EDSA CORRIDOR MASS TRANSIT DEVELOPMENT OPTIONS

Project Brief for Her Excellency President Gloria Macapagal Arroyo November 2006

Major Metro Manila Transport Corridors

Metro Manila Urban Transport Integration Study (MMUTIS) by Pacific Consultants Inc.
North Triangle

1. US$ 5.0 million JBIC study that was completed in 1999 became the foundation for highway and rail projects in Metro Manila
East Wood Ortigas

Cubao

2. MMUTIS established the 7 major traffic corridors of Metro Manila. 3. Traffic corridors are consistent with the location of Commercial, Business and Residential Districts of Metro Manila. 4. EDSA Corridor is the backbone of passenger traffic for Metro Manila with 600,000 bus riding passengers per day as per 19961997 surveys

Ayala

Fort Bonifacio

Metro Manila Mass Transit Network (MMUTIS)

North Rail
North Espressway Corridor

LRT-4
CommonwealthEspana Corridor

The Metro Manila Urban Transport Integration Study Identified the Following LRT / MRT Projects for Implementation by 2015
LRT 1 Existing LRT 1 Extension to Cavite For development MRT 2 Existing to be extended to Masinag MRT 3 Phase I Existing MRT 3 Phase II to Caloocan for development MRT 4 to Batasan Novaliches Northrail - Southrail

LRT-2
Aurora Corridor

LRT-1
Taft Corridor

MRT-3
EDSA Corridor

South Rail
South Expressway Corridor

LRT-1 Extension
Aguinaldo Corridor

Completed Mass Transit Systems

North Rail
North Espressway Corridor

LRT-4
CommonwealthEspana Corridor

As of December 2006 the Government has successfully implemented the following:

1. LRT 1 completed in the mid 80s
MRT 2 Phase I under construction at the time of MMUTIS (completed today) MRT 3 Phase I under construction at the time of MMUTIS (completed today)

LRT-2
Aurora Corridor

2.
LRT-1
Taft Corridor

MRT-3
EDSA Corridor

3.

South Rail
South Expressway Corridor

LRT-1 Extension
Aguinaldo Corridor

Projects Doable to 2010

North Rail
North Espressway Corridor

LRT-4
CommonwealthEspana Corridor

The following Projects if immediately implemented can be targeted for completion by 2010:
1. 2. MRT 3 Phase II to Caloocan Northrail to Malolos (Chinese funding) Southrail (to Calamba Korean funding)

LRT-2
Aurora Corridor

LRT-1
Taft Corridor

MRT-3
EDSA Corridor

3.

South Rail
South Expressway Corridor

LRT-1 Extension
Aguinaldo Corridor

North Ave. - Caloocan Study by Louis Berger

North Rail West Gen. Malvar Kaingin Bansalangin

North Avenue Agham Quezon Avenue

North Rail

Monumento

Balintawak

Roosevelt

DOTC engaged in 2006 the services of Louis Berger for the North Av. to Caloocan Link Project
1. 2. Study output confirms that EDSA corridor as most suitable for this Project Study projects a ridership of 600,000 passengers a day from North Avenue to Caloocan The Louis Berger dubbed Edsa North Transit follows the exact alignment of MRT 3 Phase II North Rail and LRT-1 are feeder lines to the EDSA Corridor.

3.

4.

Impact of North Av. - Caloocan Link to Northrail

North Rail West Gen. Malvar Kaingin Bansalangin

North Avenue Agham Quezon Avenue

North Rail

Monumento

Balintawak

Northrail Ridership Traffic demand forecasts have confirmed:

1. 219,000 passengers per day in 2009 with a completed inter-connection to a seamless EDSA corridor. 80,000 (more than 63% drop) without an inter-connection to a seamless EDSA corridor

Roosevelt

2.

First Conclusion
The EDSA corridor traffic Demand needs to be addressed ASAP as discussed by MRT 3 Phase II (identified by MMUTIS) and / or EDSA North Transit (identified by Louis Berger) as this will greatly affect the Northrail traffic demand.

Technical Options for North Av. Caloocan Project

North Rail West Gen. Malvar Kaingin Bansalangin

Main Alternatives
North Avenue Agham Quezon Avenue

North Rail

Monumento

Balintawak

Roosevelt

1.

Construction of a seamless MRT 3 Phase I to MRT 3 Phase II using the original MMUTIS concept Construction of the StandAlone EDSA North Transit project on the same corridor as envisioned by Louis Berger

2.

Comparative Analysis Seamless / Stand Alone

Seamless MRT-3 Development Options
Option 1 1. All Elevated from EDSA-North Avenue to EDSA-Monumento 2. US$ 220 million project cost 3. Can be completed in 18 to 24 months 1. All elevated from EDSA-North Avenue to Samson-North Rail 2. US$ 410 million project cost 3. Can be completed in 24 to 30 months 1. Combined Elevated and tunnel from EDSA-North Avenue to Samson-North Rail 2. US$ 490 million 3. Can be completed in 30 to 36 months

Option 2

Option 3

Stand- Alone ENT Project with Separate Transfer Station in EDSANorth Avenue
Option 4 1. Combined elevated and tunnel from Quezon Blvd-Agham Road to SamsonNorth Rail West. 2. US$ 575 million to US$ 680 million project cost 3. Complicated additional two way double deck guideway and station on EDSANorth Avenue 4. Additional Depot required for ENT as against no addl depot for seamless connection (US$ 40 to 50 million cost differential)

Seamless MRT-3 Project Construction Period compared to Solicited BOT Project plus ConstructionPeriod
BOT Process and Implementation Time Constraints for ENT Project
Approval Process for Solicited BOT Project
(estimated total processing time: 380-425 calendar days minimum) Private Sector Government
Project ID and Preparation

Time Frame

Seamless MRT-3 Project Implementation Time Constraints

1. Approval of Seamless Project Possible under the Contiguous Project Site of the GPRA (requires DOJ Opinion) 2. ICC-NEDA Upon submission of the DOJ Opinion approves BT Contract (90 days) 3. Financial Closure 12 months 4. Project Construction Period All Elevated 18 to 36months depending on variant with Phase I (North to Monumento) to be opened latest 1st Qtr. 2010

Approval By Appropriate Body

30 working days (40 days)

Disapproved Approved STOP OR IF WARRANTED PROPOSAL IS RECOMMENDED FOR NATIONAL GOVERNMENT FUNDING
Once every week for 3 consecutive weeks (21 days) Bidders given 30-45 days to submit PQ documents from last date of advertisement 30 days to review documents from last date of advertisement

Prepares PQ Documents

Advertisement/Invitation to Pre-qualify (PQ) & Bid Pre-qualification of Bidders Pre-Bid Conference/ Bid Preparation Receipt and Opening of Bids Evaluation of Bids (Two Envelope System ) Contract Award NEDA ICC Clearance of Contract Contract Approval Contract Implementation

Submits PQ Documents

Prepares Bid Documents

90 to 120 days to prepare bid proposal

Submits Bid Proposal & Bid Bond

1 day for Bid Submission

30 days each for the technical and financial evaluation (60 days) Decision to award 30 days from date of completion of financial evaluation ICC to act on the contract -15 working days (20 days) Approve Notice of Award (NOA) within 7 days after ICC Clearance Issuance of NOA to winning bidder- 7 days from date of approval of NOA. Contract execution - within 7 days from receipt of (NOA)/Approval of Contract which shall be within 15 days from compliance with all conditions of the contract award. Franchise shall be automatically granted. Issuance of Notice to Proceed - within 15 calendar days from approval of contract.

Receives Notice of Award

Signs contract after compliance with all conditions of the contract/Posts Performance Bond

Implements Project

Time frame in shaded areas are best estimates only. Working days converted to calendar days by multiplying with a factor of 1.33. Time frame excludes allotment of compliance with conditions for contract award.

Estimated Total Processing Time: 380-425 calendar days

BOT Approval process = 425 days plus 468 days financial closure and 1080 days Project Construction. Total Project Implementation Period of 1,973 days or 6.5 years.

Summary of the Conditions of the NEDA Board Approval

Conditions Status

Proposed project cost may be reduced by an indicative amount of around US$ 7.8 million.

The Total Project Cost was reduced from US$ 214 million to US$ 191.6 million, which represents a savings of around US$ 22.4 million
DOF has no objection and has favorably considered the proposed structure of the ROE. The compliance of the MRT-3 Phase II Project under EO 109 is likely to be a favorable opinion with the DOJ Legal Opinion No. 25, S 2002 and the DOJ Memorandum dated November 6, 2002. In a letter to the DOTC dated October 9, 2002, MRTC has clarified to the DOTC the evaluation process during the bid for the EPC.

MRTCs return on equity should be a minimum of around 11 percent. DOTC shall clarify to the ICC Secretariat the MRTC evaluation process noting that the bidding conducted by MRTC included the LRVs and secure DOJ Opinion in compliance with Executive Order (EO) 109.

Summary of the Conditions of the NEDA Board Approval

Conditions
DOTC shall ensure the inclusion of the budgetary requirements of the project, including the level of the subsidy required based on the NEDA traffic forecast and shall be within DBM prescribed ceilings.

Status
Based on our meeting with you at the DOTC last September 23, 2002, Assistant Secretary George Esguerra informed the DOTC panel that this requirement has been submitted to the ICC-TWG in June 2002. In this regard, this NEDA Board requirement has been fully complied with.

Remove references to the acquisition of Light Rail Vehicles (LRVs) from the Supplemental Agreement. Without prejudice however, should actual demand exceed forecast and justify therefore, additional LRVs, the DOTC may submit a new proposal for the acquisition of additional LRVs for ICC approval.

Average ridership of about 350,000 passengers per day was reached in September 2002. An option for the acquisition of additional LRVs when ridership reaches 350,000 passengers per day (triggering event) and finalise an agreement 90 days from the date of the triggering event.

The End

Comparative Project Cost of Seamless MRT-3 Project Options and Stand Alone ENT Project
(48 additional trams separate from the ongoing procurement of 48 trams)

Cummulative Revenue Collection less Expense (PhP 17.50 and PhP 25.00 Average Fare Rate)

Average Fare PhP 17.50

Phase 1 Only

Option 1 Seamless MRT-3 all elevated to Monumento

Option2 Seamless MRT3 all elevated to North Rail

Option 3 Seamless MRT-3 combined elevated & tunnel to North Rail

Option 4 Stand alone Phase 1 & ENT (Phase 1 & LRT1 Ext to North Ave and North Rail Ext to North Ave)

Cumulative Total Farebox Revenue Collection less Expenses

(1,280,998.60)

(431,460.78)

(691,389.62)

(714,036.15)

(2,149,807.89)

Average Fare PhP 25.00

Phase 1 Only

Option 1 Seamless MRT-3 all elevated to Monumento

Option2 Seamless MRT3 all elevated to North Rail

Option 3 Seamless MRT-3 combined elevated & tunnel to North Rail

Option 4 Stand alone Phase 1 & ENT (Phase 1 & LRT1 Ext to North Ave and North Rail Ext to North Ave)

Cumulative Total Farebox Revenue Collection less Expenses

(746,890.52)

490,762.80

230,833.96

208,187.43

(1,592,412.88)

Seamless MRT-3 System and Stand alone Deficit Neutral Cashflow (PhP 17.50 average fare rate)

Surplus/Deficit Cashflow of the four project options:

Phase 1 as a stand alone system will not be a deficit neutral cash flow for the government even after 2025. Seamless MRT-3 using option 1, 2 & 3 will be a deficit neutral cash flow for the Government by 2020. Phase 1 and ENT systems will be not be deficit neutral even until after 2025. PhP 17.50 average fare is 50% less than the comparable aircon bus fare.

Seamless MRT-3 System Deficit Neutral Financial Cashflow (PhP 25.00 average fare rate)
Surplus/Deficit Cashflow of the four project options: Stand alone Phase 1 will be deficit neutral cash flow for Government by 2021 Seamless MRT-3 using options 1,2 & 3 will be a deficit neutral cash flow for Government as early as 2015 Stand alone Phase 1 and ENT systems will be a deficit neutral cash flow for Government by 2022 PhP 25.00 average fare is 20% less than the comparable aircon bus fare.

Ridership and Financial Impact of a Seamless MRT-3 System and Non-seamless MRT-ENT System

Historically, EDSA Corridor provides a seamless public conveyance system from places of residences to the Commercial Business Districts (CBD) of Metro Manila.
MRT-3 Soft Opening from North Avenue to Buendia A disconnected public conveyance system resulted in a maximum 6% utilization of the 450,000 passenger a day line. (even after reducing average fare from PhP 18.50 to PhP 12.50) Number of passengers rose from 30,000 passengers a day to 120,000 passengers a day after the following month of the opening of a seamless public conveyance system from EDSA- North Avenue of northern Metro Manila and the EDSA-Taft of southern Metro Manila to the CBDs of Metro Manila.

North Rail Study in 1999 Ridership from North Rail Caloocan to Malolos of 1.5 million passenger is highly dependent on a connection to a seamless means of conveyance from North Rail Caloocan to the commercial business district of Metro Manila. Without the connection to a seamless means of conveyance to the CBDs of Metro Manila the North Rail risdership will fall to 440,000 [passengers a day.

Legal Resolution to DOJ 10 series 2003 and DOJ 50 series 2004 which does answer the Query of ICC-NEDA
Legal basis for the Classification of the Phase I as an Ongoing Project DOJ Opinions 10 and 40 Did not consider the fact that the government and Metro Rail Transit Corporation (MRTC) started negotiations for Phase II began last April 22, 1996, prior to the execution of the BLT Agreement on August 28, 1997 which prior to the expiry of the 25 year BLT Agreement. The only condition for negotiated, ongoing and contiguous project under section 4 of PD 1594 and Section 53 (d) of the GPRA is that negotiations commence before expiry of original contract. As Phase II is merely an extension of Phase I, the scope of works of Phase II is similar or related to that of Phase I. The technical specifications of Phase II are the exact same technical specifications of Phase I.

The original contract, the BLT Agreement, is the result of a competitive bidding. As affirmed by the Supreme Court in Tatad v. Garcia (G.R. No. 114222, April 6, 1995), the Project was validly bidded out and awarded.

DOJ 25 series 2002 and DOJ Memorandum to Her Excellency Dated November 10, 2002 answers the Query of ICC-NEDA
Phase II is adjacent to an ongoing project is consistent with provisions of EO 109-A, Section 4 of PD 1594 and Section 53 (d) of the General Procurement reform Act MRT-3 Project is a Solicited and negotiated BOT design, construct and maintain project for 25 years.

Phase II is an extension of an on-going contract and owner of the ultimate design of the EDSA MRT3 Phase I System.
DOJ Legal Opinion 25 s. 2002 and DOJ Memorandum dated November 6, 2002 to Her Excellency Gloria Macapagal-Arroyo noted that MRT-3 Phase II can be undertaken through a Supplemental Agreement.

Effectiveness of Section 2.6 of the BLT Agreement Section 2.6 has not expired based on the contemporaneous and subsequent acts between DOTC and MRTC that led to the 2nd acceptance and 2nd endorsement to the ICC-NEDA by DOTC of the MRT-3 Phase II Supplemental Agreement. This is noted by DOJ Legal Opinion 25 s. 2002 based on the BLT agreement and Article 1371 of RA 386 (Civil Code).

Notwithstanding the above: PD 1594 and the GPRA states that additional works may be undertaken pursuant to an extra work order or supplemental agreement. BOT Law allows direct negotiation of contracts.

Comparative South East Asian BOT Developed LRT projects

Index of Traffic Stress on Network

Capacity

Actual Ridership

Concessi on Type

Status of Lenders

Status of Private Sector Investors

Cost (US$ (million) per Kilometer

Cost per Kilometer Benchmark (World Bank) 36.00 53.00 33.00 40.00 57.00 40.00 30-75 33-75 30-75 27-66 33-75 27-66

Malaysia

1.6

Monorail Putra Star

200,000 500,000 600,000 350,000 450,000 450,000

60,000 170,000 140,000 350,000 200,000 450,000

BOT BOT BOO GOCC GOCC BLT

Updated payment Updated payment Updated payment Updated payment Updated payment Updated payment

Nationalized Nationalized Nationalized GOCC GOCC

Restructuring under negotiation Restructuring under negotiation Restructuring under negotiation

Philippines

13.11

LRT-1 LRT-2 MRT-3

Thailand

4.45

BTSC (Sky Train) BMCL (Blue Line)

600,000

400,000

BOT

Lenders were discounted by as much as 40% Lenders were discounted by as much as 40%

155.00

60-180

600,000

250,000

BOT

59.00

30-75

Source: Best Practices For Private Sector Investment In Railways, TERA Internatonal Group, INC. (TERA). Asian Development Bank and the World Bank Group, March 2006

Technical Benefits of a Seamless Travel for the 1.5 million commuters along the EDSA Corridor from EDSA-Monumento to EDSA-Taft
1991 Terms of Reference contemplated a project from EDSA Taft to EDSA Monumento. The project was to be implemented in two phases under the BLT Agreement. In 1998, a JBIC funded Metro Manila Urban Transportation Integration Study (MMUTIS) recommended a continuous service from EDSA-Baclaran to EDSA-Monumento. With MRTC residents of Caloocan, Malaban, Navotas, Northern Quezon and Bulacan can directly access Cubao, Ortigas and Makati will increase 450,000 to 750,000 passengers per day while an unfavorable detached project will realise only 30,000 passengers per day. Only with the track record of MRTC can Government have confidence in the completion of Phase II on time and without negative slippage or cost overruns. Phase I and II are adjacent and technically compatible and during construction the MRT-3 Phase II will generate 6,000 jobs for the administration. A continuous Phase I and II with MRTC is Technically and Financially feasible. However, a Japanese Consultant of LRTA and French Consultant of DOTC reported that an unfavorable detached project is not technically and financially feasible due to low ridership, reduced revenue collection, higher project for ROW costs and relocation cost of the Bonifacio monument.

Additional Concerns Over a Disconnected MRT3-ENT, LRT-1 Extension to

North Avenue and North Rail Extension to North Avenue Project Options
Additional Depot and a Separate North Avenue Station
Additional cost of US$ 50 million for an additional depot and US$ 5 million for a separate North Avenue Station.

No Inter-connection
MRT-3 Phase I is owned by MRTC which owns the plans and rights over the whole MRT-3 Project. Projected increase in ridership and revenue collection will not be realized because of a disconnected public means of conveyance from the places of residences and the CDBs of Metro Manila. The LRT-1 electro-mechanical system is not compatible with the electro-mechanical system of MRT-3 LRT-1 and North Rail proposed extensions to EDSA-North Avenue does not consider the DOTC Mass Transit Master Plan, DPWH flyover projects and DENR requirements.

Higher Fares for the Caloocan, Malabon, Navotas and Valenzuela (CAMANAVA) area, Northern Quezon City, and Bulacan Residents
Riders from CAMANAVA area, North Quezon City, and Bulacan will be paying fare twice , to be able to go to places of work in the CBDs along EDSA.

Additional ROW Requirements

An independent system that will be connected to LRT-1 will require acquisition of 2,500 sq.m. or PhP 200 million ROW in the Monumento area. .

Financially and economically not feasible

Financial feasibility is questionable due to low ridership, reduced revenue collection and higher project cost (study done by LRTA,s Japanese Technical consultant and DOTCs French Technical consultant).