which the capital costs incurred is at least

PhP 2.0 Billion

q  Entities which fulfill this requirement Ø  An individual, partnership, corporation, or any other juridical entity, the

Prospective Bidder itself or its Affiliate; or Ø  In case of a Consortium, a Consortium Member having at least thirty-

three and one third percent (33 1/3%) interest in the Consortium or such Consortium Member’s Affiliate.

q  Must propose at least two, and at most five, Construction Contractors

Technical Qualifications: Design and Engineering Experience (1/2)

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q  Design and Engineering Experience (Clause II-09 2.b): must have satisfactorily undertaken during the Eligible Period, detailed architectural design and engineering, including airport planning, construction planning and phasing in implementing projects, for airport terminal facilities and associated infrastructure for at least one (1) International Airport possessing all of the following criteria:

Ø  has a capacity of handling at least five (5) million passengers per annum Ø  has a terminal area of at least 40,000 square meters (sq. mt.) Ø  has the capability to handle Code 4E aircrafts, demonstrating works

undertaken for landside facilities such as passenger terminals and associated facilities, and airside facilities such as runway, taxiways, aprons, etc.

Technical Qualifications: Design and Engineering Experience (2/2)

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q  Entities which fulfill this requirement

Ø  An individual, partnership, corporation, or any other juridical entity, the Prospective Bidder itself or its Affiliate or a nominee Design and Engineering Contractor; or

Ø  In case of a Consortium, a Consortium Member or its Affiliate or a nominee Design and Engineering Contractor

•  If fulfilled by a Design and Engineering Contractor, at least two and at

most five, Design and Engineering Contractors to be proposed each of which must have the relevant experience and possess the necessary licenses

Technical Qualifications: Operation and Maintenance Experience(1/2)

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q  Operation and Maintenance Experience (Clause II-09 2.c): experience in either Ø  O&M of an International Airport for a period of at least three (3) consecutive

calendar years anytime within the Eligible Period , with such International Airport having handled an Annual Passenger Throughput of at least five (5) million passengers per annum within such three (3)-year period

Or Ø  O&M of more than one (1) International Airport, each for a period of at least

three (3) consecutive calendar years anytime within the last five (5) years of the Eligible Period (i.e., 1 January 2010 to 31 December 2014), with such airports having handled a cumulative Annual Passenger Throughput of at least (5) million passengers per annum for at least three (3) consecutive calendar years within the last five (5) years of the Eligible….

Technical Qualifications: Operation and Maintenance Experience(2/2)

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…..Period with at least one (1) of such airports having handled an Annual Passenger Throughput of at least three (3) million passengers per annum for a period of at least three (3) consecutive calendar years anytime within the last five (5) years of the Eligible Period.

§  Entities which fulfill this requirement

Ø  An individual, partnership, corporation, or any other juridical entity, the

Prospective Bidder itself or its Affiliate; or Ø  In case of a Consortium, a Consortium Member having at least ten percent

(10%) interest in the Consortium or such Consortium Member’s Affiliate

Financial Qualification Requirement(1/2)

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q  Financial Qualification Requirements (Clause II-09 3.) : A Prospective

Bidder must fulfill the following requirements:

§  For a Prospective Bidder Ø  Net Worth of at least PhP 2.0 billion, or its foreign currency equivalent

as of its latest audited financial statements, or A Set-Aside Deposit equivalent to the same amount.

§  For a Consortium Ø  the Net Worth of Consortium Members who have an equity share of at

least twenty-five percent (25%) each in the Consortium may be added

Financial Qualification Requirement(2/2)

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§  Entities which fulfill this requirement

Ø An individual, partnership, corporation, or any other juridical entity, the Prospective Bidder or its Affiliate; or

Ø In case of a Consortium, Consortium Member with at least twenty-five per cent (25%) equity interest in the Consortium, or such Consortium Member’s Affiliate

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q  Prospective Bidder as a Corporation, Partnership or Other Juridical Entity Ø  No restrictions imposed on the ownership structure; provided that, the Prospective

Bidder ensures its continued eligibility with respect to the individual Technical and Financial Qualification Requirements as provided in the Invitation Documents

q  Prospective Bidder as a Consortium Ø  Lead Member and the Consortium Member proposed to meet the Development

Experience may not withdraw or reduce their percentage interests in the Consortium as declared in the Consortium`s Qualification Documents

Ø  Other members of the Consortium may withdraw/ be substituted prior to the Bid Proposals Submission Date

*These rules shall apply from the Qualification Documents Submission Date to the Bid Proposals Submission Date

Lock-Up Rules During the Bidding Process* (1/2)

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q  Prospective Bidder as a Consortium Ø  In case of substitution, the Prospective Bidder has to ensure its continued eligibility

with respect to the individual Technical and Financial Qualification Requirements as provided in the Invitation Documents

Ø  Any change in the composition of the Consortium and/or in the list of Subcontractors must be approved by the PBAC

Lock-Up Rules During the Bidding Process* (2/2)

*These rules shall apply from the Qualification Documents Submission Date to the Bid Proposals Submission Date

ü  Government commitment for the project Focus on development of the country’s transport infrastructure through private sector participation

ü  Strong project fundamentals Attractive location of the airport with significant business and tourist potential

ü  NEDA* Board-approved projects All projects have been approved by NEDA

ü  Optimal PPP structuring balanced risk sharing and competitive returns to private sector proponents

ü  PPP Agreement for 30 years scope for long term investment & returns

ü  Award through competitive bidding transparency and equality for all prospective private sector bidders/investors

*NEDA -‐ Na(onal Economic & Development Authority

Why Invest?

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ü  Strong Legal Framework – BOT Law Enunciates the policy of the state recognizing the role of the private sector as main engine for national growth and development

READY FOR BUSINESS.

Activity Expected Timelines Qualification Documents Submission Date 18 May, 2015

Notification of results of evaluation of Qualification Documents

within 5 calendar days from approval of Pre-Qualification results

Issuance of Instructions to Bidders, Draft Concession Agreement & Draft MPSS

June 2015

Bid Proposals Submission Date TBA in the Instructions to Bidders

Issuance of Notice of Award by March 2016

Signing Date of Concession Agreement

within 5 calendar days from receipt of the Notice of Complete Compliance with all Post-Award Requirements

Note that these timelines are tentative and may be subject to change. The final timelines shall be communicated at the appropriate time, as necessary.

Way Forward: Expected Timelines

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Way Forward: Bid Submission

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18 May 2015, Before 2:00 PM at

Pre-‐‑Qualification, Bids and Awards Commi8ee for Department of Transportation and Communications

Civil Aviation Authority of the Philippines, Regional Airports Projects

Unit 153, 15/F, The Columbia Tower, Ortigas Avenue, Mandaluyong City Manila, Philippines

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THANK YOU!