Phil Infra Investment

Infrastructure
In-depth: Philippines
2015 Investment Guide
by KPMG in the Philippines
In this issue:
Philippine Economy and

Good Governance
Infrastructure Development Plan
Insights and Perspectives

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Infrastructure
The Infrastructure Issue
In-depth: Philippines
Philippines
2015 Investment Guide

Growthbyand
KPMG in the Philippines
Opportunities
in the Philippine
Infrastructure Sector
2014-2015 Edition
Cont
Contents
Contents
ents
Contents
Introduction 01 02 03
02Introduction
Contributors
Introduction
Introduction 0203
Acknowledgements
Contributors
Contributors
Contributors 03
04 Acknowledgements
03 Acknowledgements
Appendix
Acknowledgements 67Appendix
04
04 Appendix 04Glossary
85
Glossary 74 About
85
Appendix 85
86 86
theAbout
Glossary Philippines
Glossary
About 8675About
the the
Philippines
the Philippines 87
87Philipp
05
08
08
08 11
14 22
14
14 19
22 25
22 3636 45
36 31
45
45
TheA Promising
TheThe EconomicNEDA
Economic
Economic TheNEDA
NEDA Philippine DPWHPaving
DPWH
DPWH -the-Way
Paving
Paving
- Paving Building
Building
Building TheAddressing
TheThe
Economy
Promise
Promise
Promise Medium
medium
medium
medium termterm
term Through
the thethe
wayway wayGood
through
through
through Through
through
through
through the Challenges
Challenges
Challenges
Development
development Good
development
development Governance
Good
Good Partnerships Challenges
Partnerships of an
Partnerships of an
of an
planPlan
plan
plan Governance
Governance
Governance of an
Emerging
Emerging
Emerging
GlobalGlobal
Emerging
Global
CityGlobal
CityCity
City
2 | Infrastruct
2 | Infrastruct
2 | Infrastruct ure Guide:
ure Guide:
ure Guide: Philippines
Philippines
Philippines
tct
ory ofof
ofory Directory
Gover nment
Gover
Government nment Ag 90 90
of Government
Agencies
encies
Agencies 90
Agencies
KPMG
KPMGKPMG 76
Direct
About
ory
Direct
Directory ofof
ofory
ParKPMG
Par
Par
tners 77and
tners
tners
and Directory
and
Pr PrPr 92
incipals 9292Our
of Partners
incipals
incipals Our OurV
and 94
alues 94
94
Principals
Values
Values 78 Our Values 79
57
57 63
39 6347 71
71
53 80
80
57 61
Water
Water Enhancing Issues
Issues
Developing
in in Taxation
TaxationTaxation
of of of Project
Project
Funding
RiskRisk of Project Risk
Resources
Water
Resources Developing
Energy
Developing Infrastructure
Infrastructure
Infrastructure Management
Infrastructure
Management Management
Resources Energy
Energy Projects
Resources Projects Projects Projects
Resources
Resources
Infrastruct
Infrastructure
Infrastructure ure Guide:
Guide: Philippines
Philippines |3 |3
ntroduction
Intr oduction
Introduction
Philippine real
Philippine gross
The real domestic
Philippines
gross domestic product
continues to (GDP)
productbe one grew
(GDP) of gre
the5.7w percent
strongest
5.7 percent in the
and first quarter
fastest-growing
in the first quarter
of 2014, which
of 2014, waswas
economies
which low iner than
Southeast
low the 7
er than .2 percent
Asia.
the 7.2With groimpressive
an
percent wth for full
growth year
foraverage 201GDP
full year 3201
and the theof
3growth
and
6.8 percent 6.3%
6.8 percentgrowthsince
gro in 20
wth the start
in12.
2012. ofNotwithst
the Aquino
Notwithst anding administration
the slo
anding thewdo wn in
slowdo 2010,
whic
wn h was
which thewas
country
attributed
attributed
to the the remains
to impactimpact ofstrong
of the nat
theural inural
nat its economic
disasters in 20in
disasters management
13201on3agricult andand
ure
on agricult is committed
ure to a to
and to
tightening
a tightening
biasbias in improving
in monet monetar y its
ar y policies, investment climate
the Philippines
policies, the Philippines wasinw order
still tothird
the
as still achieve
the further
fastest
third progress.
growing
fastest growing
economy
economy Rating
in Asia agencies
af
in AsiaterafChina have
and also
ter China consistently
MalaMalaysia.
and ysia. In the In upgraded
last five five
the last theyears,
years, credit ratings
the Philippines
the of the
Philippines
real real
GDPGDP Philippines.
gre wgreatwanataanvMoody’s
erage
averageof assigned
6.33 a positive
percent,
of 6.33 the third
percent, theoutlook of Baa3
highest
third growth
highest to wth
gro the
ratecountry in
afterafter
rate
Singapore
SingaporeSeptember
and and
China.China.2014 while Standard & Poor’s improved its rating with a stable
outlook of BBB in May 2014. Fitch affirmed the country’s long-term
Roberto
oberto Roberto G. Manabat
G. Manabat
G. Manabat foreign
The countr
The countr y's and
y's strong
strong local currency
performance
performance hasissuer
has caughtcaught default
the atthe ratings
attention
tention at ‘BBB-’
of global
of global
and ‘BBB,’
Chairman
hairman Chairman
& CEO & CEO
& CEO investors
investors and respectively,
and
has has
been been in
recogniz March
recogniz
ed, 2014.
ed,
some some
what what belatedly,
belatedly , by by rating
rating
R.G. Manabat agencies.

agencies.
& Co. Last Last
year,year, the three
the three ratingrating agencies,
agencies, Moody’s,
Moody’s, Standard
Standard & &
.G.R.G. Manabat
Manabat & Co.
& Co. According to the East Asia and Pacific Economic Update report
Poor’Poor’ s (S&P)
s (S&P) released
andhFitc
and Fitc h finally
finally
recently
upgradedrating
upgraded
by World the
the ratingthe
Bank,1 theon
oncountr
the country’s
government y’s
needs to ramp
external
external debtupdebt
toits to investment
investment gradegrade although
although the the markets
markets have,have,
for for
spending in order to sustain the country’s economic
several
several years,years,
beenbeen pricing
pricing Philippine
Philippine debt debt at tighter
at tighter spreads
than than its
momentum. Infrastructure spending andspreads
development, itsin particular,
creditcredit
ratingrating.
.are essential in order to support growth, calling the projects under
the public-private partnership program as “new sources of growth”.
Underlying
Underlying the the remarkable
remarkable perf performance are strong fundamentals
Representatives oformance are strong
the International fundament
Monetary Fundalsalso
whichwhich
havehave
been been
forgedforged
over over
years years
of of persistent
persistent sound sound
macro macro policies,
policies,
highlighted the need to expedite infrastructure investment and
fiscalfiscal consolidation,
consolidation, an an independent
independent monet monetar
ar y y policy
policy frame framework,
open up the sector to increased competition by lifting restrictions work, and and
flexible
flexible exchange
exchange rate policies.
rate policies. These reforms
havehave allowed
the the
on foreign investorsThese reforms
for long-term growth.allowed
Philippines
Philippines to graduate
to graduate fromfrom thewhile
the erst erstwhile"sick "sick
man man of Ainto
of Asia" sia" one
into one
ofmost
of the the most dynamic
dynamic economies
economies in theinregion.
the region.
The Philippine government, on the other hand, is focused on
enhancing infrastructure albeit implementing the projects and
The country
The country benefits
benefits from
fromplans the significant
the significant steady flows of remittances
development remains asteady flows
challenge. It of remit
is workingtances
on critical
fromfrom 10 million
10 million ov overseas
erseas Filipino
Filipino w ork work
ers ers the
and andburgeoning
the burgeoning
reforms in order to address these challenges, improve governance
Business
Business
Process
Process Outsourcing
Outsourcing (BPO) (BPO)
sectorsector
that tthat
aps tthe
apsnat
theural
natural advantages
advantages of
of sector
and create a better investment climate as the infrastructure
educated
educated youngyoung Filipinos
Filipinos in in English-speaking
English-speaking sharedshared
ser ser vices
vices skills.
skills.
continues to be considered as a key driver in the country’s rapid
and sustained economic growth.
We hope that this guide will provide an overview of the

“The “The
Philippineinfrastructure
Philippine sector
Development
Development Program in of
thethis
Program Philippines
ofgo
this with
government
vernment is practical
is insights for
commit
commit investors
ted toted
sustain thelooking
to sustain to
the growth
growth rateenter
rate this dynamic
trajectory
trajectory of 7-8of 7-8sector.
percentpercent
by investing
by investing in theinright
the right infrastructure
infrastructure both both
purelypurely
publicpublic
and and
purely
purely priinfrastructure
private vate infrastructure
so that sothe
thatsustainability
the sustainability
of sucofh such
growth
growth can becan be assured.
assured. But atBut
theatsame
the same
time, time,
we arewenot
arejust
not just
blinded
blinded by growth.
by high high growth. As impor
As impor tant astant as growth
high high growth
is theis the
inclusi
inclusi ve growth.
ve growth. Geographically
Geographically , we have
, we have mappedmapped
out out
wherewhere
we canwemakcanemak e a of
a dent dentpoof poverty
verty reduction.
reduction. ” ”
NEDANED A Deputy
Deputy Director
Director RolandoTungpalan
RolandoTungpalan
1
Enhancing Competitiveness in an Uncertain World, World Bank East Asia and Pacific Economic Update. October 2014.
1 | Infrastructure
2 | Infrastruct In-depth:
Philippines
2 | Infrastructure Guide: Philippines
C
Infrastructure
Infrastruct ure Guide: In-depth: Philippines
Philippines |2
Infrastructure Guide: Philippines |3 |3
ontribut
Contr ors
Contributors
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Contributors
The Economic
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Garcia is a Principal in the
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Paul Patrick R. Afable Jerome Andrew institutions.
H. Garcia
Developing Energy Addressing the Challenges

NEDA medium
NEDA medium NEDA
term termmedium term WaterWatResour
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development
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Henry Antonioplan
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Henry D. Antonio Ma. Cynthia C.
Hernandez
A Promising Economy; Taxation of Infrastructure

The Philippine Medium term Projects
DPWH DPWH - Paving
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Issues in Quizon-Sakkam
Issues in has been in
way way
throughthrough
Good way Emmanuel
Good through Bonoan
Goodis the Vice Developing the tax practice
Developing Developingfor more than
Chairman and Head of Tax of R.G. Energy seven years.
Energy
Resources HerResources
client portfolio
Governance Governance
Governance Energy Resources
Manabat & Co. He is a former includes companies engaged in
Project
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Undersecretary of the Philippine financial service
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Department of Finance and
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Emmanuel P.scope
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on time and scope
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and within
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scope
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within
Quizon-Sakkam industries.
Paving the Way Through Funding of Infrastructure

Good Governance Projects
Michael Guarin is the head of the Sharad Somani is a Partner at
Transactions & Restructuring KPMG in Singapore who leads the
Building
Building through Building
through group ofthrough
R.G. Manabat & Co. Mike Taxation
Taxation of Taxation
ofInfrastructure of
and Projects practice
Partnerships Partnerships
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Infrastructure Infrastructure
Projects
focusing Projects
on the Asia PacificProjects
region.
Project
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project deliveries.
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Michael Arcatomy Sharad Somani and transport.
defined
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and within
H. Guarin
budget
budget budget ofareproject
are characteristics
are characteristics characteristics
of project of project budget
budget budget of
are characteristics areproject
are characteristicscharacteristics
of project of project
2 3 | Infrastructure
| Infrastruct Guide: In-depth:
2ure| Infrastructure
Philippines Philippines
Guide: Philippines
nfrastruct ure Guide: Philippines
WeWe We
areare are fgrateful
grateful or fthe
grateful or for
valuable
the
Project the
valuable
Risk vinsights
aluable
Management insights
of the
insights of the following:
following:
of the following:
Project Risk Management
Geno Armstrong is a principal in Jonathan Jong is a Chartered Civil
KPMG’s Major Projects Advisory Engineer and experienced project
Mr.
Mr.services
Rolando Mr.G.
Rolando Rolando
practice. TG.
He G. Tungpalan
hasTungpalan
ungpalan manager who has advised
substantial experience with cost infrastructure clients on project
Deputy
Deputy Deputy
Director
Director Director-General,
-General,
-General,
auditing, Inrisk and Investment
vestment
Investment
independent Programmingdelivery, project controls, risk
Programming
Programming
National National
National Economic
Economic
controls Economic
Development
assessments, and Development
Development Authority
Authority
Authority management, project monitoring
assisting companies in developing and project reporting. He has
appropriate strategies that extensive experience in
Ms.Ms.
Mar iaMs.
Mar
promote Maria
ia Catalina
Catalina
successful E.Catalina
project E. Cabral
E. Cabral
Cabral construction, infrastructure,
delivery. transportation, aviation, rail and
Geno Armstrong Assistant
Assistant
Assistant Secretary Secretary
Secretary Jonathan Jong mass-transit projects.
Department
Department
Department of Public Woforks
of Public Public
W andW
orks orks
and and
Highw
Highw Highways
aysays
Project
Ms. Ms. Risk
Cosett Mes. Cosette
Management
Cosett e Canilao
Canilao Canilao
We are grateful for the valuable insights of the
Reid Tucker is currently a director following:
inExecutive
KPMG’s MajorExecutive
Executive Director
Director
Projects AdvisoryDirector
Pulbic-Private
Pulbic-Private
Pulbic-Private practice
Partner with Partner
Partner
ship ship
over ship
Center
16 years
Center of Center
of the
of the of the Philippines
Mr. Philippines
Philippines
Rolando G. Tungpalan
project management, construction
Deputy Director-General, Investment Programming
management, project accounting
National Economic Development Authority
and contract
Mr. Mr.
Geno GenoMr.
Ar GenoInArmstrong
administration.
Armstrong
mstrong
addition, Reid has assisted in
Principal,
Principal,
establishing Principal,
Advisory
Advisory
project management Advisory
Ms. Maria Catalina E. Cabral
KPMG LLP Assistant Secretary
(U.S.)
KPMG KPMG LLPLLP
office organizations for (U.S.)
delivering
(U.S.)
major power and utility Department of Public Works and Highways
Reid Tucker construction programs.
Mr. Mr. Mr.
ReidReid Reid Tucker
Tucker
Tucker Ms. Cosette Canilao
Executive Director
Director
Director Director, Advisory
, Advisory
, Advisory Pulbic-Private Partnership Center of the Philippines
KPMG LLPKPMG
KPMG LLP LLP (U.S.)
(U.S.)
(U.S.)
Mr. Mr. Mr. Jonathan

Jonathan
Jonathan JongJong Jong
Associate Associate
Associate Director
Director Director
KPMG KPMG
S S
erviceservices
Pte. Pte.
Ltd. Ltd.apore)
(Sing
KPMG Services Pte. Ltd. (Singapore)(Singapore)
Infrastruct
Infrastruct ureInfrastructure
ure Infrastructure
Guide:Guide: In-depth:
Guide: | 3 Philippines
| 3 Philippines
Philippines
Philippines |3 |4
AAPr
Proomising
mising
Econom
Economyy
Cristina Roxas, Advisory Partner, KPMG in the Philippines
Emmanuel P. Bonoan, Vice Chairman and Head ofTax, KPMG in the Philippines
Philippine gross domestic product (GDP) grew 5.7 percent in the first quarter of 2014, which was
Philippine
lower gross
than the domestic
7.2 percent product
growth for(GDP)
full yeargrew 5.7and
2013 percent in percent
the 6.8 the first growth
quarter inof2012.
2014, which was lower
than the 7.2 percent growth for full year 2013 and the 6.8 percent growth
Notwithstanding the slowdown – which was attributed to the impact of the natural disasters in 2012. Notwithstanding
in the
slowdown – which was attributed to the impact of the natural disasters in 2013 on
2013 on agriculture and to a tightening bias in monetary policies – the Philippines was still the thirdagriculture and to a
tightening
fastest biaseconomy
growing in monetary policies
in Asia – the Philippines
after China and Malaysia.wasInstill
thethe third
last fivefastest
years, growing
Philippineeconomy
GDP in Asia
after China and Malaysia. In the last five years, the Philippine GDP grew at
grew at an average of 6.33 percent, the third highest growth rate after Singapore and China. an average of 6.33 percent,
the third highest growth rate after Singapore and China.
The country's strong performance has caught the The recent turn of economic developments in the
The country's
attention of globalstrong performance
investors has caught
and has been the attentioncountry
recognized, The recent turn of economic
has prompted investors developments
and analysts toinaddthe country
of global investors and has been recognized,
somewhat belatedly, by rating agencies. Last year, somewhat the has prompted
Philippines in investors
various and
lists of analysts to
countries add the Philippines
thebelatedly, by rating
three rating agencies.
agencies, LastStandard
Moody’s, year, the&three rating in various the
representing listsnext
of countries representing
wave, beyond the next wave,
Brazil, Russia,
agencies,
Poor’s (S&P) Moody’s, Standard
and Fitch finally & Poor’s
upgraded the(S&P) and Fitch
country’s beyond
India Brazil,
and China Russia,
(the India
BRICs), and China economies
of promising (the BRICs), of
finally
rating on upgraded the country’s
external debt ratinggrade
to investment on external
– debt to withpromising
significanteconomies with significant upside potentials:
upside potentials:
investment
although grade –have,
the markets although the markets
for several years,have,
beenfor several
years,
pricing been pricing
Philippine debt Philippine debt at tighter
at tighter spreads than itsspreads than  Global
 Global GrowthGrowth Generators
Generators (GGG)
(GGG) countries
countries “with the
“with
its credit
credit rating.rating. the most
most promising
promising growth
growth prospects
prospects in
in the
the coming
decades:
coming Bangladesh,
decades: China,
Bangladesh, Egypt,
China, India, Indonesia,
Egypt,
Underlying
Underlying thethe remarkable
remarkable perf
perf ormance
ormance areare strong
strong Iraq,
India, Mongolia,
Indonesia, Nigeria,
Iraq, Philippines,
Mongolia, Nigeria,Sri Lanka and
1 1
fundamentals which have been forged over years Vietnam.Sri

Philippines, (Citi 2011)and
Lanka Vietnam. (Citi 2011)
fundament als which have been forged over years of
of
persistent sound macro policies, fiscal consolidation, an   The
The NextNext Eleven
Eleven (N-11):
(N-11): Bangladesh,
Bangladesh, Egypt, Indonesia,
Egypt,
persistent sound macro policies, fiscal consolidation,

Iran, Mexico,
Indonesia, Nigeria,Nigeria,
Iran, Mexico, Pakistan, the Philippines,
Pakistan, the Turkey,
an independent
independent monetmonetararyy policy
policy frame
framework,
work, and
and flexible South Korea, and Vietnam. (Goldman Sachs 2007) 2
exchange rate policies. These reforms have allowed the Philippines, Turkey, South Korea, and Vietnam.
flexible exchange rate policies. These reforms have  Next Break 2 of Emerging Markets: Philippines,
(Goldman SachsOut Stars
2007)
allowed the Philippines to be recognized as one of dynamic
Philippines to be recognized as one of the most
 NextIndonesia,
Break OutThailand,
Stars of Peru, Chile,Markets:
Emerging Colombia. “The
theeconomies
most dynamic in the region. in the region.
economies Philippines,
Philippines, for instance,
Indonesia, is now
Thailand, Peru,among
Chile,the most
cost-competitive
Colombia. destinations
“The Philippines, for information
for instance, is now
TheThe countr
countr y benefits
y benefi from
ts from thethe significant
significant steady flows of
steady amongtechnology
the most and business process
cost-competitive outsourcing service –
destinations
remittances
flows from 10
of remittances million
from overseas
10 million FilipinoFilipino
overseas workers and sectors where
for information India used
technology andtobusiness
dominateprocess
with its
the burgeoning
workers Business Process
and the burgeoning BusinessOutsourcing
Process (BPO) ubiquitous
outsourcing call centers.
service ” (Wall
– sectors whereStreet Journal
India used Private
sector that(BPO)
Outsourcing taps the natural
sector that advantages of educated young
taps the natural Equity Beat
to dominate with May 2013)3
its ubiquitous call centers.”

Filipinos in English-speaking shared
advantages of educated young Filipinos in services skills. (Wall
 Street Journal Private Equity Beat May
English-speaking shared services skills. 2013) 3
 The PINE economies: Philippines, Indonesia,
Nigeria and Ethiopia with a high potential of
1 1
CitiCiti
Global “Gro
Global wthwth
“Gro Generators: MoMo
Generators: ving beybey
ving ondond
‘Emerging
‘EmergingMark ets’ and
Markets ‘BRIC’”
’ and . Global
‘BRIC’” Economics
. Global VieVie
Economics w 21 February
w 21 2011.
February 2011.
2 2
Goldman
Goldman SacSachs.
hs. “The N-1N-11:
“The 1: More Than
More AnAn
Than Acronym. ” Global
Acronym. Economics
” Global EconomicsPaper NoNo
Paper 153. 28 28
153. March 2007
March . .
2007
3 3
Wall Street
Wall Journal,
Street “Beyond
Journal, BRIC:
“Beyond TheThe
BRIC: NeNe
xt Break out Stars
xt Breakout of Emerging
Stars Mark
of Emerging ets.” Priv
Markets. ateate
” Priv Equit y Beat.
Equity 15 15
Beat. May 2013.
May 2013.
5 | Infrastructure In-depth:
2 | Infrastructure Philippines
Guide: Philippines
complement the rapidly growing services sector, domestic
becoming, along with the BRICs, the world’s Infrastructure:
and foreign the Challenge
private investments have toand
beOpportunity
attracted to the
largest economies of the 4 21st century. (Time, Among the key challenges to
manufacturing sector to create jobs in largean investment-led
numbers for
becoming, along
March 2014) 4 inclusive growth
growth.are the significant gaps in the country’s
with  PPICS: Peru, Philippines, Indonesia, Colombia, infrastructure and resolving the infrastructure deficits
and Sri Lanka as countries “which
5 are will bythe
Infrastructure: itself be a main
Challenge anddriver for growth.
Opportunity
March 2014) accelerating their development.” (COFACE, Among the key challenges to an investment-led growth are
March 2014) 5 Indonesia, Colombia, and Sri The major
 PPICS: Peru, Philippines, the significant gapsgaps
in theincountry’s
the country’s roads, ports,
infrastructure and airports,
Lanka as countries “which are accelerating their resolving the infrastructure deficits will by itself be a been
urban mass transit, water, and energy have main the
In order to ”realize the promise of its strong potential
development. (COFACE, March 2014) driver forcumulative
growth. result of years of underinvestment and
for improving the lives of ordinary Filipinos and delays in implementing public capital expenditures,
transforming the economy, the Philippines will have
In order to realize the promise of its strong potential for The major gapsconstraints,
fiscal and weak
in the country’s roads,institutions for urban
ports, airports,
improvingtotheachieve consistent
lives of ordinary real economic
Filipinos growth of six to
and transforming governance.
mass transit, water, and energy have been the cumulative
seventhe
the economy, percent sustained
Philippines for seven
will have to 10 years. It has
to achieve result of years of underinvestment and delays in
toreal
shifteconomic
from a consumption-led
growth of six togrowth to an According
consistent seven percent implementing publictocapital
the latest survey in the
expenditures, World
fiscal Economic
constraints,
sustainedinvestment-led
for seven to 10one. To complement
years. It has to shiftthe
fromrapidly
a Forum Global Competitiveness
and weak institutions for governance. Report from 2013 to
growing growth
consumption-led servicestosector, domestic and
an investment-led foreign
one. To private 2014, the Philippines ranks a very poor 98 in the
investments have to be attracted to the overall
According to thequality
latest of infrastructure
survey compared
in the World Economic to its Asian
manufacturing Competitiveness
Global Infrastructure sector to create jobs in large numbers
Ranking country neighbors. The highest ranking is Singapore

for inclusive growth. at 5.
Country
Global Infrastructure Competitiveness Ranking
Indicator Philippines Singapore Malaysia Thailand Indonesia Vietnam
Country Country
Quality of roads 87 7 23 42 78 102
Indicator
Quality of railroad infrastructure 89
Philippines
10
Singapore
18
Malaysia
72
Thailand
44
Indonesia
58
Vietnam
Quality
Quality of port of roads
infrastructure 116 87 2 7 24 23 56 4289 7898 102
Quality of railroad infrastructure 89 10 18 72 44 58
Quality of air infrastructure 113 1 20 34 68 92
Quality of port infrastructure 116 2 24 56 89 98
Quality of electricity Supply 93 8 37 58 89 95
Quality of air infrastructure 113 1 20 34 68 92
Fixed telephone connectivity
Quality of electricity supply 109 93 29 8 79 37 96 5882 8988 95
Mobile telephone connectivity
Fixed telephone connectivity 81 109 18 29 27 79 49 9662 8221 88
Overall Mobile telephone connectivity 98 81 5 18 25 27 61 4982 62110 21
Overall
Source: World Economic Forum (WEF) Global Competitiveness 98
Report 2013-2014 5 25 61 82 110
Source: World Economic Forum (WEF) Global Competitiveness Report 2013-2014
4
Michael Shuman
4 “Forget the BRICs; Meet the PINES.” TIME Business Emerging Markets 13 March 2014
5 Michael
Coface “COFACE Shuman “Forget
IDENTIFIES the BRICs;
10 EMERGING Meet the PINES.
COUNTRIES HOT ON” TIME Business
THE HEELS OFEmerging Markets
THE BRICS, 13 Risk
Country March 2014
and Economic Studies. 25 March 2014.
5
Coface “COFACE IDENTIFIES 10 EMERGING COUNTRIES HOT ON THE HEELS OF THE BRICS, Country Risk and Economic Studies. 25 March 2014.
Infrastructure
Infrastructure In-depth:
Guide: Philippines
Philippines |3 |6
TheThe Philippines’
Philippines’ overall
ov erall ranking
ranking is second
is second from
from thethe
botbottom after
tom after Vietnam.
Vietnam. It ranked
It ranked thethe worst
worst on on
fivefive indicators
indicators andand came
in second from the bottom after Vietnam on the other two indicators, which are quality of roads
came in second from the bottom after Vietnam on the other two indicators, which are quality of roads and and electricity supply.
electricity supply.
For specific sectors, there have been some improvements over the recent years, but the Philippines still ranks low among
For144 countries
specific in the
sectors, survey.
there have been some improvements over the recent years, but the Philippines still ranks low
among 144 countries in the survey.
Ranking and status of the Philippines, 2010-2012, and selected ASEAN countries, 2012, in key infrastructure indicators
Ranking and status of the Philippines, 2010-2012, and selected ASEAN countries, 2012, in key infrastructure indicators
Ranking/status of selected ASEAN countries in 2012
Ranking/status of selected ASEAN countries in 2012 Ranking/status
Indicator Philippine ranking/status of selected ASEAN countries in 2012
Indicator 2010 2 011 2012 Malaysia Thailand
2010 2011 2012 Malaysia Thailand Cambodia
Indonesia Indonesia Cambodia
Vietnam Vietnam
Quality of overall infrastructure 6 113 of 113

139 of 139 113 of 142
Quality of overall infrastructure6 113 of 142 98 of 14498 of 14429 49
29 92
49 72
92 119
72 119
Quality of roads 6 114 of 139 100 of 142 87 of 144 27 39 90 66 120
Quality
Quality of roads
of railroad 6
infrastructure 6 97 of 1139
14 of 139 101 of 142
100 of 142 94 of 14487 of 14417 27
65 39
51 81
90 66
68 120
Quality of port infrastructure 6 131 of 139 123 of 142 120 of 144 21 56 104 69 113
Quality
Quality of airof
transport infrastructure66
railroad infrastructure 97 of 139
112 of 139 101 of 142112 of 144 94 of 14424
115 of 142 17
33 65
89 51
75 81
94 68
Quality of electricity supply 6 101 of 139 104 of 142 98 of 144 35 44 93 105 113
Quality of port infrastructure6 131 of 139 123 of 142 120 of 144 21 56 104 69 113
Information and communications
92 of 152 94 of 155 98 of 157 59 95 97 120 88
technology (ICT) development index 7
Quality of air transport infrastructure 6 112 of 139 115 of 142 112 of 144 24 33 89 75 94
ICT price basket (cost and
114 of 165 113 of 161 119 of 161 53 90 110 130 112
affordability of ICT services)7
Quality of electricity supply6 101 of 139 104 of 142 98 of 144 35 44 93 105 113
e-Government ranking 8 78 of 183 (no data)* 88 of 190 40 92 97 155 83
Water supply coverage
Information 9
and communications 84.8% 84.4% (no data) 100% 96% - - 96%
technology
Sanitation coverage 9 development index7
(ICT) 92 of 152
92.5% 91.9%94 of 155 (no data) 98 of 157
100% 59
100% -95 97
- 120
- 88
Hospital beds per 1,000 people10 0.5 1.0 (no data) 1.8 2.10 - - 2.2
ICT price basket (cost and (c. 2009) (2009-2011) (c. 2010) (c. 2010)
affordability of ICT services)7 114 of 165 113 of 161 119 of 161 53 90 110 130 112
Note: *Survey conducted twice a year
Source:e-Government
Table 10.1 fromranking 8
NEDA (2014) Philippine Development 78
Plan
of–183
Midterm Update
(nowith Results Matrices.
data;
190
88 of 40 92 97 155 83
Chapter 10: Accelerating infrastructure development, p. 3/24. Reproduced with permission.
survey conducted
twice atwice
year)a year)
Real life costs of infrastructure bottlenecks
9
GoingWater
beyond
supplythe statistical
coverage comparisons, the infrastructure
84.8% deficiencies (no
84.4% translate
data) to real100%
costs to
96%the economy
- - in 96%
termsSanitation
of productivity
coverage 9 and efficiency and to ordinary
92.5%
citizens in
91.9%
terms of travel time,
(no data)
congestion,
100%
pollution,
100% -
and poor
- -
access to basic utilities.
Hospital beds per 1,000 people 10 0.5 (c. 2009) 1.0 (no data) 1.8 2.10 - - 2.2
(2009-2011) (c. 2010) (c. 2010)
For public transport, commuters anecdotally report a commute of three to four hours every day, requiring several
Source: Table
transfers from10.1 from NEDA
tricycle, (2014) Philippine
minivans, Development
rail and bus from Plan – Midterm
the suburbsUpdate with Results
to Makati, Matrices.
Metro Manila’s main business district.
Chapter 10: Accelerating infrastructure development, p. 3/24. Reproduced with permission.
Bloomberg quoted a jeepney driver who has been driving for 20 years who said that a 15-kilometer route which
used to take 30 to 40 minutes now takes two hours, cutting down his turnaround time and daily income.11
Real life costs of infrastructure bottlenecks

Going beyond the statistical comparisons, the infrastructure deficiencies translate to real costs to the economy in terms
For a transport system to be successful in large volumes of passengers in urban areas, the system should be able
of productivity and efficiency and to ordinary citizens in terms of travel time, congestion, pollution, and poor access to
to shift ridership away from cars, jeepneys and buses to urban mass transit systems – with cars as the least
basic utilities.
socio-economically efficient people movers across this range of transport modes to trains as the most efficient.
For public transport, commuters anecdotally report a commute of three to four hours every day, requiring several transfers
What has been happening, however, has been the opposite. From 1996 to 2012, person trips by car increased 15
from tricycle, minivans, rail and bus from the suburbs to Makati, Metro Manila’s main business district. Bloomberg quoted
percent while trips using public transport (jeepneys and buses) declined by 7 percent. In terms of vehicle trips (as
a jeepney driver who has been driving for 20 years who said that a 15-kilometer route which used to take 30 to 40
opposed to person trips) car trips increased 69 percent during the 16-year period while public vehicle trips
minutes now takes two hours, cutting down his turnaround time and daily income.11
increased by only 41 percent. Among public vehicles (buses versus jeepneys), the pattern was similar. The
increase in jeepney trips (less efficient for transporting people) was twice as much as the increase in bus trips.12
For a transport system to be successful in large volumes of passengers in urban areas, the system should be able to shift
ridership away from cars, jeepneys and buses to urban mass transit systems – with cars as the least socio-economically
Correlating the trends in person trips and vehicle trips, the trend reflects an increase in car ownership and a decline
efficient people movers across this range of transport modes to trains as the most efficient.
in the occupancy rate per vehicle. These trends do not augur well for more efficiency in moving people and
reducing congestion.
What has been happening, however, has been the opposite. From 1996 to 2012, person trips by car increased 15 percent
whileCompetitiveness
6 Global trips using public transport (jeepneys and buses) declined by 7 percent.
Reports for 2010-2011, 2011-2012 and 2012-2013 by World Economic Forum
7
Measuring the Information Society (MIS) Reports for 2011, 2012 and 2013 by International Telecommunication Union (ITU)
8 6
Global
United Competitiveness
Nations Reports forSurvey
Global e-Government 2010-202011,
10 2011-2012
and 2012
and 2012-2013 by World Economic Forum
Measuring
9 Annual Povertythe Information
Indicators Society
Survey (MIS)
Report for Reports
2010 andfor 2011,
2011 by 2012 andStatistics
National 2013 by International Telecommunication
Office (for Philippines); ProgressUnion (ITU) and
on Sanitation
8
UnitedWater:
Drinking Nations Global
2013 e-Government
Update by WHO and Survey
UNICEF 2010 and
(for 2012
countries)
ASEAN
10 9
Annual
World Bank Poverty
– HealthIndicators
NutritionSurvey Report forStatistics
and Population 2010 and 2011 by National Statistics Office (for Philippines); Progress on Sanitation and
11
DrinkingNews,
Bloomberg Water:“Epic
2013Gridlock
Update by WHOover
Reigns andManila’s
UNICEF23 (forMillion.
ASEAN countries)
” 10 April 2014.
12 10
World
JICA, Bank –for
Roadmap Health Nutrition
Transport andDevelopment
Sector Population Statistics
for Metro Manila and Its Surrounding Areas
11
Bloomberg
(Region III and News,
Region“Epic
IV-A).Gridlock Reigns
Final Report over
Main Manila’s
Text. March23 Million.
2014 ” 10. April 2014.
p. 2-37
Guide: Philippines
The congestion caused by the inadequacy of mass Citigroup
Without toan
bealternative
as much as PhP320linkage
transport billion (about
between2.9 the
The congestion
transitscaused by the
is feeding oninadequacy of mass
itself, as Metro transits
Manila residents percent of GDP), putting
economic zones in the at risk about a million
is feeding buy
on itself, as Metro Manila residents
more cars but use them less efficiently: carbuy more manufacturing jobs. Citigroup also said that the ensuing
Cavite-Laguna-Batangas-Rizal-Quezon
cars but use them less
occupancy efficiently:
decreased car 2.5
from occupancy
to 1.7 persons per car. transportation
(CALABARZON) bottleneck could chop
area, Citigroup atestimated
has least 1 percent
the to
decreasedThe from 2.5 to 1.7 persons per car. The efficiency
efficiency of public transportation has also of as economic
much as 5cost
percent offtruck
of the the country’s GDP estimated
ban has been mostly
public transportation has also suffered with
suffered with vehicle occupancy for jeepneysvehicle through the impact
by Citigroup to beonasthe
muchcountry’s
as US$7nontechnology export
.25 billion (about
occupancy 12
for jeepneys
declining fromdeclining
15.1 to 10,from 15.1
while fortobuses
10, while for
vehicle commodities.
2.9 percent of GDP), putting at risk about a million
buses vehicle occupancy decreased from 46.5
occupancy decreased from 46.5 to 35.5 passengers.to 35.5 manufacturing jobs.16 Citigroup also said that the
passengers. MoreMore trips
trips made
made in vehicles
in vehicles areare
lessless efficient,
efficient, and Theensuing
truck ban has further implications
transportation on the
bottleneck could cost
chop atof cargo
least
and thesethese
vehicles, in general, are being used less
vehicles, in general, are being used less shipping. Shipping
1 percent companies
to as much such asoffHapag
as 5 percent Lloyd
the country’s
efficiently.efficiently.13 impose a congestion
GDP mostly surcharge
through the impactof US$100 per twenty-foot
on the country’s
equivalent unit (TEU) on all imports
nontechnology export commodities. into Manila as a result
In the meantime, traffic studies
In the meantime, show
traffic thatshow
studies most that
roads are
most of higher operational costs.
operating roads
at close to capacity, resulting in frequent
are operating at close to capacity, resulting in The truck ban has further implications on the cost of
gridlocks and reduced
frequent travel and
gridlocks speeds. A recent
reduced travelJapan
speeds. A Forcargo
air infrastructure,
shipping. according
Shipping to Deputy
companies Director
such as HapagGeneral
16
International Cooperation Agency (JICA)
recent Japan International Cooperationstudy reported
Agency (JICA) JohnLloydAndrews
imposeofathe Civil Aviation
congestion Authority
surcharge of the per
of US$100
that with astudy
few exceptions,
reported that the average
with a fewspeed in major
exceptions, the Philippines
twenty-foot (CAAP), airlinesunit
equivalent have been
(TEU) onincurring
all importslosses
into of
Metro Manila roads
average is 10 in
speed kph, withMetro
major 75 percent
Manilatoroads
92 is 10 kph, more thanas
Manila PhP7 billion
a result of ahigher
year inoperational
fuel expenses costs.because
17 of
percent ofwith
travel
75inpercent
the network below 20ofkph.
to 92 percent travel in the network the worsening congestion at Ninoy Aquino International
below 20 kph.14 Airport
On 13 (NAIA).
September Planes unable
2014, the to immediately
Manila land, for
City government
The same JICA study has estimated that the economic example, would need to burn extra amounts
temporarily lifted the seven-month old truck ban of fuel.in
cost of congestion
The sameatJICA
PhP2.4 billion
study has per day in Metro
estimated that the Andrews estimated that about 200,000 to
light of the severe congestion in the Port of Manila 400,000
Manila, and another
economic PhP1.0
cost of billion in
congestion the Bulacan,
at US$54.35Rizal,
million per kilograms
and major in additional
losses to fuel are expended
exporters as a result
and importers, foodof the
Laguna and 13
dayCavite area.Manila,
in Metro This amounts to PhP1.2
and another trillionmillion
US$22.65 per in congestion,
shortages,orrisingPhP10 million
prices of to PhP20
basic million
goods, a day,
traffic jams,by the
year in thethe
Mega Manila area or 11 percent of GDP .
Bulacan, Rizal, Laguna and Cavite area. This airlines.
and the Airlines
threatincur close
of an17 to PhP3.7
estimated US$7 billion a year
.25 billion in to
loss
amounts to US$27.18 billion per year in the Mega added fuel expenses
the economy and lose
attributed another
to the PhP3.7
truck ban. billion
Prior from
to the
A truck ban scheme
Manila areahasor been in place
11 percent in Metro
of GDP . 15 Manila “engine costs and cost of aircraft time. ”
lifting of the truck ban the government formed a Task
since 1978 whereby cargo trucks with a gross vehicle Force Pantalan to oversee traffic management along
weight (GVW) of more
A truck than 4,000
ban scheme kg areinprohibited
has been place in Metrofrom In the
the power space, the critical
major thoroughfares power
leading outsituation in the
of the Port of
passing along major thoroughfares during peak
Manila since 1978 whereby cargo trucks with traffic rush
a gross country is 18well-documented. Electricity prices are the
Manila.
hours in the morning
vehicle weightand(GVW)
in the afternoon.
of more than The scheme
4,000 kg are highest in Asia, even higher than Japan. There is limited
14
has been modified
prohibitedoverfrom the years in
passing terms
along of restricted
major thoroughfares supply in the
For air Philippinesaccording
infrastructure, comparedtotoDeputy
other countries.
Director
18
hours, alternative
during peak traffic rush hours in thenet
routes, and GVWs but the effect has
morning and in According to an American Chamber of
General John Andrews of the Civil AviationCommerce report,
Authority
been the reduction in efficiency and increase
the afternoon. The scheme has been modified in the cost ofover Thailand has 40,699MW power capacity serving 67
of the Philippines (CAAP), airlines have been incurring million
transporting
thegoods
years in
in Metro
terms Manila. The underutilization
of restricted hours, alternative of people. South Korea has 79,859MW serving 49
losses of more than US$158.56 million a year in fuel million
freight vehicles
routes,has
and induced
GVWs freight
but theforwarders
net effect hasto have
been the while the Philippines
expenses becausehas onlyworsening
of the 15,680MW for 90.3 million
congestion at
more trucks than necessary
reduction to handle
in efficiency the cargoes
and increase in thein and people.
Ninoy In per capita
Aquino terms, electricity
International consumption
Airport (NAIA).19
Planesin the
15cost of
out of ports
transporting goods in Metro Manila. The trips
during the limited time windows. Trucks Philippines
unable toisimmediately
the lowest at 588for
land, kilowatt-hour (kwh).need
example, would
per day are cut down fromofthree
underutilization to vehicles
freight one. Thehas additional
induced freight to burn extra amounts of fuel. Andrews estimated
transport costs are then passed on to consumers.
forwarders to have more trucks than necessary to Electricity
that about supply and demand
200,000 indicators,
to 400,000 ASEAN-6,
kilograms 2008
in additional
handle the cargoes in and out of ports during the Installed
fuel are expended as a result of the congestion, or
Recently, the citytime
limited of Manila imposed
windows. a ban
Trucks onper
trips eight
day are cut Capacity
US$226,000 to US$453,000 a day, by the airlines.
wheelers down
and vehicles with a gross weight of 4,500 kgs
from three to one. The additional transport (MilAirlines
KW), incur close to US$83.79 million a year in
from plying Manila’s
costs streets
are then between
passed on to 5:00am to 9:00pm,
consumers. 2008
addedTotalfuel expenses and lose another US$83.79
with a temporary concession for six to eight months, domestic
million from “engine costs and cost of aircraft time.”
allowing aRecently,
window from 10:00am
the city to 3:00pm.
of Manila imposedWithout
a ban onaneight production
alternativewheelers
transportand
linkage between the economic zones
vehicles with a gross weight of 4,500 (GWh),
In the power space, the critical power situation in the
in the Cavite-Laguna-Batangas-Rizal-Quezon
kgs from plying Manila’s streets between 5:00am to 2008
country Total supply,
is well-documented. Electricity prices are
(CALABARZON)
9:00pm, area,
withCitigroup has estimated
a temporary concession the
for six to eight includes
the highest in Asia, even higher than Japan. There is
economic months,
cost of the
allowing a window from 10:00amby
truck ban has been estimated to 3:00pm. netalso
exports
limited supply in the Philippines compared to
12
JICA, Roadmap for Transport Sector Development for Metro Manila and Its Surrounding Areas
(Region III13and Region IV-A). Final Report Main Text. March 2014 p. 2-37.
Ibid.
13 Ibid.
14 JICA (2014) p. 2-38.
14 JICA (2014) p. 2-38.
15 Op. cit. p. 2-41
15 Op. cit. p. 2-41
16 Citi Macro Research Note 7 March 2014
16 Citi Macro Research Note 7 March 2014
17 SeaNews, Truck ban prompts Hapag-Lloyd to levy Manila import congestion charge, 3 June 2014.
17 SeaNews, Truck ban prompts Hapag-Lloyd to levy Manila import congestion charge, 3 June 2014.
18
18
“Erap lifts Manila city truck ban”, Philippine Daily Inquirer, 14 September 2014.
19 Inquirer, “Airlines losing P7 billion due to congested airport.” 29 May 2014.
Philippine DailyPhilippine Daily Inquirer, “Airlines losing P7 billion due to congested airport.” 29 May 2014. Infrastructure
Guide: Philippines
Philippines |3 |8
Electricity supply and demand indicators, ASEAN-6, 2008
Electricity supply and demand indicators, ASEAN-6, 2008
Installed
Installed TotalTotal Total supply,Total Total
Total supply, PopulationConsumption
Population Consumption Distribution
Distribution &
&
Capacity domestic includes
includes consumption,
consumption, (million), per capita
Capacity domestic (million), per capita transfer
transfer
(Mil KW), production net exports
net exports includes use
includes use 2008 (kWh), 2008 losses as losses
% of
as % of
2008(Mil KW), production
(GWh), (GWh), 2008 2008 of energy
(GWh), of energy 2008 (kWh), 2008total supply,
1
total supply,
2008 sector sector
but netbut net 2008 1
2008 (GWh), 1
of distribution 2008
of distribution
2008 & transfer
& transfer
losses (GWh),
2008 losses (GWh),
2008
Indonesia
Indonesia 27.8016
27.8016 149,437
149,437 149,437
149,437 134,399
134,399 227.3 227.3 591.2 591.2 10.1%10.1%
Korea, South 79.859 446,428 446,428 429,052 48.7 8,801.6 3.9%
Korea, South 79.859 446,428 446,428 429,052 48.7 8,8
8,8001.6 3.9%
Malaysia* 22.973 96,916 97,392 94,721 27.0 3,506.3 2.3%
Malaysia* 22.973 96,916 97,392 94,721 27.0 3,506.3 2.3%
Philippines 15.680 60,821 60,821 53,140 90.3 588.2 12.6%
Philippines 15.680 60,821 60,821 53,
53,1140 90.3 588.2 12.6%
Singapore 10.950 41,717 41,717 39,610 4.8 8,184.9 5.1%
Singapore 10.950 41,717 41,717 39,610 4.8 8,184.9 5.1%
Thailand** 40.669 149,032 147,427 140,079 67.4 2,078.7 6.1%
Thailand** 40.669 149,032 147,427 140,079 67.4 2,078.7 6.1%
Vietnam 13.850 76,269 73,049 68,907 86.2 799.3 10.1%
Vietnam 13.850 76,269 73,049 68,907 86.2 799.3 10.1%
Notes: *netInternational
Sources: energy exporter, **net
Energy energy
Agency andimporter, 1-Author’s
US Energy calculation
Information Administration; World Bank for the population
Sources: International Energy Agency and US Energy Information Administration; World Bank for the population
Notes: *net energy exporter, **net energy importer, 1-Author’s calculation
other countries. task

According to an American Chamber Foreign equity restrictions for operators of public
An enormous
ofThe
Commerce report, Thailand has 40,699MW power utilities have also discouraged potential foreign
task of resolving the infrastructure deficits in the All of the foregoing reasons hindered the
capacity serving 67 million people. South Korea has investments.The lack of legal and technical
Philippines is arguably daunting in magnitude and development of efficient
capacities on the part
and critical modern
79,859MW serving 49Greater
million while 19 of the implementing
complexity. For the Capitalthe Philippines
Region (GCR) alone, infrastructure.”
agencies, especially those relating to project
has only 15,680MW for 90.3 million people.
the transport sector projects identified in the In JICA
per “dream
capita terms, electricity consumption in the preparation and procurement, was also seen as
plan” are estimated to cost a total of PhP520,440 billion It is one
possible, however, tostumbling
of infrastructure’s identify certain elements
block. All of the in the
Philippines
(US$11,828is the lowest at 588 kilowatt-hour (kwh).
billion). country situation and the current
foregoing reasons hindered thegovernment’s
development of initiatives
which efficient and critical modern infrastructure.” positive
count towards increasing the chances of
20
AnAccording
enormoustotaskthe National Economic and Development and significant progress in the coming years.
The task of Public-Private
Authority resolving the infrastructure deficits
Partnership Center in the
(NEDA-PPP), It is possible, however, to identify certain elements in
Philippines is arguably daunting in magnitude and theFor one, asituation
country new governance ethic isgovernment’s
and the current being put in place in
complexity.
“In For
the the Greater
past, Capital Region
the Philippines’ (GCR) spending initiatives
infrastructure the Department
which countof Public
towardsWorks and Highways
increasing the (DPWH)
alone, thewas
transport sector projects
low compared to otheridentified in the
ASEAN economies due chances
whichofwill enableand
positive mission-efficient expenditures
significant progress in the even as
JICA “dream plan”
to fiscal are estimated
deficit situation. to costmajor
Other a totalimpediments
of the government
coming accelerates
years. For one, the pace ofethic
a new governance execution
is and
US$11.79include
billion. the absence of long-term planning, no implementation. Hopefully, this will also
being put in place in the Department of Public Worksbe adopted in
political will to improve infrastructure delivery, and andother government
Highways (DPWH)infrastructure agencies. (See Chapter
which will enable
Accordinglack
to the NationalinEconomic
of reforms andpolicy framework. The mission-efficient
the existing 3.) expenditures even as the
Development Authority
policies Public-Private
and procedures Partnership
already in place were no government accelerates the pace of execution and
Center (NEDA-PPP),
longer attuned to the existing business The new edition
implementation. of the public-private
Hopefully, this will alsopartnership
be adopted(PPP)
environment. program
in other is building
government capacity for agencies.
infrastructure tendering solicited
(See
“In the past, the Philippines’ infrastructure proposals consistent with the government’s development
Chapter 3.)
spending was low compared to other ASEAN
In addition to regulatory uncertainties or risks, plans and priorities and ensuring appropriate risk allocation
economies due to fiscal deficit situation. Other
corruption likewise emerged as another critical Thebetween the private
new edition sector and the
of the public-private government. The
partnership
major impediments include the absence of
element contributing to the poor business coverage
(PPP) program of is
the PPP modality
building capacityisfor
being expanded over a
tendering
long-term planning, no political will to improve
environment
infrastructure in the country.
delivery, Foreign
and lack of reformsequity
in the broader
solicited portfolioconsistent
proposals of sectors.with the government’s
restrictions for operators of public
existing policy framework. The policies and utilities have also development plans and priorities and ensuring
discouraged
procedures potential
already foreign
in place were investments.
no longer The macroeconomic
appropriate risk allocation stability
between andthe
domestic
private financial
sector
attuned to the existing business environment. In and the government. The coverage of theaPPP
evolution in recent years have created base of domestic
The lack
addition of legal and
to regulatory technical capacities
uncertainties or risks, on the part local currency
modality is being funding
expanded that cana support
over broader the volume and
portfolio
of the implementing
corruption likewise emergedagencies, especially
as another criticalthose tenors required by infrastructure projects.
of sectors.
relatingcontributing
element to project preparation and procurement,
to the poor business
was also seen
environment in theascountry.
one of infrastructure’s stumbling
block.
2
20
NEDA-PPP
NED A-PPP Center
Center writ
written response to
ten response to KPMG
KPMG questionnaire,
questionnaire, 18
July 18,201
July, 2014.4.
9 |8Infrastructure In-depth:
| Infrastructure Guide:Philippines
Philippines
The macroeconomic
The macroeconomic stability and
stability and domestic domestic financial
financial For the non-PPP projects to be executed through
evolution in recent years have created
evolution in recent years have created a base of domestica base of regular procurement, local private contractors can
ocal currency funding that can support the volume andsupport the
domestic local currency funding that can look forward to an improving governance framework
enors requiredvolume and tenors projects.
by infrastructure required by infrastructure projects. in the awarding of projects. Foreign contractors are
allowed to bid only for the so-called foreign assisted
What’s in it for the private sector? projects (FAPs) usually funded from grants and loans
The emphasis being given to the PPP modality from official development assistance (ODA) sources.
attests to the recognition and expectation that the
private sector will have a major role in solving
infrastructure bottlenecks. Among the key
challenges that remain is the need to calibrate the For further information, please contact:
risk-reward configuration offered to private investors
in PPP projects in order to have an optimal allocation
Roberto G. Manabat
of risks while attracting sufficient response from
investors to bid for the projects. This will be Chairman & CEO
important for foreign investors which are allowed to KPMG in the Philippines
participate up to 40 percent of the project company in T: +63 2 885 7000
most sectors, and up to 100 percent in power E: rgmanabat@kpmg.com
generation projects. For further information, please contact:
Emmanuel P. Bonoan
Vice Chairman and Head of Tax
T: +63 2 885 7000 ext. 200

E: ebonoan@kpmg.com
Infrastructure
InfrastructureIn-depth: Philippines| | 10
Guide: Philippines 9
The
Philippine
Philippine

Medium
mediumt
teer
rm m
Development
development Planplan
CristinaPRoxas,
Emmanuel Advisory
. Bonoan, Partner,
Vice Chairman KPMG
and Head in the
ofTax, Philippines
The midterm update of the 2013-2016

The midterm
Philippine
update
Development
of the 2013-2016
Plan calls
Philippine
for accelerating
Development
pacePlan
of calls for
economic growth. Gross domesticaccelerating
productpace
(GDP)of is
economic
targeted growth.
to grow at
Gross
6.5 to
domestic
7.5 percent
product
in 2014,
(GDP) is
increasing to 7 to 8 percent growth
targeted
in 2015,
to grow
andatto6.5
7.5 to
to 78.5
.5 percent
percentinby2014,
2016.increasing to 7 to 8 percent
growth in 2015, and to 7.5 to 8.5 percent by 2016.
Infrastructure spending as component of capital outlay, 2012-2016
6.0% Infrastructure spending as component of capital outlay, 2012-2016
5.0%
6.0% 5.1%
4.0%
5.0%
3.0% 4.0% 5.1%
4.0% 3.5%
2.0%
4.0%
1.0% 2.2% 2.5%3.0% 3.5%
2.0%
0.0%
1.0% 2.2% 2.5%
2012 20130.0% 2014 2015 2016
Note: Actual figure for 2012.
2012
Source: Department of Budget and Management and National Economic and Development Authority 2016
Source: Department of Budget and Management and National Economic and Development Authority
Infrastructure development is to beNote: a key driver
Actual figuretoforachieve
2012. this rapid and sustained growth.
“The overall strategy… is toInfrastructure

invest massivelydevelopment is to be
in infrastructure a key driver by
development to achieve thispublic
increasing
1
rapid and sustained
infrastructure spending to atgrowth.
least 5 percent of the country’s GDP by 2016. For the whole plan period, the
government expects to spend PhP4.17 trillion (US$94.44 billion) but the major single item in the plan is
“The
PhP2.46 trillion (US$55.71 billion) ‘for overall strategy…
accelerating is to invest
infrastructure massively
development. ” in infrastructure development by
increasing public infrastructure spending to at least 5 percent of the country’s
GDP by infrastructure
For the first semester of 2014, actual government 2016. For the spending
whole plan period,
grew the government
by almost 63 percentexpects to spend
to US$552.57
PhP4.17was
million. The faster pace of infrastructure spending trillion but the
spurred by major single itemconstruction
the accelerated in the plan is PhP2.46
program oftrillion
the ‘for
Department of Public Works and Highwaysaccelerating
(DPWH) andinfrastructure development.
the rehabilitation ”
and reconstruction programs in the
Haiyan-hit areas. Budgetary reforms adopted in 2013, which made the General Appropriations Act (GAA) as the
1
release document, also enabled the faster disbursements of budgetary appropriations.
1
NEDA (2014) Philippine Development Plan 2011-2016– Medium Term Update with Results Matrix. Chapter 10:
1
NEDA (2014) Philippine Development Plan 2011-2016– Medium Term Update with Results Matrix. Chapter 10:
11 | 2Infrastructure In-depth:
Philippines
Public Investment
Public Investment ProgramProgram (PIP) targets
(PIP) targets by theme*
by theme
in PhP mn in PhP mn
PDP Theme Total %
PDP Theme Total (2013 - 2016)%
(2013 - 2016)
Accelerating Infrastructure Development 2,461,220 53.2
Notes: *With possible duplication
Social
Accelerating Development
Infrastructure Sector
Development 2,461,220733,145 53.2 21.2 of investment targets reflected for
Competitive arid Sustainable Agriculture and Fisheries Sector 549,063 15.2 cross-cutting programs and
Social Development Sector 733,145 21.2
Peace and Security 207,139 4.3 projects (PAPs); May not add up
Competitive arid Sustainable
Sustainable Agriculture and
and CIimate-Resilient Fisheries Sector
Environment 549,063 176,443
and Natural Resources 15.2 4.9 due to rounding off. PIP consists of
both core investment programs
Peace and Competitive
Security and Innovative Industry and Services Sector 207,139 23,230 4.3 0.6 and projects (CIPs) and non-CIPs.
Good
Sustainable andGovernance and theEnvironment
CIimate-Resilient Rule of Lawand Natural Resources 176,443 15,752 4.9 0.4
Macroeconomic Policy 4,115 0.1 Source: Enhancing Resilience to
Competitive and Innovative Industry and Services Sector 23,230 0.6 Sustain Inclusive Growth March
Resilient and Inclusive Financial System 164 0.0
2014 Presentation of the Bangko
Good Governance
TOTAL and the Rule of Law 15,752 0.4
4,170,332 100.0 Sentral ng Pilipinas
Macroeconomic Policy 4,115 0.1
ResilientThe
and performance for the
Inclusive Financial first several months of 2014 is in line
System 164with the targets0.0 for full year 2014. Public
TOTAL infrastructure expenditures are budgeted to increase by 40 percent to US$9.15
4,170,332 100.00billion from US$6.52 billion in 2013,
which ramps up from the 36 percent growth in the public infrastructure budget in 2013. The bulk of the
expenditures will be in Roads and Bridges at US$3.37 billion for full year 2014. This is before any supplemental
budgets for the Haiyan reconstruction requirements.
There are several reasons why infrastructure spending to GDP has been historically low which continued to be
reflected in the major approval criteria for projects at the National Economic and Development
Authority-Investment Coordination Committee (NEDA-ICC). Projects are evaluated at the NEDA-ICC based on the
“fiscal, monetary and balance of payments (BOP) implications of major capital projects” taking into account the
peso requirement and foreign exchange requirements of the project in terms of current and capital outlays,
sources of funds and conditions for proposed financing, “compliance with the foreign debt ceiling under Republic
Act (RA) No. 4860 or the Foreign Borrowings Act of 1966.”
Such criteria were driven by the difficult macro environment which prevailed in the past few decades. The country
had to contend with the challenge of executing stable monetary policies on a consistent basis which was made
difficult by a weak fiscal base, chronic BOP problems, low international reserves, very high external debt (which
was restructured in the early 1990s), and limited access to international capital markets. The macroeconomic
conditions of the country posed a binding constraint on infrastructure spending. Other historical reasons were the
weak bureaucratic institutions inherited from the Marcos martial law government.
Infrastructure
Guide: Philippines
Philippines | 3 | 12
Major
Major Government
Government Spending
Spending Initiatives
Initiatives: Ramped-up investments on public infrastructure
Ramped-up
Particulars investments on public infrastructure
2012 Actual 2013 GAA 2014 GAA Growth Rate (%)
(PhP mn) (PhP mn) (PhP mn) 2012-2013 2013-2014
Particulars 2012 Actual 2013 GAA 2014 GAA Growth Rate (%) There are several reasons why
Roads and Bridges 84,218 (PhP mn) 149,599
108,097 28.4 38.4
(PhP mn) (PhP mn) 2012-2013 2013-2014 infrastructure spending to GDP has
Basic Educational Facilities* 11,012 26,268 50,967 138.5 94.0
Roads and Bridges
Flood Control/Seawalls 84,218 108,097
11,331 149,599
16,536 28.4
34,806 38.4
45.9
been historically low which
110.5
Basic Educational Facilities*
Housing 11,012 26,268
10,518 50,967
22,373 138.5 94.0
16,317 112.7 (27continued
.1) to be reflected in the
National
Flood Irrigation
Control/Seawalls 11,331 24,193
16,536 22,212
34,806 15,785
45.9 (8.2)
110.5 major approval criteria for projects at
(28.9)
Farm-to-Market
Housing Roads 10,518 4,868
22,373 5,657
16,317 12,603
112.7 (27 16.2
.1) the National Economic and
122.8
Health Facilities Enhancement Program 5,078 13,558 9,138 167.0 (32.6)
Development Authority-Investment
National Irrigation 24,193 22,212 15,785 (8.2) (28.9)
Electrification 4,950 6,374 9,679 28.8 51.8
Farm-to-Market Roads 4,868 5,657 12,603 16.2 122.8 Coordination Committee (NEDA-ICC).
Airports/Air Navigational Facilities 802 5,195 9,114 547.8 75.4
Health Facilities
Other Public Works Enhancement 5,078 13,558
15,120 9,138
1,321 167
10 .0 (32.6)
(91.3) Projects are evaluated at the
(99.2)
Water Supply
Program 1,516 1,839 6,954 21.3 NEDA-ICC based on the “fiscal,
278.1
Preliminary and Detailed Engineering

Electrification 4,950 780
6,374 1,724
9,679 3,026
28.8 121.0
51.8 monetary and balance of payments
75.5
Land Transportation/Railway (57(BOP)

.2)
implications of major capital
Airports/Air Navigational 802 -
5,195 3,834
9,114 547.8 75.4 -
1,642
Ports and Lighthouses 679 2,361 1,377 247.9 (41.7)
projects” taking into account the
Facilities
Quick Response Fund 1,383 1,150 1,305 (16.8) 13.5
Other Public Works
Others 15,120 1,321 10
49,964 (91.3) (99.2)
81,989 42.7
peso
64.1
requirement and foreign
35,015
Total Infrastructure
Water Supply Outlays 1,516 1,839
211,463 6,954
288,464 21.3
404,312 278.1
36.4 exchange
40.2 requirements of the
Preliminary and Detailed 780 1,724 3,026 121.0 75.5 project in terms of current and
Note: *Inclusive of School Building Program
Engineering capital outlays, sources of funds and
Source: Table B.6, 2014 GAA-Based Infrastructure Outlays as published in Bangko Sentral ng Pilipinas investor Relations
Land Transportation/Railway - to Sustain Inclusive
3,834 Growth. Table
1,642reproduced (57.2)permission. conditions for proposed financing,
Office (March 2014) Enhancing Resilience with
Ports and Lighthouses 679 2,361 1,377 247.9 (41.7) “compliance with the foreign debt
Quick Response Fund 1,383 1,150 1,305 (16.8) 13.5 ceiling under RA4860 or the Foreign
TheOthers
situation is clearly different today.
35,015
The country
49,964
is 81,989
The sheer42.7
size of
64.1
the infrastructure
Borrowings deficits
Act ofsuggests
1966.” Such
on aTotal
much stronger macroeconomic
Infrastructure Outlays 211,463
footing. The
288,464 404,312
that a sustained
36.4 40.2
effort to resolve
criteria bottlenecks
were driven across
by the adifficult
fiscal sector, while in deficit, is manageable with an broad front of sectors andmacro regions will by itselfwhich prevailed
environment
Source: Table
improved B.6, 2014
revenue GAA-Based
base Infrastructure
after the passage Outlays
of theas published in Bangko Sentral ng Pilipinas
contribute investor to economic development.
significantly
Relations Office (March 2014) Enhancing Resilience to Sustain Inclusive Growth. Table reproduced with
expanded Value-Added Tax (VAT) in 2005 and the sin The government, however, is very conscious about
permission.
taxNotes:
law in 2013. After the restructuring of the
*Inclusive of School Building Program
the “need to put in place the right infrastructure in
government debt to commercial banks in 1992 under the right place, in the right time,” as expressed by
theinBrady
the pastdeal,fewthedecades.
government The country
has nurtured had to ancontend with NEDA In the midterm
Director update
General of theTungpalan.
Rolando Philippine Development Plan,
the challenge of executing stable
investor base in international capital markets. Large monetary policies on a the government maintains the objective of inclusive
consistent basis which was made
inflows from overseas Filipino workers and service difficult by a weak fiscal growth, to consist of poverty
Thus, under the overarching theme of enhancing reduction in multiple
base,from
exports chronic BOP problems,
business low international
process outsourcing dimensions through
(BPO)reserves, interconnectivity “massive
of sectors, urbanquality
centers, employment
and
very highhave
companies external debt (which
generated strongwas restructured
external balancesin the earlymarkets,creation”the with a focus on
government spatial
intends toand
put sectoral
in place strategies,
a
and1990s),
boosted and limited access
international to international
reserves. There is amplecapital markets. seamlessand based on rapidlogistics
multimodal and sustained
systemeconomic
along thegrowth.
The macroeconomic
domestic liquidity. Termconditions
project financingof the country posed a
is available Subic-Clark-Manila-Batangas (SCMB) corridor “to
frombinding
majorconstraint
domestic on infrastructure
banks spending.forOther
in sizable amounts The efficient
ensure government flowhas introduced thesupplies,
of commodities, conceptand of High
historical reasons were the weak
tenors of 10 to 12 years. In the midterm update of the bureaucratic institutions Standard Highways (HSH) which
inputs to tourism, agricultural production and would have limited
inherited
Philippine from the Marcos
Development Plan, martial law government.
the government access, high speed,
economic/industrial zones.long distance
” The SCMB highways,
corridor ismost of which
maintains the objective of inclusive growth, to consist will be to
expected constructed
eventually as concession
extend further public-private
north and
The situation
of poverty reductionis clearly different
in multiple today. The
dimensions country is on a further
through partnerships
south. (PPPs). The master plan for the High Standard
much stronger
“massive macroeconomic
quality employment footing.
creation” withThe fiscal sector,
a focus Highway Network Development calls for the construction
while in deficit, is manageable with
on spatial and sectoral strategies, and based on rapid the improved revenue The government is 234.13
of an additional kilometers
also exploring the (km) of toll expressways
establishment
base after the passage of the
and sustained economic growth. The government expanded Value-Added Tax of a long-distance, high-speed mass rail transit Luzon, Metro
that will provide interconnectivity in Central
(VAT) in 2005 and the sin tax
has introduced the concept of High Standard law in 2013. After the Manila
system andandan the CALABARZON (Cavite,
integrated/full-length railway Laguna,
systemBatangas,
restructuring
Highways (HSH)of the government
which would have limited commercial banks for Rizal
debt to access, and Quezon).
freight-rail services across Luzon that would be
highin speed,
1992 under the Bradyhighways,
long distance deal, the government
most of which has nurturedlinked to Metro Manila and other urban centers. The
willanbeinvestor
constructedbase as in international capital markets. Large
concession public-private The sheeralso
government sizecontinues
of the infrastructure
to pursue the deficits suggests that a
Central
inflows from
partnerships overseas
(PPPs). Filipino plan
The master workers andHigh
for the service exportsRORO (Roll-On/Roll-Off) Spine Project to enhancea broad front
sustained effort to resolve bottlenecks across
Standard Highway Network Development calls for the have inter-island
from business process outsourcing (BPO) companies of sectors and regions
logistics and the will by itself contribute
movement of significantly
generated strong external balances
construction of an additional 234.13 kilometers (km) and boosted to economic development.
passengers, vehicles and goods along the The government, however, is
international reserves. There is ample
of toll expressways that will provide interconnectivity domestic liquidity. very conscious about the “need
Luzon-Panay-Negros-Cebu-Bohol-Mindanao nautical to put in place the right
Term project
in Central Luzon,financing is available
Metro Manila and the from major domestic infrastructure in the right place, in the right time,” as
highway.
banks in sizable
CALABARZON amounts
(Cavite, Laguna,for tenors
Batangas, of 10 to 12
Rizal andyears. expressed by NEDA Director General Rolando Tungpalan.
Quezon).
Guide: Philippines
As in previous Public Investment
As in previous Plans, there
Public Investment is an
Plans, effort
there to
is an constructing roads, bridges, flood control, and
have an effort
integrated approach in the development
to have an integrated approach in the plan, government buildings with the projects and programs
various termed
developmentas “cross
plan,cutting”
variousor “crossasreference”
termed “cross cutting” of the Department of Tourism (DOT), Department of
projects.or As explained
“cross by NEDA
reference” Director
projects. AsGeneral
explainedRolando
by Education (DepEd), Department of Agriculture (DA)
Tungpalan,
NEDA the Director
overall investment is not just
General Rolando a collation
Tungpalan, the of
overall and local governments.
individualinvestment
projects and programs
is not (PAPs) submitted
just a collation by projects
of individual each Addressing the specific constraints faced by the poor
agency, but
and there has to
programs be a strategic
(PAPs) submittedroadmap
by each that
agency, but requires
Theconsideration of geophysical
convergence program of DPWHcharacteristics
and DOT will
integrates
there has to be a strategic roadmap that traffic,
the impact of PAPs on transportation, The integrated
integrates coordinate approach
construction is reflected of access in the roadsConvergence
to priority
drainage,theetc.
impact of PAPs on transportation, traffic, Strategies tourism destinations under the National Tourism
its
of the DPWH that supports and coordinates

drainage, etc. projects under its mandate
Development Plan (NTDP). of constructing
The Department roads, bridges, of

The midterm update introduces a spatial dimension to the flood control,

Transportation and government
and Communications buildings with (DOTC)the projects will

challenge of midterm
The inclusive update
growth introduces
by identifying the top
a spatial dimension and programs
upgrade of the Department
principal airports toofinternational Tourism (DOT), and
provinces most affected by poverty either in terms of high

to the challenge of inclusive growth by identifying the Department of Education (DepEd),
principal Class 1 and 2 airports. Tourism airports Department of
are
numberstopof provinces
poor families or high poverty incidence, and
most affected by poverty either in Agriculture (DA) and local governments.
also planned for Marinduque, San Jose, Siargao,
those provinces
terms ofmost
high exposed
numbers toof environmental
poor families orhazards.
high Vigan, Basco, Bukidnon, General Santos, and Roxas
For eachpoverty
category,
incidence, and those specific
the plan proposes provincessocial
most The convergence
airports. Tourism program ports ofwillDPWH and DOT in
be upgraded will ports
like
interventions suchtoas
exposed employment hazards.
environmental creation, diversifying coordinate Ivanaconstruction
Port in Batanes, of access Panganngan roads toPort priorityin Bohol, tourism

income sources, and infrastructure services. destinations

Lawigan under Port the National Tourism
in Camiguin, and Cagban DevelopmentJetty PortPlan in

For each category, the plan proposes specific social (NTDP). The Department of Transportation and
Aklan.
interventions such as employment creation, Communications (DOTC) will upgrade principal airports to
I – provinces with highest II – provinces with highest III – provinces prone to multiple
diversifying income sources, and infrastructure international

number of the poor and principal
The integratedproportion approach Class
of the poor 1 and 2hazards
is also found airports.
in theTourism
services. airports
 Createare also
more growth
innovation and growth
opportunities
planned
 for
Promote Marinduque,
economic
labor throughcorridors
mobility of
human capital
 SanCapacitate
for Mindanao Jose,
officials and
residents on disaster where
risk-
Siargao,
 Vigan,
Undertake
integrated
employment
Basco,
skills training, Bukidnon,
and infrastructure
facilitation infrastructure
development
General
development 
Santos,
reduction strategies
strategies
Promote income
and will
The integrated approach is reflected in the Roxas
 airports.
Encourage
link agricultural
arrangements
Tourism
flexible work  ports
Link residentswill
production
chain
be upgraded
to the value
bases to
 processing
Expand
in ports like
diversification
social protection and
Convergence Strategies of the DPWH that supports Ivana Port in Batanes,

centers and markets.

Panganngan
Strengthen peace-building
efforts
Port in Bohol, Lawigan
insurance
and coordinates its projects under its mandate of Port in Camiguin, and Cagban Jetty Port in Aklan.
Source: Bangko Sentral ng Pilipinas presentation on Enhancing Resilience

to Sustain Inclusive Growth March 2014
The integrated approach is also found in the innovation and
growth corridors for Mindanao where integrated
infrastructure development strategies will link agricultural
production bases to processing centers and markets.
Addressing the specific constraints faced by the poor

requires consideration of geophysical characteristics
Category I – provinces with highest Category II – provinces with highest Category III – provinces prone to
number of the poor proportion of the poor multiple hazards
Addressing the specific • Rapid growth opportunities • Very remote, sparsely • Prone to multiple hazards
constraints faced by the exist but not for the poor populated
poor requires consideration • In-migrants are attracted but • Limited growth opportunities
of geophysical they cannot participate in the • Confronted by conflict and/or
characteristics growth process as well frequent disasters
I – provinces with highest number of II – provinces with highest III –

provinces prone to multiple
the poor
Addressing theproportion
specific of the poor
• Createhazards
more growth • Promote economic mobility of • Capacitate officials and residents

 Rapid growth constraints
opportunities  Very remote, sparsely opportunities
requires  Prone to multiple hazards labor through human capital and on disaster risk-reduction
different
exist but not for the poor strategiespopulated • Undertake skills training, infrastructure development strategies
 In-migrants are attracted but  Limited growth opportunities
employment facilitation • Link residents to the value chain • Promote income diversification
they cannot participate in the  Confronted by conflict and/or
growth process as well frequent disasters • Encourage flexible work • Strengthen peace-building • Expand social protection and
arrangements efforts insurance
Source: Bangko Sentral ng Pilipinas presentation on Enhancing Resilience to
Sustain Inclusive Growth March 2014
Source: Bangko Sentral ng Pilipinas presentation on Enhancing Resilience to Sustain Inclusive Growth March 2014
Infrastructure
Guide: Philippines
Inno
Inno vation
vation andand growth
growth corridors
corridors in Mindanao
in Mindanao Underquality
massive the overall goal of “poverty
employment” along withreduction
the useinof multiple
 Mindanao Food, Agribusiness and Logistics the dimensions
so-called and
“logical the creation
framework” of massive
for quality
formulating
 Mindanao
Corridor Food, AgribusinessSantos);
(Tagum-Davao-General and Logistics Corridor development employment” plans, along with the midterm
the updated use of the so-called “logical
Philippine
(Tagum-Davao-General Santos);
 Mindanao Industrial Trade Corridor (Western and framework”
Development Planforidentifies
formulating twodevelopment
intermediateplans, goals
the
 Mindanao
Northern Industrial Trade Corridor (Western and
Mindanao); updated
of (1) rapid andmidterm
sustained Philippine
economicDevelopment
growth while Plan identifies
Northern Mindanao);
 Mindanao Food Basket Corridor (Central two intermediate
achieving goals of (1) opportunities.
(2) equal development rapid and sustained economic
 Mindanao Food Basket Corridor (Central
Mindanao-Bukidnon); growth while achieving (2) equal development
Mindanao-Bukidnon);
 Mindanao Biodiversity and Ecotourism Corridor Thereopportunities.
are, in turn, seven “infrastructure-supported
 Mindanao BiodiversityOriental
(Surigao-Agusan-Davao and Ecotourism
including Corridor
former sector outcomes”, which are driven by five
(Surigao-Agusan-Davao
Paper Industries CorporateOriental including former Paper
of the Philippinos There are, in
“infrastructure turn, seven outcomes”
Intermediate “infrastructure-supported
and 14 sector
Industries
[PICOP] Corporate of
concessionaire the Philippinos
areas); and [PICOP]
outcomes”
specific , which are driven by five “infrastructure
strategies.
concessionaire areas); and
 Mindanao Mariculture and Trade Corridor Intermediate outcomes” and 14 specific strategies.
 (Zambasulta:Mariculture
Mindanao and Trade Corridor (Zambasulta:
Zamboanga-Basilan-Sulu-Tawi-Tawi) The sector outcomes, which are impacted by the
Zamboanga-Basilan-Sulu-Tawi-Tawi)
Source: Philippine Development Plan 2011-2016 stateThe
of sector outcomes,
the country’s which are have
infrastructure, impacted
to doby the state of
with
Source: Philippine Development Plan 2011-2016
http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastructure-develo
pment/
http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastructure-development/
(1) the
globalcountry’s infrastructure,
competitiveness in thehave to do
industrial with
sector;(1) global
(2)
competitiveness
competitiv eness in the in the industrial
agricultural sector;
sector, (3)(2)
Another
Another manifest
manifestation of of
ation thethe
integrated
integrated effort
effortareare
thethe long effective
competitiveness
governance,in(4) the agricultural
stable nationalsector, (3) effective
security, (5)
long term “dream plans” for 2035 for
term “dream plans” for 2035 for transportation transportation governance,sustainability,
environmental (4) stable national security, (5) environmental
(6) improvements in
development
development forfor
Metro
MetroManila
Manilaand Metro
and Metro CebuCebu putput humansustainability,
capabilities, (6)and
improvements
(7) reductioninofhuman capabilities, and
vulnerabilities
together
together with thethe
with assistance
assistance of of
thetheJapan
Japan International (7) reduction
to natural calamities.of vulnerabilities to natural calamities.
International
Cooperation Cooperation
Agency (JICA),Agency (JICA),
which which more livable,
envisions
envisions more livable, less congested,
less congested, environmentally friendly mega-urban areasThese These sector
sector outcomes
outcomes will will depend
depend on fivone five intermediate
environmentally friendly mega-urban
conducive to productive employment. areasAtconducive
the same time, intermediate outcomes: (1) the enhancement
outcomes: of competitiveness
(1) the enhancement of and
to the
productive
World Bankemployment.
is involvedAtinthe same time,
formulating plansthefor the productivity, (2)
competitiveness andbetter governance,
productivity, (3) improved security,
(2) better
World
regionsBankthat
is involved in formulating
do not belong plans for
to the National the Region governance,
Capital (4) environmental
(3) improved quality, and most
security, significantly, (5)
(4) environmental
regions
(NCR).that do not belong to the National Capital adequacy
quality, and most andsignificantly,
accessibility (5) of basic infrastructure
adequacy and services
Region (NCR). Under the overall goal of “poverty includingof
accessibility the far-flung
basic areas. services including
infrastructure
reduction in multiple dimensions and the creation of the far-flung areas.
Results framework on accelerating infrastructure development
Results framework on accelerating infrastructure development
Goals
Goals
Poverty in multiple dimensions reduced and massive quality employment created
Poverty in multiple dimensions reduced and massive quality employment created


Rapid and sustained Equal development
Intermediate goals
Intermediate
Rapid and sustained economic growth opportunities achieved
Equal development
goals
economic growth  opportunities achieved
 
Globally Competitive Effective and Stable Sustainable Human Vulnerabilities

and efficient national and climate capabilities reduced
Infrastructure Globally -
competitive
and sustainable governance security resilient improved
Competitive agriculture achieved achieved environment
innovative
Sustainable
supported sector and industry andEffective
competitive and fisheries achieved
Human
and Stable
Infrastructure - sustainable
services sector and climate Vulnerabilities
and innovative efficient
achieved national capabilities
reduced
outcomesservices
sectors resilient
supported sector industry and agriculture achieved governance security improved
and achieved achieved environment
outcomes fisheries achieved
sectors
achieved sector
achieved
      
Infrastructure
  
Competitiveness

Governance

Safer and Environmental

Adequacy and

intermediateCompetitiveness
enhanced and
productivity incresed in
improved more
secured
environment
quality
improved Adequacy
accessibility of basic
and
infrastructure services
Safer and
outcomesproductivity
the industry, services enhanced, and
created and accessibilityinfrastrucutre
of basic gaps in
Infrastructure enhanced and and agriculture sectors
Governance more secured Environmental
sustained infrastructure services
far-flung areas reduced
intermediate
incresed in improved environment quality enhanced, and
the industry, services created and improved
outcomes
and agriculture sectors
infrastrucutre gaps in
sustained far-flung areas reduced

Source: Philippine Development Plan 2011-2016 http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastructure-development/
15 |2Infrastructure In-depth:
Philippines
The fourteen infrastructure development strategies Intermediate outcome B: Adequacy and accessibility of basic
are directed towards the five intermediate infrastructure services enhanced and infrastructure gaps in
Intermediate outcome E.far-flung
Environmental quality improved
infrastructure outcomes which support the sector areas reduced
outcomes.
Strategy 5: Improve access to and adequacy of basic
Intermediate outcome A: Competitiveness enhanced and productivity Strategyinfrastructure
12: Strengthen resilience to climate change
services
increasedFor each
in the strategy,
industry, there
services is a results
and agriculture matrix (RM) which
sectors and disasters
specifies mostly physical indicators and targets to
Strategy 6: Address infrastructure gaps in
measure the government’s success in each strategy.
Strategy 1: Improve connectivity and efficiency Strategyfar-flung
13: Improve
areaswastewater and solid waste
among urban centers, regional growth hubs management
For Intermediate outcome A, Strategy 1: Improve
connectivity and efficiency among urban centers, and Intermediate outcome B: Adequacy and accessibility of basic
infrastructure
Strategy services
14: Supportenhanced
measuresandtoinfrastructure
improve air gaps in
regionalStrategy
growth 2: hubs,
Supportthe following
agricultural is the Results
production
quality far-flung areas reduced
Matrix from 2013 to 2016 in the original Philippine
Development Plan, and the revalidated results matrixSource: Philippine DevelopmentStrategy 5: Improve access to and adequacy of basic
Plan 2011-2016
in the midterm
Strategy 3:update. The end-of-plan
Pursue energy targets have http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastructure-development/
and water security infrastructure services
been mostly reaffirmed. (See Appendix A and B)
The targets
Strategyare4:as specific
Improve as the
business transfer
climate through time The strategies are not Strategy 6: Address infrastructure gaps in
just motherhood
far-flung areas
statements.
institutional and policy reforms,
between MRT/LRT platform to platform and and legislation
concourse to platform; the number of passengers perFor each strategy, there is a results matrix (RM) which
square meter vs. the optimal; the volume of tonnage specifies mostlyIntermediate physical indicators and targets to
outcome C: Governance improved
transported through measure the government’s success in each strategy.
Intermediate outcome B: Adequacy andthe Central
accessibility RORO
of basic spine; the
infrastructure
number of passengers transported through airlines;
services enhanced and infrastructure gaps in far-flung areas reduced
and percentage of mobile services with broadband For Intermediate outcome A, Strategy
Strategy 7: Promote 1: Improve
good governance through
facilities. connectivity and efficiency among
information andurban centers,
communication and
technologies (ICTs)
Strategy 5: Improve access to and adequacy of basic regional growth hubs, the following is the Results Matrix
infrastructure services
As reflection of the scale and complexity of the from 2013 to 2016 in the original Philippine Development
Strategy 8: Improve coordination and planning, and
transportation problem in Metro Manila and other Plan, and the revalidated resultsgovernment
streamline matrix inprocesses
the midterm
Strategy 6: Address infrastructure gaps in
urban areas, it indicates that the target set for the update. The end-of-plan targets have been mostly
far-flung areas reaffirmed. (See Appendix A.1 and A.2)
average travel time via road along key urban corridors Strategy 9: Optimize resources and investments in
is to decrease from the baseline of 20.59 minutes in infrastructure
2012 to just 20.03 minutes by 2016. An improvement The targets are as specific the “transfer time between
of travel time C:byGovernance
56 secondsimproved
will hardly be felt by MRT/LRT: platform to platform and concourse to
Intermediate outcome
urban commuters. Perhaps what the target platform”;Intermediate
the number of passengers
outcome D: Safer andper square
more meter
secured vs.
environment
the optimal; the volume of created
tonnage andtransported
sustained through
represents is the objective that traffic in Metro
Manila’sStrategy
main 7:
corridors will at
Promote good least notthrough
governance worsen the Central RORO spine; the number of passengers
information and
between 2014 to 2016. communication technologies (ICTs) transported through airlines;
Strategyand percentage
10: Provide of security
safety and mobilemeasures
services with broadband facilities.
The targets for8:the
Strategy transfer
Improve times and
coordination for planning,
LRT andand MRT
passengers to go
streamline four to five minutes also As reflection of the scale
down byprocesses
government
and 11:
Strategy complexity
conflict-affected
of the in
Enable development
areas and other urban
do not seem material. transportation problem in Metro Manila
areas, it indicates that the target set for the average travel
Strategy 9:outcome
Intermediate OptimizeA:resources and investments
Competitiveness enhancedin and time via road along key urban corridors is to decrease from
infrastructure
productivity increased in the industry, services and agriculture the baselineIntermediate outcomein E.2012
Environmental quality improved
of 20.59 minutes to just 20.03
sectors
minutes by 2016. An improvement of travel time by 56
Strategy 1: Improve connectivity and efficiency
seconds will hardly be felt by urban commuters. Perhaps
Strategy 12: Strengthen resilience to climate change
Intermediate outcome D:among Safer urban
and more secured
centers, regional growth hubs what the target represents is the objective that traffic in
and disasters
environment created and sustained Metro Manila’s main corridors will at least not worsen
between 2014 to 2016.
Strategy 2: Support agricultural production Strategy 13: Improve wastewater and solid waste
Strategy 10: Provide safety and security measures management
The targets for the transfer times for LRT and MRT
passengers to go down by four to five minutes also do not
Strategy 3: Pursue energy and water security seem material. Strategy 14: Support measures to improve air
Strategy 11: Enable development in
quality
conflict-affected areas

Strategy 4: Improve business climate through http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastructure-development/
institutional and policy reforms, and legislation
Infrastructure
Guide: Philippines
For otherthe
For other items in the Results Matrix, items in thetargets
physical Resultsthat
Matrix, the physical
appear targets that
to be significant are:appear to be significant are:
Indicators Baseline (2012) End of Plan Percent change
Indicators Baseline (2012)End of Plan Percent change
Load transported via Central RoRo spine (tons per ship-hour) 189 251 32% increase
Davao 126 per ship-hour) 179
Load transported via Central RoRo spine (tons 189 42%
251 increase32% increase
Cagayan de Oro Davao
42 47
126
11.9%
179
increase42% increase
Batangas 21 25 19.0% increase
Cagayan
Passengers transported via air per annum de Oro 37,960,765 42
56,084,528 4747
.7% increase11.9% increase
Batangas
Source: Philippine Development Plan revalidated results matrix and author’s calculations. 21 25 19.0% increase
Another salient observation is that the leadtransported

Passengers agency forvia the strategies
air per annum will mostly be the DOTC which
37,960,765 has been 47.7% increase
56,084,528
managing challenges in rolling out public-private
Source: partnership
Philippine Development (PPP) projects.
Plan revalidated results matrix and author’s calculations.
Another
For strategy 2, supporting agricultural salient observation
production, the physical is targets
that therefer
lead to
agency for the of
the percent strategies
potentialwill
areasmostly
withbe the
DOTC
irrigation services. (See Appendix C) which has been managing challenges in rolling out public-private partnership (PPP)
projects.
For Strategy 3 covering water and energy security, there are specific physical targets for the ratio of power supply
to demand; non-revenue water; For24/7strategy 2, supporting
water service agricultural
availability; production,
etc. The the physical
physical targets do nottargets
reflect refer to the percent of
ambitious
target indicators. (See Appendixpotential
D) areas with irrigation services.
For the power sector, the target Forfor Strategy

the ratio of3 covering
dependablewater and energy
capacity to peaksecurity,
demand there are specific
including physical
required targets
reserve in for the
ratio of power supply to demand; non-revenue water; 24/7 water
fact goes down from 108 percent in 2010 to 104 percent for the country as a whole. For Luzon, this goes down service availability; etc. The
from 113 percent to 107.85 percent physical
whiletargets
for thedo not reflect
Visayas, ambitious
the ratio target
increases indicators.
from (SeetoAppendix
103 percent A.3) The
105 percent.
critical demand-supply situation in Mindanao and the realistic prospects for addressing them are reflected in the
drop of the ratio from 107 percent Fortothe power
just sector, the
100 percent target for the ratio of dependable capacity to peak demand includ
by 2016.
ing required reserve in fact goes down from 108 percent in 2010 to 104 percent for the
The table below shows the committedcountryand as aindicative
whole. For Luzon, this
capacities goes down
for private sectorfrom 113projects
power percent in
toLuzon,
107.85 Visayas
percent while for
and Mindanao from 2013 to 2016, theand
Visayas, the ratio
the targeted increases
ratio from 103capacity
of dependable percenttotopeak
105 percent.
demand Theand critical
requireddemand-supply
reserve by 2016. situation in Mindanao and the realistic prospects for addressing them are reflected in the
drop of the ratio from 107 percent to just 100 percent by 2016.
Target capacity of committed and indicate private sector-initiated power plant projects, 2013-2016
Table 3 shows the committed and indicative capacities for private Grid sector power projects in
Luzon, Visayas and Mindanao from 2013 toLuzon
Particulars 2016, and theVisayas
targeted ratio Mindanao
of dependable
capacity to peak demand and required reserve by 2016.
Capacity of committed power plant projects (2013-2016), in MW 767.4 429.6 515.0
Capacity of indicative power plant projects (2013-2016), in MW 9,702.5 718.0 1,928.0
Target capacity of committed and indicate private sector-initiated power plant projects, 2013-2016
Ratio of dependable capacity to peak demand and required reserve (2016) 107.86% 105.32% 100.0%
Particulars Grid
Source: Philippine Development Plan 2011-2016 http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastructure-development/
Luzon Visayas Mindanao
In the water sector, the targets actually show

Capacity a degradation
of committed power of theprojects
plant ratio of million liters
(2013-2016, in MWper day (MLD)
767.4 of water 429.6
supplied to 515.0
water demand for the country as a whole, from 116 percent to 92 percent. This appears to be weighed down by the
Capacity of
prospects in the Metropolitan Waterworks indicative
and powerSystem
Sewerage plant projects
(MWSS)(2013-2016, in MW area which
Concession 9,702.5
drops from718.0
122 1,928.0
percent to 113 percent, with a noteRatio
thatofthe MWSS Concession areas will be in deficit by 2017
dependable capacity to peak demand and required reserve (2016) . 107.86% 105.32% 100.0%
Although the other major urban areas show an increase or a constant ratio of supply to demand, the actual ratios point to
the continuing critical situation as well. In Metro Cebu, the ratio of supply to demand was only 32 percent, improving but
still below 100 percent, to 58 percent by 2016. Bulacan and Davao City targets show a slight improvement over actuals
In the
but will still be in the 85 to 86 percent bywater
2016.sector, the targets
Only Cagayan De actually
Oro shows show anaimprovement
degradation of the 109
from ratiopercent
of million
to liters
121 per day
percent in the plan period. (MLD) of water supplied to water demand for the country as a whole, from 116 percent to 92
percent. This appears to be weighed down by the prospects in the Metropolitan Waterworks and
Sewerage
The full-time coverage of water supply System
services (MWSS)
in cities Concession
are targeted area which
to increase from drops from
78 to 90 122 percent
percent. to 113 percent, with a
Non-revenue
water is projected to decrease from note36that
to 23the MWSS Concession areas will be in deficit by 2017.
percent.
The government also intends to develop master plans for river basins, including water resource assessments or water
availability studies, particularly for water-critical areas, and to identify new water sources for domestic, commercial,
industrial, irrigation and other needs.
17 | Infrastructure In-depth: Philippines Philippines

“The Development
“The Philippine Philippine Development
Program of thisProgram
government of this
is
government is committed to sustain the

committed to sustain the growth rate trajectory of 7-8 percent growth
rate
by investing trajectory
in the of 7-8 percent
right infrastructure by investing
both purely public andin the
purely private
rightinfrastructure
infrastructure so that
boththepurely
sustainability
public of such
and purely
growth can be assured. But at the same time, we are not just
private infrastructure so that the sustainability
blinded by high growth. As important as high growth is the
of
such growth can be assured. But
inclusive growth. Geographically, we have mapped out
at the same
where we time, we aare
can make dent not just blinded
of poverty by ”high growth. As
reduction.
important
NEDA Deputy asDirector
high growth
RolandoisTungpalan
the inclusive growth.
Geographically, we have mapped out where we
can make a dent of poverty reduction.”
- NEDA Deputy
Surface water will be prioritized Director Rolando
over groundwater resources,Tungpalan
where
appropriate particularly in water-critical areas such as Metro Manila,
Metro Cebu, Metro Davao, Angeles City, Metro Iloilo, Cagayan de
Oro City and Surface
Bulacan.water
Alternative
will be water sources
prioritized overto the Angat Dam,
groundwater
which supplies 97 percent
resources, of Metro
where Manila’s
appropriate water requirements,
particularly are
in water-critical
also being explored.
areas such as Metro Manila, Metro Cebu, Metro Davao,
Angeles City, Metro Iloilo, Cagayan de Oro City and
This is to reduce the risks
Bulacan. arising from
Alternative waterbeing dependent
sources on a single
to the Angat Dam,
water sourcewhich
for various consumption
supplies 97 percentneeds. TheManila’s
of Metro two other water
water
PPP projectsrequirements,
are Laiban Dam areand the
also Bulacan
being Bulk Water projects.
explored.
This is to reduce the risks arising from being dependent

on a single water source for various consumption needs.
The two other water PPP projects are Laiban Dam and
the Bulacan Bulk Water projects.
Major government infrastructure projects to
pursue energy and water security
 Angat Dam and Dyke Strengthening Project
 Angat Water Transmission Improvement Project
 New Centennial Water Source-Kaliwa Dam
 Bulacan Bulk Water Supply Project also adds the spatial dimensions of poverty, vulnerability
 Rehabilitation, Operation and Maintenance of the to natural disasters, and sustainability.
Angat Hydro Electric Power Plant (AHEPP)
Auxiliary Turbines 4 & 5 through PPP Finally, it presents the midterm update results matrices
 Uprating of Agus 6 Units 1 & 2 by which the government intends to evaluate
 50-MW Isabel Coal Mine-Mouth Power Plant achievement versus the plan in terms of quantitative
 50-MW Coal-fired Power Plant in Malangas physical targets and amount of time consumed. The
 278.4 MW Renewable Energy Project plan reflects the government’s commitment to make
Major government infrastructure projects to pursue energy and water security
 Angat Dam and Dyke Strengthening Project measurable progress
For further in infrastructure
information, development.
please contact:
 Angat http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastructure-development/
Water Transmission Improvement Project
 New Centennial Water Source-Kaliwa Dam
 Bulacan Bulk Water Supply Project Roberto G. Manabat
 The current
Rehabilitation, Philippine
Operation development
and Maintenance of the plan
Angatrightfully
Hydro puts Chairman & CEO
Electric Power Plant (AHEPP) Auxiliary Turbines 4 & 5 through PPP

“pride of place” in infrastructure as the key challenge KPMG in the Philippines
 Uprating of Agus 6 Units 1 & 2

50-MW and major
Isabel Coalopportunity in thePlant
Mine-Mouth Power country’s economic growth For further information, please contact:

 50-MW and development.
Coal-fired Power PlantThe ultimate goals reflect the mantra
in Malangas
T: +63 2 885 7000
 278.4 MW Renewablegrowth”:
of “inclusive Energy Project
poverty reduction and generation E: Emmanuel
rgmanabat@kpmg.com
P. Bonoan
of quality employment. Vice Chairman and Head of Tax
The plan presents a logical framework on the
relationship between these ultimate goals, intermediate T: +63 2 885 7000 ext. 200
goals, thematic outcomes, and sector strategies. E: ebonoan@kpmg.com
Reflecting recent natural calamities, the midterm update
Infrastructure
Guide: Philippines
Paving
Pavingthe
theWay
Through Goodgood
way through
Go
govver
ernance
nance
Michael Arcatomy H. Guarin, Advisory Partner, KPMG in the Philippines
Infrastr uctureure
Infrastruct spending
spending bybthe Department
y the Departmentof of
Public WoW
Public rks and
orks Highw
and ays (DPWH)
Highway s (DPWH) is eisxpected
expected to to reach
reach US$4.30
PhP190 billionbillion in 2014,
in 2014, which which
wouldwould be more
be more than than
doubledouble the US$2.05
the PhP90.67 billion
billion levellevel in 2011.
in 2011. Infrastructure
Infrastructure
spending has spending
been growinghas been growing
at 28 at a28year
percent percent
in thealast
yearthree
in theyears.
last three years.
The bulk of The bulk of and the
the spending
thehighest
spending and the highest growth has been in highways, which jumped from
growth has been in highways, which jumped from PhP68 billion in 2011 to PhP128 billion US$1.54 billion in in 2014.
2011
ThetoDPWH
US$2.90 billionforin2015
budget 2014.could
The DPWH
go up tobudget
as muchfor as
2015 couldbillion.
PhP300 go up to as much as US$6.79
billion.
DPWH has set ambitious targets to overcome the country’s deficit in terms of the quality of roads in comparison with
Theneighbouring
DPWH has set countries.
ambitious Bytargets
2016, the target is tothe
to overcome completely
country’spave thein32,000
deficit terms ofkilometers (km)
the quality of national
of roads in roads, from only
86 percent
comparison as of
with 2013. The quality
neighbouring for the
countries. By paved roads
2016, the is targeted
target to be at the
is to completely international
pave the 32,000roughness
kilometersscale
(km) of
of 4. DPWH
is upgrading
national 117,000
roads, from onlylineal meters as
86 percent of of
bridges
2013. nationwide.
The quality Added
for the to the task
paved roadsare
is the rehabilitation
targeted to be at and
the reconstruction
requirements
international in the regions
roughness scale ofdamaged by Typhoon
4. The DPWH Haiyan.117,000 lineal meters of bridges nationwide. Added to
is upgrading
the task are the rehabilitation and reconstruction requirements in the regions damaged by Typhoon Haiyan.
The Global Competitiveness Report
TheRanking
DPWH ofis the
alsoPhilippines
supportingsignificantly
the development programs
improved of other
from no. agencies such
114 (2010-2011) as87
to no. the agriculture, tourism, and
education departments
(2013-2014) under
in the quality ofits Strategic
roads Convergence
indicator in the WEFProgram (SCP).
Global Competitiveness Index
Quality of Roads
The Global Competitiveness Report
The ranking of the Philippines significantly improved from(2010 -no.
2013)
114 (2010-2011) to no. 87 (2013-2014) in the quality
of roads indicator in the World Economic Forum (WEF) Global 2011
6.0 5.7 5.7 5.4 5.4
2010 - 2011 - 2012
Competitiveness 2012 - 2013
Index 2013 - 2014
5.1 5 5 4.9
5.0
Quality of Roads
4.0 (20103.5 3.5 3.4 3.7
- 2013) 2.8 3.1 3.4 3.6
5.7 5.7 5.4 5.4 2010 - 2011 2011 - 2012 2.7 2.6 2.7 3.1
2012 - 2013 2013 - 2014
6.0 3.0
5.1 5 5 4.9
5.0 2.0
4.0 1.0 3.5 3.5 3.4 3.7 2.8 3.1 3.4 3.6
2.7 2.6 2.7 3.1
3.0 0.0
Malaysia Thailand Indonesia Vietnam Philippines
2.0
Legend: 1 = extremely underdeveloped; 7 = extensive and efficient by international standards (Based on 146 Countries)
WEF: World Economic Forum
1.0
0.0
Malaysia Thailand Indonesia Vietnam Philippines
Notes: 1 = extremely underdeveloped; 7 = extensive and efficient by international standards (Based on 146 Countries)
Guide: Philippines
2011-2015 DPWH Infrastructure Program:
The DPWH is also
Capital supporting
Outlays the development programs of other agencies such as the agriculture, tourism, and educa-
(By Category)
tion departments under its Strategic Convergence Program (SCP).
300.0
41%
2011-2015 DPWH Infrastructure Program:
Capital Outlays (By Category)
250.0
Amount (in Billion Pesos)
300.0 32%
41%
200.0
250.0 45%
Amount (in Billion Pesos)
150.0 32%
200.0 10%
100.0 45%
150.0
50.0 10%
100.0
2011 2012 2013 2014 Proposed 2015
50.0
Highways 68.0 78.1 100.9 129.4 173.5
Flood Control 11.3 10.8 15.9 33.6 44.8
Others 11.3 10.8 27.6 27.9 51.4
Total (PhP) 2011 90.7 99.5

2012 144.3
2013 190.9
2014 Proposed269.7
2015
Source: Bangko Sentral ng Pilipinas presentation
Highways 68.0 on Enhancing78.1
Resilience to Sustain Inclusive Growth March
100.9 129.42014 173.5
TheFlood
DPWH Control
has introduced the 11.3
concept of High 10.8
Standard Highways15.9 33.6 are limited 44.8
(HSH) which access, high speed
highways
Others for long distance trips 11.3in a 200 km radius10.6 in the National 27.6 Capital Region
27.9 (NCR). These
51.4will be constructed
under
Totalthe public-private
P partnership
90.7 (PPP) program. 99.5 By 2020, the HSH network
144.3 is projected269.7
190.9 to increase from 420
kilometers to 626 kilometers. Another 236 kilometers are proposed to be constructed by 2030, and 130 kilometers
beyond
Source: Bangko 2030,
Sentral ng forpresentation
Pilipinas a total ofon995 kilometers.
Enhancing Resilience to Sustain Inclusive Growth March 2014
The DPWH has introduced the concept of High Standard Highways (HSH) which are limited access, high speed highways
for long distance trips in a 200 km radius in the National Capital Region (NCR). These will be constructed under the
public-private partnership (PPP) program. By 2020, the HSH network is projected to increase from 420 kilometers to 626
kilometers. Another 236 kilometers are proposed to be constructed by 2030, and 130 kilometers beyond 2030, for a total
of 995 kilometers.
Infrastructure
Guide: Philippines
But even more significant than the quantum increase Governance Reform and Anti-Corruption Program
in infrastructure spending and physical Key Reforms Policies and Program
accomplishments by DPWH are qualitative changes
Objective programming criteria based on
in governance which are transforming the way the 
planning applications (i.e. PMS-HDM 4);
DPWH is delivering on its mandate. A “massive  Project Status available on the DPWH
increase in spending” by government is usually Right Projects website;
associated with massive irregularities and  Public consultation and disclosure on public
expenditure (eNGAS) and project
governance issues as well. Under the banner of a identification up to project completion.
“good governance reform and anti-corruption
 Detailed Design, Program of Work and
program”, DPWH Secretary Rogelio Singson has Detailed Cost/Estimates prepared/evaluated
launched various initiatives to safeguard against such Right Cost based on restructured Indirect/Direct Cost;
risks. In pursuing its ambitious targets, the DPWH  Open, Transparent and Competitive Bidding
which resulted in savings.
adopted the following priorities:
 24/7 DPWH Call Center (165-02) to address
queries and complaints;
Right Quality  Outsourced project inspection and quality
assurance;
 Developing ISO Standards of DPWH Offices.
1. Right Projects 2. Right Cost 3. Right Quality
Accredited 47 Civil Society Organizations

(CSOs) partners for monitoring;
Right On Time  Bantay Lansangan Road Sector Report Card
Rating
 Close monitoring of project implementation.
4. Right Time 5. Right People
Source: Bangko Sentral ng Pilipinas presentation on Enhancing
Resilience to Sustain Inclusive Growth March 2014
The DPWH adopted concrete steps and approaches
to make sure that these priorities do not remain as In collaboration with the Philippine Contractors
mere slogans. Many of these steps are ingeniously Association (PCA) and the DPWH’s Accreditation
simple but are proving to be effective in curbing Board, the eligibility of contractors to bid is based on
moral hazards
But even more andsignificant
spending than irregularities.
the quantum increase in Governance
their certificationReform
and credit andrating.
Anti-Corruption
To ascertain Program
the
infrastructure spending and physical accomplishments by financial capacity, the DPWH requires no less than a
The procurement
DPWH process
are qualitative has been
changes made morewhich are
in governance certification
Key Reformsfrom the Bureau ofPolicies Internaland Revenue
Program
transparent
transforming andthe simplified
way DPWH to ensure the most
is delivering on its mandate. (BIR).
qualified proponents are chosen. The number of Objective programming criteria based on
Right Projects
signatures
A “massive required hasinalso
increase been reduced
spending” to five. is usually The DPWH is working planning
by government to cluster applications (i.e. PMS-HDM 4);
projects to ensure
Project Status available on the DPWH
This lowers the
associated withchances
massive forirregularities
moral hazardand in the form
governance that these are executedWebsite; by contractors with the
ofissues
bureaucratic
as well.interference. The number
Under the banner of
of a “good governance proper capabilities and equipment.
Public consultationSmaller project on public
and disclosure
documents
reform andrequired to be submitted
anti-corruption program”has also been
, DPWH Secretary lot sizes are also beingexpenditurediscontinued as much
(eNGAS) as
and project
reduced
Rogeliofrom 20 tohas
Singson five. launched various initiatives to possible. The DPWH annual identification
reportupforto project completion.
2012 states
safeguard against such risks. In pursuing its ambitious the following anecdote: Detailed Design, Program of Work and
Additionally,
targets, thethe DPWH
DPWH used tothe
adopted require bidders
following to
priorities: Right Cost Detailed Cost/Estimates prepared/evaluated
submit letters of intent for projects being tendered “Bidding irregularities based in onDPWH Region
restructured 4-B. The Cost;
Indirect/Direct
and the potential
1. Right bidders
project are posted in public. This District EngineeringOpen, Office (DEO) and
Transparent in Mamburao,
Competitive Bidding
step allowed bidders
2. Right costto find out who the other Occidental Mindoro which resulted
began in savings.
a project worth
bidders competing for the project. Notwithstanding
3. Right quality PhP473.457 million (US$ 10.72 million),
24/7 DPWH Call Center (165-02) well to address
laws and 4. rules to the
Right contrary, the process was prone
on time Right Quality
beyond the PhP50 million
queries and(US$1.13
complaints; million) that
to collusive 5. behaviour
Right people to the disadvantage of the district engineers can sign off
Outsourced on their
project own. and
inspection To quality
DPWH. Under the current process, bidders simply bypass clearanceassurance;from regional and central
procure
The DPWH the bid documents
adopted and submit
concrete steps and their bids with to
approaches offices, they cut the projectISO
Developing Standards
into componentsof DPWH Offices.
the DPWH
make sureproviding
that these no priorities
information do on
notwho the as
remain other
mere that would not breach the said limit. DPWH
Accredited 47 Civil Society Organizations
cancelled
Right On Timethe bidding (CSOs)ofpartners
these projects,
bidders
slogans.are.Many
In theofpast
these few years,
steps arethis new approach
ingeniously simple but for monitoring;
clustered themBantay into sixLansangan
projects, andRoadrebid
Sectorthese
Report Card
hasareallowed
provingthe to DPWH to generate
be effective in curbingUS$452.93
moral hazards and
in September 2011. Total approved budget for the
Rating
million in savings
spending in terms of the Approved Budget for
irregularities.
contract (ABC)Close for themonitoring
six clustered projects
of project was
implementation.
the Contract (ABC) and the actual cost of the bids PhP463.8 million (US$10.50 million). Through
awarded. The DPWH
The procurement also introduced
process has been standard
made more unittransparent Source:public
Bangkobidding,
Sentral ng Pilipinas
the DPWH presentation
was on Enhancing
able to saveResilience to Sustain
costs
and which are published
simplified to ensure in thetheir
most website
qualified andproponents
has are Inclusive Growth March 2014
PhP46.6 million (US$1.06 million) as the total
initiated a Quality Assurance program which is awarded contract amounted to only PhP417.2
outsourced to an external consultant. million (US$ 9.45 million).”
Philippines
In collaboration with the Philippine Contractors Association
and the DPWH’s Accreditation Board, the eligibility of In terms of getting the right people, DPWH has initiated a
contractors to bid is based on their certification and credit cadet engineer program to encourage young entry level
rating. To ascertain the financial capacity, the DPWH engineers to pursue a career in government service. They
requires no less than a certification from the Bureau of are required to take qualifying exams, designed by the
Internal Revenue (BIR). Development Academy of the Philippines (DAP) and the
Civil Service Commission (CSC), not just on the eligibility
DPWH is working to cluster projects to ensure that these but also on their management competencies. The
are executed by contractors with the proper capabilities and competency test is a way of making sure that the right
equipment. Smaller project lot sizes are also being candidates are selected based on qualifications and not on
discontinued as much as possible. The DPWH annual endorsement by government officials. Over time, this will
report for 2012 states the following anecdote: result in the upgrading of the overall skills and
professionalism in DPWH.
“Bidding irregularities in DPWH Region 4-B. The
District Engineering Office (DEO) in Mamburao, In addition, DPWH has also enlisted the support of civil
Occidental Mindoro began a project worth society groups to improve performance and governance.
PhP473.457 million, well beyond the PhP50 million
that district engineers can sign off on their own. To “Road projects are now being implemented
1
bypass clearance from regional and central offices, according to approved plans and specifications by
they cut the project into components that would not better equipped and qualified contractors with closer
breach the said limit. DPWH cancelled the bidding of project inspection and monitoring, including the
these projects, clustered them into six projects, and monitoring and participation of a network of Civil
rebid these in September 2011. Total approved Society Organizations (CSOs), Non-Government
budget for the contract (ABC) for the six clustered Organizations (NGOs), Church and private sector
projects was PhP463.8 million. Through public organizations. As of February 2012, DPWH
bidding, the DPWH was able to save PhP46.6 million accredited 52 Civil Society Organizations (CSOs) as
asThe
the DPWH has created
total awarded contracta national
amounted roadtodatabase
only of all government service.
partners/observers They
in all are required
stages of projectto take
projects nationwide
PhP417.2 million.” which at any time can give the qualifying exams, designed by the Development
development cycle (identification, preparation,
status of each project. It enables the DPWH to Academy of the Philippines (DAP)
budgeting, procurement, implementation, and theoperation
Civil
optimize the deployment of resources
DPWH has created a national road database of all projects for timely Service Commission (CSC), not just on
and post evaluation) and in other areas of mutual the eligibility
nationwide execution
which atand anycompletion,
time can give andthetostatus
prioritize repairs.
of each but also
interest. ” on their management competencies. The
project. It enables the DPWH to optimize the deployment competency test is a way of making sure that the
In the
of resources forcase
timely of execution
farm to market roads underand
and completion, thetoSCP These reforms right candidates
introducedare in selected basedyears
the last three on qualifications
have
with
prioritize repairs.the Department of Agriculture (DA), the DPWH and not on endorsement by government
begun to make a difference in the public perception officials.
of
insists on one simple basic criterion: that the farm to governance Overattime,
DPWH.this will result in the upgrading of the
In the casemarket
of farmroadto has
marketto connect
roads under to a major
the SCP road or the
with overall skills and professionalism in the DPWH.
highway. This curbs the tendency
Department of Agriculture (DA), DPWH insists on one for the alignment
of farm
simple basic to market
criterion: roads
that the to to
farm bemarket
based more on local
road has to In addition,
Opportunities for thethe DPWH
private has also enlisted the support
sector
connect to political
a majorconsiderations
road or highway. ratherThisthan
curbsthethe
direct of civil society groups to improve performance and
tendency contribution
for the alignmentlinkingoffarm
farmareas to market
to market roadscenters.
to be governance.
The significant opportunities for the private sector are in the
1
based more Theon DPWH is geo-tagging
local political farm to rather
considerations marketthanroadstheto PPP projects in the HSH of the DPWH:
support this. “Road projects are now being implemented
direct contribution linking farm areas to market centers.
according to approved plans and specifications
DPWH is geo-tagging farm to market roads to support this. � Plaridel Bypass Toll Road (DPWH) Laguna
In its SCP with the Department of Tourism (DOT), the Lakeshore Expressway by better equipped and qualified contractors with
Dike Project
closer project inspection and monitoring,
In its SCPDPWHwith theemphasizes
Department theofinterconnections
Tourism (DOT), DPWH between � C-6 Expressway (Southeast,
including the monitoringEastandand North of a
participation
emphasizes portstheand airports to tourist
interconnections destinations.
between ports and Section) (DPWH) network of Civil Society Organizations (CSOs),
airports to tourist destinations. � NLEX East Expressway Organizations
Non-Government (DPWH) (NGOs), Church
The DPWH is also supporting local governments and � Camarines Sur Expressway Project (DPWH)
and private sector organizations. As of February
DPWH is schools in constructing
also supporting rainwater catchment
local governments and schools facilities
in � Skyway2012,
Stage 3
DPWH accredited 52 Civil Society
in order
constructing to augment
rainwater catchmentthe water supply
facilities in specific
in order to Organizations (CSOs) as partners/observers in all
augment locations.
the water supply in specific locations. stages of project development cycle
(identification, preparation, budgeting,
In terms of getting the right people, the DPWH has procurement, implementation, operation and
initiated a cadet engineer program to encourage post evaluation) and in other areas of mutual
young entry level engineers to pursue a career in interest.” 2
1
1 Adding geographical
2
Adding geographical
identification identification
metadata for metadata
each road.for each road.
DPWH Accomplishment Report 2012.
Infrastructure
Guide: Philippines
These reforms
partners/observers
introduced in the
in alllast
stages
threeofyears
project
have
development
begun to make
cyclea (identification,
difference in the
preparation,
public perception
budgeting,
of procurement,
governance
implementation,
at the DPWH. operation and post evaluation) and in other areas of mutual interest.
”
development cycle (identification, preparation, budgeting, procurement, implementation, operation and post
evaluation) and in other areas of mutual interest.

Opportunities for ”the
2
private sector
TheThese reforms
significant introduced for
opportunities in the
the last three
private yearsare
sector have begun
in the PPPtoprojects
make a in
difference
the HSH in
ofthe
thepublic
DPWH: perception of governance
at DPWH.
 Plaridel Bypass Toll Road (DPWH) Laguna Lakeshore Expressway Dike Project
 C-6 Expressway (Southeast, East and Opportunities for(DPWH)
North Section) the private sector

 NLEx East Expressway (DPWH)
The significant
 Camarinesopportunities
Sur Expressway
for theProject
private(DPWH)
sector are in the PPP projects in the HSH of the DPWH:
 Skyway Stage 3
 Plaridel Bypass Toll Road (DPWH) Laguna Lakeshore Expressway Dike Project
 C-6 Expressway (Southeast, On-Going

East andConstruction: 160.83
North Section) km
(DPWH)
 NLEX East Expressway (DPWH)
 Camarines Project
Sur Expressway
Name Project (DPWH) Length (km) Project Cost (PhP Bn) Completion
 Skyway Stage 3
Tarlac-Pangasinan-La Union Expressway 88.85 17.52 2018
Daang Hari-SLEx Link 4.00 2.01 2014
STAR, Lipa-Batangas, Phase II On-Going Construction:
19.74 160.83 km 2.32 2015
NAIA Expressway 7.15 15.52 2015
Project Name Legnth (km) Project Cost (PhP Bn) Completion
Metro Manila Skyway Stage 3 14.82 26.66 2017
NLEx-SLEx Connector Road
Tarlac-Pangasinan-La Union Expressway 26.27 88.85 37.07 17.52 2017 2018
Daang Hari-SLEx Link 4.00 2.01 2014
STAR, Lipa-Batangas, Phase II NEDA Board-Approved: 77.70 km19.74 2.32 2015
NAIA Expressway 7.15 15.52 2015
Project Name Length (km) Project Cost (PhP Bn) Completion
Metro Manila Skyway Stage 3 14.82 26.66 2017
NLEx-SLEx
CALA Connector
Expressway Road
(Cavite and Laguna side) 47.00 26.27 35.4337.07 2018 2017
Central Luzon Link Expressway (CLLEx),
30.70 14.94 2017
Phase I (Tarlac-Cabanatuan, Nueva Ecija)
NEDA Board-Approved: 77.70 km
Project NameProposed (Priority): 140.79

Legnth
km(km) Project Cost (PhP Bn) Completion
CALA Expressway (Cavite and Laguna

Project Name side) 88.85Project Cost (PhP
Length (km) 17.52 Bn) Completion 2018
Central Luzon Expressway (CLLex), Phase I 30.70 14.94 2017
Metro Manila Expressway, C-6 58.09 TBD TBD
(Tarlac-Cabanatuan, Nueva Ecija)
Daang Hari-SLEx Link 47.00 122.81* 2021
STAR, Lipa-Batangas, Phase II 35.70
Proposed (Priority): 140.79 km 14.20 TBD
Note: *Includes PhP57.89 billion reclamation cost
Project Name Legnth (km) Project Cost (PhP Bn) Completion
Metro Manila Expressway, C-6 58.09 TBD TBD

Daang Hari-SLEx Link 47.00 122.81* 2021
STAR, Lipa-Batangas, Phase II 35.70 14.20 TBD
Note: *Includes PhP57.89 billion reclamation cost
2DPWH Accomplishment Report 2012.
Guide: Philippines
Other
Other
prospective
prospective
PPPPPP
Projects
Projects
PPP Bridges:
PPP Bridges: Ser vicesSer
to vices
Conduct BusinessBusiness
to Conduct Case Study
Caseand the and
Study
 Field validation of national
 Field validation of bridges
nationalproposed for PPP
bridges proposed subsequent
the ABC for
subsequentthe corresponding
ABC for the Consultancy
corresponding
is on-going.
for PPP is on-going.
ServicesConsultancy
was alreadyServices
approved. was already approved.
 The Researc
 Theh, Education
Researc and Institand
h, Education utional
Institutional
Development (REID) Foundation
Development will prepare Quirino Highway
will prepare
(REID) Foundation (Operation
Quirino Highway and Maintenance):
(Operation and Maintenance):
BusinessBusiness
Case Study Casefor Study
the Package
for the I,Package I,  Improvement/rehabilitation of a 93.45
 Improvement/rehabilitation of akm (2 lanes)
93.45 km (2
construction/rehabilitation of 139 selected
construction/rehabilitation of 139 bridges
selectedin national lanes)
road that traverses
national road Quezon, Camarines
that traverses Quezon,
Luzon bridges in Luzon Norte and Camarines
Camarines Sur and
Norte provinces.
Camarines Sur
 TargetforTarget
Invitation to Bid
for Invit – December
ation 2012
to Bid – December 2012  TOR for provinces.
the Consultancy Services to Conduct
 Submission and Evaluation

 Submission of Bids – of
and Evaluation August
Bids –2013
August Business
 TOR Case
forStudy and the subsequent
the Consultancy Services ABC for
to Conduct
2013 the corresponding
Business CaseConsultancy
Study andServices was
the subsequent
Kenon and Marcos Highway: already approved.
ABC for the corresponding Consultancy
 Upgrading
Kenon and and improvement
Marcos Highway: of the landslide prone  ConductServices
of Business
was Case Study
already to be funded under
approved.
sections of Kenon and
 Upgrading andMarcos Highway
improvement of with a
the landslide the Project Development
 Conduct and Case
of Business Management
Study to Facility
be funded
combinedprone
length of 80.86ofkm.
sections Kenon and Marcos Highway (PDMF) of the
under PPP
the Center.
Project Development and
 Terms of with
Reference (TOR) length
a combined for the of
Consultancy
80.86 km. Management Facility (PDMF) of the PPP
 Terms of Reference (TOR) for the Consultancy Center.
ADB, JICA,
ADB,WB Road
JICA, WBSector Portfolio
Road Sector Summary
Portfolio Summary
RUPP RUPPJICA Assisted

ADB Assisted
ADB Assisted RUPP RUPP
JICA Assisted World
World BankBank Assisted
Assisted
Component
Component NRIMP
NRIMP 2 2
(P’B) (P’B) ($’M) ($’M) (P’B) (P’B) ($’M) ($’M) (P’B) (P’B) ($’M) ($’M)
Upgrading / Improvement Component 0.385 8.95 (P’B)8.823 205.19

($’M) 12.948 301.12
Upgrading / Improvement Component 0.385 8.95 8.823 205.19 12.948 301.12
Asset Preservation Component 4.519 105.09 23.77 541.33 13.657 317.60
Asset Preservation Component
Institutional Capacity Development 4.519 1.024 105.09
23.81 23.772.061 541.33
47.93 13.657
2.760 317.60
64.19
InstitutionalOthers (Front
Capacity End Fee, CM)
Development 1.024 0.313 23.81 7.28 2.061 - 47.93 - 0.029
2.760 64.190.67
Total 6.241 145.14 34.161 794.44 29.394 683.58
Others (Front End Fee, CM) 0.313 7.28 - - 0.029 0.67
Total 6.241
Notes: 1. US$1 = PhP43, 2. P’B – pesos in billion, 3. $’M – US dollars in million
145.14 34.161 794.44 29.394 683.58
Source: DPWH presentation on Strategic Infrastructure Policies and Programs May 2012
Source: DPWH presentation on Strategic Infrastructure Policies and Programs May 2012
Notes:
1. Going
US$1 beyond these specific opportunities which include some very large projects, there is the recognition gaining
= PhP43
2. ground
P’B – pesosinin the
billionprivate infrastructure sector of the improvements in the governance ethic in the DPWH which can
3. $’M – US dollars in million
ultimate translate into the significant expansion of the highway network with higher quality and cost efficiency,
thereby broader economic opportunities for the private sector.
For further information, please contact:

Michael Arcatomy H. Guarin
Advisory
Roberto Partner
G. Manabat
KPMG in
Chairman & CEOthe Philippines
T: +63 2 885 7000 ext. 347
E: mguarin@kpmg.com
T: +63 2 885 7000
E: rgmanabat@kpmg.com
Infrastructure
Guide: Philippines
Building
BuildingThr
through
ough
PPar
arttnerships
nerships
Paul Patrick R. Afable, Advisory Senior Manager, KPMG in the Philippines
TheThe
Philippine
Philippineexperience
experience with
with
public-priv
public-priv
ateate
partnership
partnership (PPP)
(PPP) programs
programsgoes
goesbacback
k almost
almost
3030 years. The
years.
countrThey had
countr
theyfirst
had Build-Operate-Transfer
the first Build-Operate-T (BOT)
ransfer
law(BOT)
in Asia
lawinin1990
Asiawhich
in 1990 served
whichasserved
a modelas for
a other
model
countries.
for otherEven
countries.
prior to the
Even BOT
prior
law,
to the first
BOTBOT law, contract
the first BOT
in Asia
contract
was awarded
in Asia was
to Hopewell
awardedforto the
Hopewell
210MWfor Navotas
the 210MW
plant inNavotas
1988. The
plantPhilippines
in 1988. The used
Philippines
the PPP approach
also usedtothe
solve
PPPtheapproach
power crisis
to in the
solve
1990sthewhen
powereight
crisistoin12
the
hour
1990s
blackouts
when eight
paralyzed
to 12thehour
industry
blackouts
andparalyzed
crippled exports.
the industry
Fromand
1991 to 1995,
crippled
4,200MW exports.
of new
Fromprivate
1991power
to 1995,
capacity
4,200MW wereofcommissioned
new private powerwith project
capacitycosts
wastotalling
commissioned
almost US$5
with
billion.
project
In costs
1997, the
totalling
Philippines
almostexecuted
US$5 billion.
the largest
In 1997water
, the Philippines
privatizationexecuted
in the world
the largest
with the
water
award of the
privatization
Metropolitan in the
Waterworks
world withand theSe
awwerage
ard of the
System
Metropolitan
(MWSS) Waterworks
franchise to two
and Sewerage
concessionaires
Systemat a total
(MWSS)
projectfranchise
cost of US$7
to two.5 billion.
concessionaires at a total project cost of US$7.5 billion.
PrivPriv
ateate sector
sector participation
participation in infrastructure
in infrastr ucture investments, NPCThe to the
pesoPower Sector Assets
depreciation and Liabilities
also severely impacted one of the
investments,
however, went however,
throughwent through aphase
a declining decliningin the second halfManagement
MWSS water Corporation (PSALM).
distribution The peso eventually
concessionaires,
of the
phase 1990s.
in the The Asian
second half ofFinancial
the 1990s. Crisis 1997 adversely depreciation
TheinAsian resulting in also severely
buyout and impacted one of the
re-privatization.
affected
Financial the in
Crisis government’s
1997 adversely exposure
affected to the BOT projects in MWSS water distribution concessionaires, eventually
two ways. exposure
government’s The large to pesothe depreciation
BOT projectsmeant in twothat NPC’s resulting
Otherinprojects
buyout undertaken
and re-privatization.
after the first phase of the PPP
take-or-pay
ways. contracts,
(1) The large mostly denominated
peso depreciation meant that in US dollars, program became problematic. Take for example the MRT3
ballooned
National Power dramatically
Corporation’s in peso(NPC) terms. NPC, however, was Other
take-or-pay projects
project. Theundertaken
governmentafter the first 15
guaranteed phase of the
percent equity
not ablemostly
contracts, to passdenominated
on the higherinforeign exchange costs fully PPPreturns
US dollars, program became
in dollar problematic.
terms Take sponsors
to the project for example while tariffs
ballooned dramatically
and immediately in peso terms. NPC, however,
to consumers. the were
MRT3highlyproject. The government
subsidized. guaranteed
This resulted 15 fiscal
in a heavy
was not able to pass on the higher foreign exchange percent
burden equity
which returns in dollar
continues terms
to the to the project
present. Another are the
costs
On fully and immediately
the other to consumers.
hand, the economic recession resulted in a sponsors
(2) Worse, allegedwhile tariffs were
irregularities andhighly subsidized.
discrepancies This the bid
between
theweaker
economic economic
recession growth
resultedthanin had assumed in the resulted
been economic
weaker awardinand a heavy fiscal burden
commercial franchisewhich continues
in US$300 to Ninoy
million
growth than had
projections forbeen assumed
electricity in the Lower
demand. projections for
electricity the Aquino
present.International
Another areAirport
the alleged
(NAIA)irregularities
terminal 3. This resulted
consumption
electricity demand. resulted
Lower in electricity
excess power capacity which NPCandindiscrepancies
consumption the Supremebetween the bid
Court voiding theaward
contractand and a lengthy
was committed
resulted in excess power to pay capacity
for the take-or-pay
which NPC contracts
was whethercommercial
litigation franchise
which hasinnot US$300 million Ninoy
been settled.
they were
committed to dispatched
pay for the or created stranded costs, Aquino International Airport (NAIA) terminal 3. This
not. This contracts
take-or-pay
estimated
whether they at PhP74.3
were billion and
dispatched stranded
or not. debts of PhP2.45resulted
This created A World in theBankSupreme
countryCourt
studyvoiding
in 2005the notedcontract
the involvement
billion (incurred
stranded when NPC
costs, estimated had to borrow
at US$1.68 to cover its
billion and andofa takeover
the private of sector
the project from the had dropped from a
in infrastructure
operating
stranded debtsandoffinancial
US$55.48 losses).
millionThe stranded
(incurred when costs and concessionaire
peak of six percentPiatco, and a lengthy
of gross litigation
domestic which
product (GDP) in
NPC had to borrow
stranded to cover its
debts eventually operating
required restructuring of the has1998
the and not beento one settled.
percentTerminal
by 2002. 3 became
The World fullyBank observed
powerlosses).
financial sector and Thethe privatization
stranded of NPC
costs and under the the operational
stranded that many in August 2014 after Takenaka
of the controversial projectsCorp., the
were unsolicited
debts eventually
Electric Powerrequired
Industrythe restructuring
Reform Act (EPIRA) of the of 2002 which construction
proposals,contractor completed
and that the framework the for
rehabilitation
vetting unsolicited
transferred
power sector and the the
assets and liabilities
privatization of NPCof NPC
under the Power works
tothe in the airport
proposals was vaguewhichandwas originally
gave a lot ofconstructed
leeway for
theSector
Electric Powerand
Assets Industry Reform
Liabilities Act (EPIRA)
Management of
Corporation in 2002. The arbitration proceedings however
corruption.
2002(PSALM).
which transferred the assets and liabilities of between the German firm Fraport, the majority
Philippines
Under Under
the nethe
w new framework,
framework, the govtheernment
government is willing
is willing to to
assumeassume regulator
regulator y riskybut
riskwill
buttransf
will transf er commercial
er commercial risks risks
to to
private sector. T he national government
private sector. The national government has also been has also been
moremore sparing
sparing in proinviding
providing performance
performance undert undertakings
akings or or
guarantees
guarantees on the onobligations
the obligations
of goof government
vernment agencies
agencies and and
corporations
corporations not to
not only only to avoid
avoid incurthe
incurring ringfiscal
the fiscal
burdensburdens
as in as
theinpre
thevious
previous projects
projects but as
but also also
aw asaya to
way to take
take
advantadvant
age ofage
theofnethe
w ne w confidence
confidence and positive
and positiv investor
e investor
perceptions of the countr y’s economic standing and and
perceptions of the country’ s economic standing
prospects.
prospects.
The govTheernment
government has adopted
has also also adopted various various
modes modes
of PPP of PPP
structstruct
ures ures
outside outside
of theofusual
the usual
BOT BO T or build-lease-transfer
or build-lease-transf er
owner in Piatco continues to be pending (BLinT)(BL
to T)
the to include
include hybrid hybrid
structstruct
ures ures
where
commercially where theate
theattractive;
priv private
sector sector
(iii) PPP mode is the
International Centre for Settlement of Investment is responsible
is responsible terms for
for civil civil
for
w orks wand
approvalorks
mostbyand
the the the implementing
NEDA
implementing
viable option Investment
for agency agency
Coordination
the government to
as in theDisputes
previous (ICSID)
projectsinbut also as a way to (IA)
Singapore. takeis(IA) is responsible
responsible Committee for (ICC)
operation
for operation or
andNEDA
undertake and the maintenance
Cabinet
maintenance project and(O&M),
Committee.
(O&M), or The
results or better
in PPP value
advantage of the new confidence and positive investor vice-vvice-v
ersa,ersa,
andCenterand Build
Build alsoTransfer
Transferacts for
with awith
as money; deferred
non-voting
deferred (iv)payments.
risks payments.
are appropriately
adviser to the IAs inallocated;
the
perceptions of the country’s economic
A World Bank country study in 2005 noted the standing and Different
Different t ypes t ypes
bid
of and
bid of bid
award
parameters (v)
parameterstariffs
process.be yond are
beyond affordable.
the the
typical During
typical the cooperation
prospects.involvement of the private sector in infrastructure “lowest“low est
cost” hadcost”
bid are bidbeing
are being period,
applied,
applied, PPP including
including projects are
highest constructed and/or
highest
operated yusing an output-based specification
dropped from a peak of six percent of premium grosspremium offered
domestic offered
“The andlothe
andimplementing
the west lowest viabilit
agencies
viabilit yfinancing
gap
gapidentify financing
priority projects which
The government has also adopted various modes of(V
(VGF) GF)The
PPP required,
required, shall
etc. be etc.
The VThe
included
GF is approach.
VGF is being
in the
being 3 Concessionaires
Public
adopted adoptedfrom from
Investment are
other
otherProgram required to follow
(PIP).
product (GDP) in 1998 to one percent by 2002.
structures outside ofobserved
the usual that BOTmanyor build-lease-transfercountries
whicThe which PIP hav e used
contains thetheMinimum
approach
the projects, Performance,
to ensure Standards,
programs and activities that &
World Bank of thecountries
controversial h hav e used the approac
Specifications
h to ensure
and keythe performance
(BLT) to include
projectshybrid
were structures
unsolicitedwhere the private
proposals, and
1 affordabilit y of consumer tarif
sector
that they of will
affordabilit be implemented
consumer tariffs while fsbywhile making
the agencies
making project
within
the project the indicators
commercially viable and defined
attractive intoeach project’s
investors. concession
is responsible for civil
framework forworks
vetting and the implementing
unsolicited agency
commercially
proposals was medium-term.
viable and at Note
tractive that
to projects
investors. selected should be
agreement.”3
(IA) is responsible for operation and maintenance
vague and gave a lot of leeway for corruption. To (O&M), or consistent and aligned with the goals and objectives of the
vice-versa, and Build Transfer with deferred
address this, the World Bank suggested2 that the payments.
The The
gov gov
ernment ernment
Philippine
has has reorganized
Development
reorganiz ed the the
Plan.
former former
The
BOT BOT
PIP Center,
also
Center, indicates the
previously attached The thecountry’s initial experience andin4 PPP (whether
projects
Differentgovernment
types of bid try parameters
to reinstate beyond the typical
a process previously
for attracting attached to thetoDepartment
procurement Department
method of eachof Trade of Trade
project
and identified
Industr y (DTI), yielded
intoPPP
the the
PPP Center following attacto “lessons”:
hed
“lowest cost”
privatebid are being applied,
investments including and
on a transparent highest
Industr y (DTI),
competitive PPP
into, official
the development
Center attacassistance
hed thetoNational
the National
[ODAs], or traditional
premiumbasis
offered and the
instead lowest viability
of through unsolicitedgap bids.
financing Economic and
A key and procurement).
Economic Development
Development1.Authority Authority (NEDA). (NEDA).The The PPP
PPP
Be judicious in providing guarantees and
(VGF) required,
condition etc.forThe
thisVGFshiftiswould
being be adopted from
Center
to address Center
theis theisne
other the xusnexus
and theandmain
the maindriverdriv of erthe ofPPP
the PPP
performance undertakings, particularly for those
countriesweaknesses
which have in used the approach to ensure Program.
Program.
the planning, preparing, and executing The TheT
PPPhe PPP
PPP Center
Center
Center w works
aims
orks withto with
roll-out
IAs to IAs to Policy
the
prepare prepare Guidelines on
risks which the private sector is in a better
affordability of consumer tariffs while making
of private infrastructure projects and even basic the well-struct
project
well-struct ured ured
Pipeline
PPP PPP projects
Development,
projects and acts as a tec hnical
position to bear, such as market demandtheir
and acts to
as aid
a agencies
tec hnical in adviser
mapping
adviser out and
commercially viable and attractive to investors.
requirements such as a sufficient budget and the project pipeline and
foreignpriority
exchange projects. ”
depreciation.
skills to prepare quality pre-investment studies for 2. Prefer solicited proposals on projects which are
The government
projects hasthatreorganized
are likely to the former
attract BOTinvestors.
private Center, 1 The PPP Center aligned manages to thethe4national
Project government
Development and
programs
previously attached to the Department of Trade and Monitoring Facility (PDMF)
and priorities. which is the recipient of a
Industry (DTI), into“PPP theprojects
PPP Center shouldattached to the National
be well-prepared, highly revolving fund 3.from ODA afunds
Establish clear for andengaging
transparent consulting
process for
Economic and Development
bankable, andAuthority
should undergo(NEDA). The PPP
competitive firms in providing expertise
project selection in project structuring and
and approvals.
Center is the nexus and(for
bidding thesolicited
main driver of the
projects) or PPP
Swiss challengeinvestment2 4. Build up capacity for preparing solicited projects
requirements.
Program. The PPP Center works
(for unsolicited with IAs
projects). We toputprepare
high regard in through business cases, pre-feasibility studies,
5
well-structured PPP contracts
projects and prepared
acts as in a transparent
technical advisermanner,“PPP is more than bidding
just apackages,
means toetc. address the lack of
promote a level playing field, and can withstand
in the project cycle of project structuring, setting minimum public funds. More than just a financing scheme, PPPs
legal scrutiny.
performance standards Before a project
and specifications, andcancontract
be undertaken It is in sector
bring in private the context innovation of such to lessons
implement thatcritical
the
through PPP, there are certain criteria that must infrastructure government
projects.sought Through to re-launch
PPP, private thesector
PPP Program in
be complied with such as the following: (i) 2010.
economic viability; (ii) financially and
1 World Bank
1 (2005). The Philippines. Meeting Infrastructure Challenges. Infrastructure Sector Department, East Asia and Pacific Region.
World Bank (2005). The Philippines. Meeting Infrastructure Challenges. Infrastructure Sector Department, East Asia and Pacific Region.
2 A Swiss challenge
2 is challenge
a form of public procurement which requires therequires
government agency which has received an received
unsolicited
A Swiss is a form of public procurement which the government agency which has anproposal to publish
unsolicited proposalthe
to bid
publish the bid
and invite third parties
and inviteto match
third or exceed
parties it. or exceed it.
to match
3
WB (2005)3 op. cit. Chapter
NEDA-PPP 4 “Maximizing
Center the benefits
written response of Private
to KPMG Sector Participation”
questionnaire, 18 July 2014.

4 WB (2005)4 op. cit. p. 80.
5
WB (2005) op. cit. Chapter 4 “Maximizing the benefits of Private Sector Participation”
WB (2005) op. cit. p. 80. Infrastructure In-depth: Philippines
Infrastructure Guide: Philippines | 3 | 26
The current edition of the Philippine PPP Program has works with IAs to prepare well-structured PPP
made significant strides since its inception, having projects and acts as a technical adviser in the project
achieved a sound policy framework, institutional cycle of project structuring, setting minimum
reforms, robust pipeline of PPP projects, and performance standards and specifications, and
Under the newimplementing
framework, the government is willing to contract terms “Theforimplementing
approval by the agencies
NEDAidentify
Investment priority
well-capacitated agencies.
assume regulatory risk but will transfer commercial risks toCoordination projects
Committee (ICC) or NEDA Cabinet Public
which shall be included in the
private sector. The national government has also been Investment
Committee. The PPP Center Program (PIP).
also actsThe
as aPIP contains the
Under the new framework, the government is willing
more sparing in providing performance undertakings or projects, programs and activities
non-voting adviser to the IAs in the bid and award that will be
to assume regulatory risk but will transfer
guarantees on the obligations of government agencies and process. implemented by the agencies within the
commercial risks to the private sector. The national
corporations not only to avoid incurring the fiscal burdens medium-term. Note that projects selected should be
government has also been more sparing in providing
as in the previous projects but also as aonway consistent and aligned
agencieswith the goals
priorityand objectives
performance undertakings or guarantees theto take “The implementing identify
advantage of the new confidence and positive investor of the Philippine Development
projects which shall be included in the Public Plan. The PIP also
obligations of government agencies and corporations
perceptions of the country’s economic standing and indicatesProgram
Investment the procurement
(PIP). The method
PIP contains of each
the
project
not only to avoid incurring the fiscal burdens as in
prospects. identified
projects, (whether
programs and PPP, official
activities that development
will be

previous projects but also as a way to take advantage

assistanceby[ODAs],
implemented the or traditional
agencies within procurement).
the
of the new confidence and positive investor

The government
perceptions has also adopted
of the country’s economic various
standing modes
and of PPP medium-term. Note that projects selected
structures outside of the usual BOT or build-lease-transfer Thebe
should PPP Center aims
consistent to roll-out
and aligned withthethePolicy
goals
prospects.
(BLT) to include hybrid structures where the private sector andGuidelines
objectives of onthe Philippine
Pipeline Development
Development, to
aid agencies
is responsible for civil works and the implementing agency Plan.
inThe PIP also
mapping outindicates the procurement
their project pipeline and priority
The government has also adopted various modes of method of each
(IA) is responsible forofoperation projects. ”
project identified (whether PPP,
PPP structures outside the usualand BOT maintenance
or (O&M), or
official development assistance [ODAs], or
vice-versa, and Build

build-lease-transfer (BLT)Transfer withhybrid
to include deferred payments.
structures
Different types of bid parameters beyond theworks
typical traditional procurement).
The PPP Center manages the Project Development and

where the private sector is responsible for civil
“lowest cost” bid are being applied, including highest Monitoring Facility (PDMF) which is the recipient of a
and the implementing agency (IA) is responsible for The PPP Center
premium offered and the lowest viability gap financing revolving fund fromaimsODAtofundsroll-out forthe Policy consulting
engaging
operation and maintenance (O&M), or vice-versa, and Guidelines on Pipeline Development, to aid
(VGF) required, firms in providing expertise in project structuring and
Build Transfer withetc. The VGF
deferred is beingDifferent
payments. adopted from other
agencies in mapping out their project pipeline
countries which have used the approach to ensure investment requirements.
types of bid parameters beyond the typical “lowest and priority projects.” 6
affordability of consumer tariffs
cost” bid are being applied, including highest while making the project
commercially “PPP is more than just a means to address the lack
premium offered,viable
lowest and attractive
viability gapto investors.
financing (VGF) The PPP Center also manages the Project
of public funds. More than just a financing scheme,
required, etc. The VGF is being adopted from other Development and Monitoring Facility (PDMF) which
The government has reorganized the former BOT Center, PPPs bring in private sector innovation to implement
countries which have used the approach to ensure is the recipient of a revolving fund from ODA funds
previously attached to the Department of Trade and critical infrastructure projects. Through PPP, private
affordability of consumer tariffs while making the for engaging consulting firms in providing expertise in
Industry (DTI), into the PPP Center attached to the National sector expertise and efficiency would enable us to
project commercially viable and attractive to project structuring and investment requirements.
Economic and Development Authority (NEDA). The PPP build high-quality infrastructure services at a faster
investors.
Center is the nexus and the main driver of the PPP
pace.
“PPP is more than just a means to address the
Program. The PPP Center works
The government has reorganized the former BOT with IAs to prepare
lack of public funds. More than just a financing
well-structured AsidePPPs
frombring
efficiency gains, PPPs allow the proper
Center, previously PPP projects
attached andDepartment
to the acts as a technical
of adviser scheme, in private sector innovation
in the project cycle of project structuring, setting minimum allocation of risks to the party
to implement critical infrastructure projects. that is best able to
Trade and Industry (DTI), into the PPP Center
performance standards and specifications, and contract manage and assume the
Through PPP, private sector expertise and consequences of the risk
attached to the National Economic and Development
terms for approval by the NEDA Investment Coordination involved.
efficiency wouldPPPs enable
enable us thebuild
to government
high-quality to take on
Authority (NEDA). The PPP Center is the nexus and
fewer risks due to at appropriate risk allocation with
theCommittee
main driver(ICC) of the or PPP
NEDA Cabinet Committee.
Program. The PPP Center The PPP infrastructure services a faster pace.
Center also acts as a non-voting adviser to the IAs in the the private partner.”
bid and award process.
6
NEDA-PPP Center written response to KPMG questionnaire, 18 July 2014.
Philippines
(GOCCs).
Aside from efficiency gains, PPPs allow the To ensure the continuity of the revised PPP program,
PPP projects, especially those that
proper allocation are supported
of risks to the partybythat
PDMF ,
is best  Executive Order No.
the government 136, s. 2013,institutional
is introducing allowed for measures
the
undergo a Value able
for Money
to manage (VfM)
andanalysis
assumeatthetheconsequences
project creation of a PPP Governing Board as the
that would sustain the reforms beyond the current
development stage to risk
of the determine
involved.if PPPs
a project is more
enable viable
the government policy-making body for all PPP-related concerns, and
administration.
to be undertakentothrough
take on PPP
fewerorrisks
through other
due to appropriate risk strengthening the monitoring of projects by
authorizing the procurement of independent
allocation
procurement methods. If awith the private
project taken”7forward as
partner.
is to be  The Implementing Rules and Regulations (IRR)
consultants through the PDMF.
a PPP, it must be demonstrated that it will deliver better of the existing BOT Law and NEDA have also
VfM thanPPP projects, especially
the traditional method ofthose thatthrough
delivery are supported by issued the Revised Joint Venture Guidelines for
 The Investment Coordination Committee-Cabinet
governmentPDMF , undergo a Value
procurement, and thatfor the
Money (VfM) analysis at
government's government-owned and controlled corporations
Committee (ICC-CC) also introduced reforms in the
resourcestheareproject
managed development stage to
with due regard fordetermine
economy, if a (GOCCs).
appraisal of PPP projects which effectively and
project is more
efficiency and effectiveness. viable to be undertaken through PPP efficiently streamlines the process and delineates the
or through other procurement methods. If a project is  Executive Order No. 136, s. 2013, allowed for
roles of concerned agencies. It created the
To enhanceto be
thetaken forward and
transparency as a accountability
PPP, it must beof the the creation of a PPP Governing Board as the
ICC-Technical Working Group (ICC-TWG) for PPP
demonstrated
approval process, a PPPthat it will deliver
Governance Boardbetter
has VfM
beenthan the policy-making body for all PPP-related concerns,
projects, which consists of (i) NEDA: for alignment
institutedtraditional
consistingmethod of deliveryofthrough
of the principals the majorgovernment
agencies and strengthening the monitoring of projects by
and contribution to the national, regional or local
procurement, and that authorizing the procurement of independent
involved in the PPP process suchtheas government's
NEDA, Department resources
of government plans or programs, and socio-economic
consultants through the PDMF.
Finance (DOF), and the Department of Budget and efficiency
are managed with due regard for economy, analysis; (ii) DOF: for risk structure and allocation of
Managementand effectiveness.
(DBM) the project, fiscal requirements and government
 The Investment Coordination
undertakings, the project’s financial internal rate of
Committee-Cabinet Committee (ICC-CC) also
The BOT ToLaw enhance
(RA 7718) the istransparency
currently being and reviewed
accountability
by of return, and its impact on fiscal sustainability through
introduced reforms in the appraisal of PPP
governmentthe agencies
approval process, a PPPworking
and legislative Governance Board has
committees assessment of direct and contingent government
projects which effectively and efficiently
to updatebeen instituted
the legal consistingframework
and regulatory of the principals
on issuesof the costs; (iii) Department of Environment and Natural
streamlines the process and delineates the roles
major
such as the agencies
maximum involved insupport
government the PPPfor process such as
a project, Resources- Environmental Management Bureau
of concerned agencies. It created the
NEDA, Department of Finance (DOF), and the (DENR-EMB): for the environmental impact of the
VGF as a mode of subsidy, unsolicited proposals, joint ICC-Technical Working Group (ICC-TWG) for PPP
project; and (iv) PPP Center: for VfM analysis,
ventures,Department
etc. The PPPofCenter Budget is and Management
diligently pushing (DBM).
for the projects, which consists of (i) NEDA: for
commercial financial viability, bankability, and project
enactment of the PPP Act, which amends the existing BOT alignment and contribution to the national,
structuring).The PPP Center also acts as the PPP
The BOT
Law, in order Law (RA
to ensure the 7718) is currently
sustainability of thebeing
PPPreviewed regional or local government plans or programs,
Secretariat for the ICC-TWG and ICC-CC for PPP
Program.by government
It also aims to have agencies and PPP
a robust legislative
pipelineworking
with at projects.
and socio-economic analysis; (ii) DOF: for risk
committees
least 50 projects to update
in various stagestheoflegal
the and regulatory
project cycle by structure and allocation of the project, fiscal
framework
end of 2016; 15 PPP on issues signed;
contracts such as five the maximum
projects requirements and government undertakings, the
 Through the enhanced appraisal process which has
government support for a project,
completed; and at least 10 infrastructure projects VGF ashanded
a mode of project’s financial internal rate of return, and its
been in place since January of this year, approvals
subsidy,
over to the privateunsolicited proposals,and
sector for operation jointmaintenance.
ventures, etc. The impact on fiscal sustainability through
have been secured for six projects from the ICC-CC,
PPP Center is diligently pushing for the enactment of assessment of direct and contingent
and four projects from the NEDA Board. The average
the PPPalso Act,initiated
which amends thefor
existing BOT Law, in government costs; (iii) Department of
The government a process managing turnaround time for the appraisal and ICC-CC approval
order to ensure Environment and Natural Resources-
contingent liabilities (CLs)the thatsustainability
may materialize of the
fromPPPPPP of projects is one month from the date of submission
Environmental Management Bureau
Program.
projects and how theseIt alsoCLsaims to have
would a robust PPPfor
be appropriated pipeline
and by the IAs. It is also notable to highlight the
(DENR-EMB): for the environmental impact of
funded. As an interim measure, the government has the
with at least 50 projects in various stages of importance of the conduct of clarificatory and
the project; and (iv) PPP Center: for VfM
project cycle
included provisions forbyCLs endin of
the2016; 15 PPP contracts
Unprogrammed Fund of reconciliation meetings prior to the approval of
analysis, commercial financial viability,
signed;
PhP20 billion in thefiveGeneral
projectsAppropriations
completed; and Actatofleast
2014.10 projects such that project issues are threshed out and
bankability, and project structuring.The PPP
infrastructure projects handed over to the private resolved prior to presentation to the ICC-CC.
Center also acts as the PPP Secretariat for the
The Centersector
also for operation
advocates and reforms
policy maintenance.
to improve the ICC-TWG and ICC-CC for PPP projects.
 Aside from these, the government will soon be
legal and regulatory frameworks governing the PPP
issuing the IRR on alternative dispute resolution
Program.The government also initiated a process for managing  Through the enhanced appraisal process which
(ADR); the PPP Manual for National Government
contingent liabilities (CLs) that may materialize from has been in place since January of this year,
Agencies (NGAs); policy guidelines on pipeline
To ensurePPPthe projects
continuity andofhow these CLs
the revised PPPwould be the
program, approvals have been secured for six projects
development; and other sector-specific PPP
governmentappropriated
is introducing for and funded. As
institutional an interim
measures thatmeasure, from the ICC-CC, and four projects from the
guidelines to continuously improve the PPP policy
the government
would sustain the reformshas included
beyond provisions for CLs in
the current NEDA Board. The average turnaround time for
environment.
the Unprogrammed Fund of US$452.93 million in the
administration. the appraisal and ICC-CC approval of projects is
General Appropriations Act of 2014. one month from the date of submission by the
 Cognizant of the important role of the local
 the Implementing Rules and Regulations (IRR) of the IAs. It is also notable to highlight the importance
government units (LGUs) in achieving sustainable
The PPP
existing BOTCenter also
Law and advocates
NEDA policy
have also reforms
issued the to of the conduct of clarificatory and reconciliation
development and inclusive growth, the government
Revised
improveJoint
theVenture Guidelines
legal and for frameworks
regulatory meetings prior to the approval of projects such
government-owned
governing the PPP and controlled corporations
Program. that project issues are threshed out and resolved
prior to presentation to the ICC-CC.
7 Ibid.
Infrastructure In-depth: Philippines | 28

Infrastructure Guide: Philippines | 3
 Aside from these, the government will soon be 4 Projects with Live Bidding
issuing the IRR on alternative dispute resolution  Mactan-Cebu International Airport (MCIA)
(ADR); the PPP Manual for National Government Passenger Terminal Building [For issuance of
Agencies (NGAs); policy guidelines on pipeline Notice of Award]
development; and other sector-specific PPP  Cavite-Laguna Expressway
guidelines to continuously improve the PPP  LRT Line 1 Cavite Extension and Operation and
policy environment. Maintenance
 Integrated Transport System - Southwest
 Cognizant of the important role of the local Terminal
government units (LGUs) in achieving
sustainable development and inclusive growth, 1 NEDA Board-Approved
the government advocates the mainstreaming of  Bulacan Bulk Water Supply Project
PPPs at the local level through the PPP Center’s
Capacity Building Program for LGUs. Further, the 4 For Evaluation of Relevant Bodies
Internship Program and Partnerships with  Operation and Maintenance of the Laguindingan
selected Local Capacity Building Institutions Airport
(LCBIs) have been identified as short-term and  Enhanced Operation and Maintenance of the
medium-term strategies of the PPP Center in New Bohol (Panglao) Airport
providing assistance to LGU-PPP programs and  New Centennial Water Supply Source Project
projects. (See Chapter 6)
 Another important initiative is the  Operation and Maintenance of LRT Line 2
standardization of PPP contracts, aimed at 1 For Finalization of Project Structure
streamlining the drafting of concession  Davao Sasa Port
agreements and creating templates for
implementing agencies by incorporating the 11 Projects with On-going Studies
tested procedures and lessons learned from  Operation and Maintenance of the Puerto
previous PPP contracts. Princesa Airport
 Integrated Luzon Railway Project
 The PPP Center is also introducing probity  Mass Transit System Loop
management in PPP projects to bolster  Regional Prison Facilities through PPP
transparency and integrity in the existing PPP  Laguna Lakeshore Expressway
procurement process and also increase the Dike-Calamba-Los Baños Toll Expressway
private sectors’ confidence in the bidding  Central Luzon Link Expressway Phase II
process.  Operation and Maintenance of Iloilo, Davao, and
Bacolod Airports Project
The government has enumerated a pipeline of  Improvement and Operation and Maintenance of
projects based on an updated Philippine Kennon Road and Marcos Highway
Infrastructure Plan (but which includes some projects  Motor Vehicle Inspection System Project
which have been on the drawing board for years)  LRT Line 1 Extension to Dasmariñas Project
which will be bid out as solicited projects. The  Upgrading of the San Fernando Airport
projects are in diverse sectors such as expressways,
airports, public school classrooms, hospitals, bulk 5 For Procurement of Consultants to Conduct
water, and urban railways. Pre-investment Studies
 Modernization of the National Center for Mental
Pipeline of projects Health
 Plaridel Bypass Toll Road
6 Awarded Projects  Manila Bay-Pasig River-Laguna Lake Ferry
 Daang Hari-SLEx Link Road
System
 PPP for School Infrastructure Project (PSIP)
 Batangas-Manila (BatMan) 1 Natural Gas Pipeline
Phase I  C-5 Transport Development Project
 NAIA Expressway (Phase II) Project
 PPP for School Infrastructure Project (PSIP) 3 Other Projects for Implementation
Phase II  NLEx-SLEx Connector Road
 Modernization of the Philippine Orthopedic  Skyway Stage 3 Project
Center  MRT Line-7
 Automatic Fare Collection System
29 | Infrastructure In-depth: Philippines

13 Projects under Conceptualization/ Philippine Development Plan, proper allocation of
Development risks between the government and the private
 Civil Registration System – IT Project Phase II sector, with the government veering away from
 Central Spine RORO assuming risks in market demand, revenues, and
 Ferry Passenger Terminal Buildings Development returns.
 Operation and Maintenance of Clark Airport
 Metro Cebu Expressway Project The current PPP approach also pursues a more
 Tagum-Davao-General Santos High-Standard transparent mode of providing government capital
Highway support in the form of the Viability Gap Funding as
 C6 Expressway (South-East, East, and North the bid parameter which prompts investors to
Sections) disclose efficient level of government support for
 Modernization of the Region 1 Medical Center affordable services and commercially viable and
 PhilHealth Information Technology Project bankable projects.
 Manila Heritage and Urban Renewal Project
 Tri-Medical Complex (including Modernization of
The prerequisites for moving in these directions
the Jose Fabella Memorial Hospital Project)
 R-7 Expressway
include capacity building for project development and
 NLEx East preparation, where important progress has been
made in the PPP Center and implementing agencies,
Source: Public-Private Partnership Center publication on PPPs @ PH and enhancing the PPP framework through the PPP
Investment Opportunities February 2014
government board and revisions of the BOT law now
While the number of PPP projects that have been pending in Congress.
rolled out for bidding or implementation has been
lower than initial expectations, the current edition of
the PPP program arguably presents a significant For further information, please contact:
“proof of concept” of the PPP approach in enlisting
the participation of private investors in infrastructure Paul Patrick R. Afable
development. Advisory Senior Manager
Taking into account important lessons from the
previous BOT projects the current PPP program has T: +63 2 885 7000 ext. 767
emphasized solicited projects developed by the E: pafable@kpmg.com
government consistent with the priorities of the
The Challenges
Addressing the of an
emerging global
Challenges of an
city MetroGlobal
Emerging transport
City

Ma. Cynthia C. Hernandez, Advisory Director, KPMG in the Philippines
TheThe National
National Economic
Economic Development
Development Authority Authority Board,
Board, chaired chairedBenigno
by President by President
Aquino Benigno Aquino
III, approved in III,
early September
approved 2014 aSeptember
in early long term "Dream
2014Plan"
a longfor term
the transport
"Dream infrastructure of Mega
Plan" for the Manilainfrastructure
transport that aims to of
resolve
Mega the heavy congestion
Manila that aims frequently
to resolveexperienced
the heavybycongestion
Metro Manila commuters.
frequently This plan promises
experienced to Manila
by Metro
create a more liveable Greater Capital Region (GCR) with higher mobility and connectivity by
commuters. This plan promises to create a more liveable Greater Capital Region (GCR) with higher2030.
mobility
According to aand connectivity
recent by 2030.
Japan International Cooperation Population growth and density
Agency (JICA) study the population of Metro Manila Between 1980 and 2010, the population in Metro
According to a recent Japan International Cooperation
is expected to reach 13.904 million by 2030, from
Population growth and density
Manila doubled from 5.9 million to 11.9 million while
Agency (JICA) study the population
11.858 million in 2014. The population in the adjoining
of Metro Manila is Between 1980 and 2010, the population in Metro Manila
the rate of growth has slowed down from 2.95
expected to reach 13.904 million by 2030, from 11.858 doubled from 5.9 million to 11.9 million while the rate of
provinces of Bulacan, Rizal, Cavite and Laguna percent annually in the 1980s to 1.79 percent in
million in 2014. The population in the adjoining growth has slowed down from 2.95 percent annually in the
(BRLC) is expected to reach 15.486 million by 2030, 2000-2010. This is lower than the natural rate of
provinces of Bulacan, Rizal, Cavite1 and Laguna (BRLC) is 1980s to 1.79 percent in 2000-2010. This is lower than the
for a total population in Mega Manila of around 30 increase for the whole country growth rate of 1.9
expected to reach 15.486 million by 2030, for a total natural rate of increase for the whole country growth rate
million, making it one of the largest urban areas in the percent – an indicator of some out-migration from
population in Mega Manila
1
of around 30 million, making of 1.9 percent – an indicator of some out-migration from the
world. 2
the core capital region. The population density of
2 core capital region. The population density of 191 persons
it one of the largest urban areas in the world. 191 persons per hectare (ha) in Metro Manila was 70
per hectare (ha) in Metro Manila was 70 times the national
The JICA study observes that the complex social, times the national population density of 2.7 persons
population density of 2.7 persons per hectare. As a
The JICAand
economic, study observes
public sector that the complex
management social,
problems per hectare. As a comparison, this is higher than the
comparison, this is higher than the population density of
economic,
besetting Metro andManila
publiccan
sector management
be boiled down toproblems
five population density of Seoul at 170, Tokyo at 131,
Seoul at 170, Tokyo at 131, Jakarta at 131 and Shanghai at
besetting
major issues:Metro Manila can be boiled down to five major Jakarta at 131 and Shanghai at 124.
124.
issues:1. Uncontrolled urbanization
2. 1. Uncontrolleddegradation
Environmental urbanizationand hazard risk For the adjoining BRLC provinces, population growth
For the adjoining BRLC provinces, population growth
3. 2.LackEnvironmental
of affordable degradation
housing and hazard risk averaged 4.7 percent annually in the 1980s, rising to
averaged 4.7 percent annually in the 1980s, rising to 5.9
4. 3. Lackcongestion
Traffic of affordable housing 5.9 percent in the 1990s, and tapered to 4.0 percent
percent in the 1990s, and tapered to 4.0 percent in
5. 4. Traffic congestion
Concentrated spatial structure in 2000-2010. These growth rates, far in excess of
2000-2010. These growth rates, far in excess of the natural
5. Concentrated spatial structure the natural rate of growth, indicate high rates of
rate of growth, indicate high rates of in-migration from
Given the importance of the region to the economy in in-migration from either the National Capital Region
either the National Capital Region (NCR) or from the rest of
Given
terms of the
share importance of the
in population, region
gross to the economy
domestic product in (NCR) or from the rest of the country. By 2030,
the country. By 2030, Metro Manila is expected to
terms
(GDP), of shareand
industry, in population,
services, the gross domestic
manner product
in which Metro Manila is expected to accommodate an
accommodate an additional two million persons while
(GDP),
these issuesindustry, and services,
are managed the manner
will make in which these additional two million persons while BRLC will
a significant BRLC will absorb an additional six million. Within Metro
issues
impact onare themanaged
country as will make a significant
a whole. These issues impact
alsoon the absorb an additional six million. Within Metro Manila
Manila itself, densities in some cities are even higher by an
country
provide an as a whole.
agenda These issues
for integrating plansalso
andprovide
programsan agenda itself, densities in some cities are even higher by an
order of magnitude. The highest density is in the City of
so for
thatintegrating plans and
the interrelated programs
problems so that
in Metro the interrelated
Manila are order of magnitude. The highest density is in the
Manila proper at 662 persons per hectare. This is followed
problemsinina Metro
addressed coherentManila are addressed in a coherent
manner. City of Manila proper at 662 persons per hectare.
by Mandaluyong at 353, Pasay at 281, Navotas at 280 and
manner.
1 City of
1 Manila
City of and
Manila
theand
cities
theofcities
Caloocan,
of Caloocan,
Las Piñas,
LasMakati,
Piñas, Makati,
Malabon, Malabon,
Mandaluyong,
Mandaluyong,
Marikina,Muntinlupa,
Marikina,Muntinlupa,
Navotas,Navotas,
Parañaque,
Parañaque,
Pasay, Pasig,
Pasay,Quezon
Pasig, Quezon
City, San City,
Juan,
SanTaguig,
Juan,and
Taguig,
Valenzuela,
and Valenzuela,
as well asas the
wellMunicipalit
as the Municipality
y of Pateros.
of Pateros.
2 Japan2International
Source: JapanCooperation
International Agency
Cooperation
Presentation
Agency onPresentation
Roadmap foron Transport
Roadmap Infrastructure
for TransportDevelopment
InfrastructureforDevelopment
Metro Manilafor
and
Metro
Its Surrounding
Manila and
Areas
Its Surrounding
(Region III and Areas
Region
(Region
IV-A)III
Summary
and Region
of the
IV-A)
Outputs
Summary September
of the Outputs
2013 September 2013
Philippines
This is followed by Mandaluyong at 353, Pasay at 281, Navotas at 280 2030 Do Nothing
This is followed by Mandaluyong at 353, Pasay at Under a “do nothing” scenario, the transport cost of
and Caloocan at 267. The cities which were growing higher than the Volume/ Capacity Ratio
281, Navotas at 280 and Caloocan at 267. The cities traffic in Metro Manila will (beyond
V/C > 1.50 increase from US$54.35
capacity)
rate of natural increase were Caloocan, Muntinlupa, Parañaque, and
which were growing higher than the rate of natural million per day toV/C
US$135.88
= 1.001.50
– million percapacity)
(at & above day by 2030,
Pasig. 3
increase were Caloocan, Muntinlupa, Parañaque, and while in the peri-urban BRLC
V/C = 0.751.00
– this will capacity)
(reaching increase from
Pasig. According to the JICA study, at the barangay US$22.65 millionV/Cper<day
0.75to(below
US$79.26 million per
According to the JICA study, at the barangay level, “about 50 percent capacity)
level, “about 50 percent of the people live in day. The volume/capacity ratio in the major
of the people live in high-density barangays (> 300 persons/ha
high-density barangays (> 300 persons/ha population thoroughfares will be 15 times in excess.
population density). If the population growth trend continues, Metro
density). If the population growth trend continues,
Manila’s density will increase from 191 persons/ha to 224
Metro Manila’s density will increase from 191 The economic contribution of transport systems is to
persons/ha.”
persons/ha to 224 persons/ha.” provide efficient connectivity among markets, factory
districts, residential communities, shopping areas,
“The outward rapid urbanization and densification from Metro Manila
“The outward rapid urbanization and densification business districts, recreation areas, schools and
to BRLC and beyond is inevitable. Without policy and planning
from Metro Manila to BRLC and beyond is inevitable. hospitals, ports and airports.
intervention, such urban sprawl will have the concomitant worsening
Without policy and planning intervention, such urban
of the urban blight, environmental degradation, severe housing and
sprawl will have the concomitant worsening of the A transport network facilitates the switching to the
sanitation conditions, and traffic congestion,” says the JICA study.
urban blight, environmental degradation, severe most appropriate mode according to the
housing and sanitation conditions,
3 and traffic characteristics of the payload, e.g. commuters,
Under a “do nothing” scenario, the transport cost of traffic in Metro
congestion,” says the JICA study.
Manila will increase from PhP2.4 billion per day to PhP6.0 billion per
day by 2030, while in the peri-urban BRLC this will increase from
Traffic
PhP1 billion per demand and impact
day to PhP3.5 (Mega
billion per day. Manila)
The volume/capacity
Traffic demand
ratio in the and impactwill
major thoroughfares (Mega
be 15 Manila)
times in excess. 2012 2030 ‘30/’12
2012 2030 ‘30/’12
Traffic demand Metro Manila 12.8 14.5 1.13
Traffic demand Metro Manila 12.8 14.5 1.13
(mil.trips/days)
(mil.trips/days) BRLC* BRLC 6.0 8.0 1.33
6.0 8.0 1.33
Public
Public transport transport
share share in total demand 69%
in total demand 69% 1.00
69% 69% 1.00
Occupancy road space by private vehicles 78% 78% 1.00
Occupancy road space by private vehicles 78% 78% 1.00
Transport cost Metro Manila 2.4 6.0 2.50 Source: Japan International
(PhP bil./day)TransportBRLC
cost Metro Manila 1.0 3.5 3.50 2.4 6.0 2.50 Cooperation Agency
(PhP bil./day)
Metro Manila BRLC GHG 4.79 5.72 1.19 1.0 3.5 3.50 Presentation on Roadmap
Air quality PM 0.014 0.019 1.36 for Transport Infrastructure
GHG 4.79 5.72 1.19 Development for Metro
(mil.tons/year) BRLC Metro Manila 3.20
GHG 4.49 1.40
Manila and Its Surrounding
Air quality PM 0.005 0.010 PM
2.00 0.014 0.019 1.36 Areas (Region III and
*Bulacan, Rizal, (mil.tons/year)
Laguna, Cavite GHG 3.20 4.49 1.40 Region IV-A) Summary of
Source: Japan International Cooperation Agency Presentation on Roadmap
BRLC the Outputs September
PM 0.005
for Transport 0.010
Infrastructure 2.00
Development for Metro Manila and Its
2013
Surrounding Areas (Region III and Region IV-A) Summary of the Outputs
3 September 2013
Area immediately adjoining an urban area.
3
Area immediately adjoining an urban area.
Infrastructure
Guide: Philippines
high bulk low value, low bulk high value, long
distance trips, etc. The transport system interacts Region III
The rest of
Regional Growth Center the country
dynamically with the growth of urban hubs and (Subic-Clark-Tarlac)
central business districts. The transport development  New urban-cove
strategy will be instrumental in influencing the spatial  Green city
 Gateway port/airport
configuration of Mega Manila.
Mega
The JICA study has proposed a short-term strategy Manila
Planned Urban Expansion

for the transport development priorities in the (Bulacan)
 Affordable housing
2014-2016 planning period, and a longer-term agenda
 New Towns
based on a vision for a more viable and livable Mega
Manila. Suburban Rail
Expressway
Specific ideas proposed by JICA are: Metro Manila

 Inner-city developments/revitalization
1. Consider a bigger planning area of a Greater  Rehabilitation of disaster prone areas
Capital Region (GCR) consisting of Metro
Manila, and Region III and Region IV-A.
a. At the GCR level, avoid urban sprawl and Planned Urban Expansion
promote the development of regional (Cavite, Laguna)
growth centers instead while  Affordable housing
 New Towns
strengthening the connectivity between
the region and Metro Manila, and among Region IV-A
the regional growth centers.

b. For Metro Manila, pursue a planned and Regional Growth Center
(Batangas-Lipa-Lucena)
guided expansion of urban areas toward  New urban-cove
the peri-urban provinces of Bulacan and  Gateway port
The rest of
Cavite through integrated public transport the country
and multi-modal network and services.
2. Promote the shift away from the metro-centric Source: Japan International Cooperation Agency Presentation on
Roadmap for Transport Infrastructure Development for Metro Manila and
urban pattern to a hierarchy of multiple urban Its Surrounding Areas (Region III and Region IV-A) Summary of the
centers and hubs, including large new towns Outputs September 2013
that will be countermagnets to the attraction
of Metro Manila. alternative to Manila. Provincial capitals or city
centers such as in Malolos, Tarlac, Cabanatuan,
Five regional clusters are envisioned consisting of: Olongapo, Malolos, Tagaytay, and Calamba will be
1. Metro Manila expected to be centers of sub-regions by providing a
2. Peri-urban areas in Bulacan wide range of employment opportunities, residential
3. Peri-urban areas in Cavite and Laguna areas, education and health services.
4. The northern regional growth center in
Subic-Clark-Tarlac axis The transport development strategy for the GCR calls
5. The southern regional growth center of for the improvement of gateway ports in Subic and
Batangas, Lipa-Lucena Batangas and the Clark International Airport, the
north-south backbone in the form of expressways
Metro Clark (San Fernando, Angeles City, Mabalacat and mass transit, and the secondary roads for
City, and Porac) and Metro Batangas (Batangas City Regions III and IV-A.
and Lipa City) are envisioned as regional centers and
core cities with self-sustained diverse economies, The development plan for the transport network of
industry, services, higher education, health services, Mega Manila aims to strengthen the north-south
cultural activities, etc. transport axis to guide future urban expansion and to
promote the shift from road-based traffic to rail based
They will serve as regional hubs of the transport mass transit, and to enhance the resiliency of the
network within 100 kms from Metro Manila. They network through an integrated multi-modal transport
will also function as international gateways as an system.

Five regional clusters are envisioned consisting of: They will serve as regional hubs of the transport
1. Metro Manila network within 100 kms from Metro Manila. They will
2. Peri-urban areas in Bulacan also function as international gateways as an alternative
3. Peri-urban areas in Cavite and Laguna
to Manila. Provincial capitals or city centers such as in
4. The northern regional growth center in Subic-Clark-Tarlac axis
5. The southern regional growth center of Batangas, Lipa-Lucena Malolos, Tarlac, Cabanatuan, Olongapo, Malolos,
Tagaytay, and Calamba will be expected to be centers of
sub-regions by providing a wide range of employment
opportunities, residential areas, education and health
services.
Proposed spatial structure of GCR
Source: Japan International Cooperation Agency Presentation on Roadmap for Transport

Infrastructure Development for Metro Manila and Its Surrounding Areas (Region III and
Region IV-A) Summary of the Outputs September 2013
Metro Clark (San Fernando, Angeles City, Mabalacat City, and

Porac) and Metro Batangas (Batangas City and Lipa City) are
envisionedSource:
as regional centers and core cities with
Japan International Cooperation Agency Presentation on Roadmap for Transport Infrastructure Development for
self-sustained
Metro diverse
Manila andeconomies,
Its Surrounding industry, services,
Areas (Region higher
III and Region IV-A) Summary of the Outputs September 2013
education, health services, cultural activities, etc. Infrastructure Development for Metro Manila and Its Surrounding Areas (Region III and
Region IV-A) Final Report March 2014
Gateway
Theairports and seaports
major components will be: share of railways in Metro Manila to 41 percent by
GatewayAt
airports
grade roads 2030,
Gateway compared to 10 percent at present.
seaports
 Missing links in C3 and C5
Development of New NAIA
 137 kms of new roads (existing NAIA will be closed The urban expressway network will cater to long-trip
 Flyovers and converted for New CBD) fast travel traffic for those willing to pay for
 Sidewalks and pedestrian facilities
Development of CLARK (core congestion-free thoroughfares.
airport for central and
northern cluster; alternative
Expressways to New NAIA) The proposed transport sector dream plan for Metro
 426 kilometers of inter-city expressways Manila is projected to avoid the US$135.88
 78 kilometer of urban expressways million/day transport cost in the 2030 “do nothing”
scenario by 45 percent and even reduce these from
Urban/suburban rail the current level of US$54.35 million.
 246 kilometers of six main lines Shift cargo-handling function
of Metro Manila to Subic and
 72 kilometers of five secondary lines
Batangas There will also be remarkable improvements in air
Regenerate Manila Port to
quality. Similar benefits will accrue to the peri-urban
An integrated urban mass transit network
highwill aim to
value-added diversifiedBRLC region. The “reach” of a one-hour travel time
waterfront areas
accommodate an increase in ridership from 1.5 from Manila will expand outward, giving better
million per day in 2012 to 9.1 million by 2030 and access and assisting in decongesting the core city
Source: Japan International Cooperation Agency Presentation on Roadmap for Transport Infrastructure Development for Metro
Manila and Its avoid theAreas
Surrounding worsening
(Region III andof traffic
Region IV-A) by increasing
Summary theSeptember
of the Outputs modal2013 center.
Infrastructure
Guide: Philippines
Opportunities for the
Impact of private
proposedsectortransport network Opportunities for the private sector
The focus on the PPP approach
(estimated fortime
travel implementing the urban rail and
from Manila) Theexpressway projects
focus on the opens upfor
PPP approach numerous
implementing the urban
opportunities
Today for private investors. The bidding out of urban rail and expressway
rail and projects
expressway has
projectsgained
opens some traction
up numerous
in the recent months, including LRT1, CALAx, NAIAx. The currentopportunities
pipeline includes US$30.80
for private billion in urban rail
investors.
projects and US$16.33 billion in road and expressway projects. (See Appendix E)
The bidding out of urban rail and expressway projects has
JICA is quick to point out, however, that many of the projects havegained
been on
somethetraction
drawinginboard for years,
the recent and many
months, including LRT1,
of the original designs have been overtaken by the developments CALAx,
on site. NAIAx.
JICA urges:
The current pipeline includes PhP1.36
trillion in urban rail projects and PhP721 billion in road and
“All the projects that had been studied and planned in the past, but which had
expressway so far eluded realization, should
projects.
now be rushed into implementation. The sweet spot (convergence of many favorable factors) may not last long.
For roads, this includes: (i) all the missing sections of C3, C4, and C5; (ii) several flyovers and interchanges; (iii) at
JICA is quick to point out, however, that many of the
least one of the two North Luzon Expressway (NLEx) - South Luzon Expressway (SLEx) connector roads; and (iv)
projects have been on the drawing board for years, and
frontloading by private sector concessionaires of their investment commitments on SLEx, Manila-Cavite
many of the original designs have been overtaken by the
Expressway (CAVITEx), and NLEx. For railways, this includes: (i) LRT 1 Extension to Cavite; (ii) LRT 2 extension to
the East; (iii) MRT-3 capacity expansion and system upgrade; (iv) developments
improvementon site.
and JICA urges:
rehabilitation of the commuter
service on the south and revival of the north service, and (v) MRT-7 from Quezon City Circle to San Jose del
Monte. “All the projects that had been studied and planned
in the past, but which had so far eluded realization,
shouldbe
Similarly, the computerized traffic signalling system of Metro Manila should now be rushed
expanded intoand
rapidly, implementation.
its system
upgraded as part of an intelligent urban transport system. For airports, un-freeze and complete several landside
and airside projects for Manila and Clark airports.” (See Appendix F) The sweet spot (convergence of many favorable
factors) may not last long. For roads, this includes: (i)
Immediate opportunities all the missing sections of C3, C4, and C5; (ii)
60 min several
For the short-term program (2014-2016), US$7.34 billion in expressways and otherflyovers and interchanges;
road projects are projected (iii)toatbe
least one of
implemented, with many of the larger projects to be90 min under the the
procured PPPtwomode.North Luzon US$3.56
Another Expressway (NLEx)
billion in - South
urban railway projects are also scheduled for implementation Luzon Expressway (SLEx) connector roads; and (iv)
120 minin the short-term.
frontloading by private sector concessionaires of
Short-term Program (2014-2016) 150 min their investment commitments on SLEx,
Railways Manila-Cavite Expressway (CAVITEx), and NLEx.
Name of Project Amount (PhP million) Status
Future
1. LRT1 - Cavite Extension (Niyog) For railways,
30,764this includes: (i) LRT 1 Extension to
Committed
2. LRT2 - East Extension Cavite; (ii)9,446
LRT 2 extension to the East; (iii) MRT-3
Committed
capacity expansion and system upgrade; (iv)
3. MRT3 Capacity Extension 10,200 Committed
improvement and rehabilitation of the commuter
4. MRT7 stage 1 (Quezon Ave. - Commonwealth Ave.) 51,870 Committed
service on the south and revival of the north service,
5. AFCS CommonTicketing System 1,722 from Quezon
and (v) MRT-7 Committed
City Circle to San Jose
6. System Rehabilitations for LRT1 and 2 del Monte. 4,500 Committed
7. Mega Manila a. C4 EDSA-Taft Ave. to Roxas Blvd. 24,800 Proposed
North-South Similarly, the computerized traffic signalling system
b. C4: Roosevelt / Congressional Committed
Commuter of Metro Manila should be expanded rapidly, and its
Railway c. C4: West Ave. / North Ave. / Mindanao Ave. system upgraded as partProposed
of an intelligent urban
8. Metro Manila CBD
CBDTTransit S
System
ystem P
Project
roject Study 120
transport system. Proposed
9. F/S of New
NewTTranspor
ransportt System (e.g. Monorail, AGT)
System 75 Proposed
Railways Total For airports, un-freeze and complete
146,897 - several
landside and airside projects for Manila and Clark
Road Public Transport
airports.”
1. ITS (3Japan
Source: Provincial BusTerminals)
International Immediate opportunities
6,300 Comitted
Cooperation Agency
2. Presentation
Public Road PassengerTransport
on Roadmap for Reform Study For the short-term program
60 (2014-2016),
Proposed PhP324 billion in
3. BRT
Transport Infrastructure
System 1
expressways and3,500
other road projects are projected to be
Proposed
Development for Metro
Manila and Its Surrounding implemented, with many of the larger projects to be
Road-based
Areas (RegionPublic Transport Total 9,860 -
III and Region
IV-A) Summary of the
procured under the PPP mode. Another PhP157 billion in
Outputs September 2013 urban railway projects are also scheduled for
implementation in the short-term.

Short-term Program (2014-2016)
Roads
1. Missing Link of C5 a. Flyover on CP Garcia in Sucat 251 Committed

b. Coastal Rd/C5 Extn. South Flyover 210 Committed
c. C5 South Extn. Flyover at Slex 235 Proposed
2. Global City-Ortigas Link Road 8,120 Proposed
3. Skyway/FTI/C5 Link 17,880 Committed
4. C3 Missing links (S. Juan to Makati [Sta. Ana oval]) 24,000 Proposed
5. EDSA Rehabilitation 3,744 Committed
6. Plaridel Bypass, packages 3 & 4 900 Committed
7. Metro Roads
Manila a. C4 EDSA-Taft Ave. to Roxas Blvd. 2,430 Committed
Interchanges / b. C4: Roosevelt / Congressional 941 Committed
Flyovers
c. C4: West Ave. / North Ave. / Mindanao Ave. 1,502 Committed
1. Missing Link of C5 a. Flyover on CP Garcia in Sucat 251 Committed
d. C5: Greenmeadows 1,575 Committed
b. Coastal Rd/C5/ Acropolis
Extn. South Flyover 210 Committed
e. C5: Pasig-Bagong Ilog Flyover at SLEx 435 235 Committed
Proposed
c. C5 South Extn.
f. Link
2. Global City-Ortigas C2: Gov.
Road Forbes / Espana 1,0708,120 Committed
Proposed
Roads
3.Total
Skyway/FTI/C5 Link 63,29317,880
Committed
4. C3 Missing links (S. Juan to Makati [Sta. Ana oval]) 24,000 Proposed
Expressways
5. EDSA Rehabilitation
Name of Project Amount (PhP million)3,744 Committed
Status
6. Plaridel Bypass, packages 3 & 4
1. Daang Hari-SLEx LinkTollroad 2,000 900 Committed
Committed
7. Metro Manila a. C4 EDSA-Taft Ave. to Roxas Blvd. 2,430 Committed
2. NLEx-SLEx a. Link Expressway (MNTC) 7,800 Committed
Interchanges /
Connectors b. C4: Roosevelt / Congressional 941 Committed
Flyovers b. Skyway 3 section (Citra) 9,000 Committed
c. C4: West Ave. / North Ave. / Mindanao Ave. 1,502 Committed
c. Common section (DPWH) 11,000 Committed
d. C5: Greenmeadows / Acropolis 1,575 Committed
d. Seg. 9&10, and connection to R10 8,600 Committed
e. C5: Pasig-Bagong Ilog 435 Committed
3. NAIA Expressway, phase 2 15,520 Committed
f. C2: Gov. Forbes / Espana 1,070 Committed
4. CALA Expressway, stages 1 and 2 14,232 Committed
Roads Total 63,293 -
5. CLLEX Phase I (La Paz,Tarlac-Cabanatuan) 12,833 Committed
Expressways
6. Calamba-Los Banos Expressway 16,900 Proposed
7. C6 extension - Lakeshore Dike Road 43,380 Proposed
1. Daang Hari-SLEx LinkTollroad 2,000 Committed
8. Segment 8.2 of NLEx to Comm. 7000
, Proposed
2. NLEx-SLEx a. Link Expressway (MNTC) 7,800 Committed
Expressways
ConnectorsTotal 148,265 -
b. Skyway 3 section (Citra) 9,000 Committed
Other Roads Total c. Common section (DPWH) 11,000 Committed
Name ofd.Project Amount (PhP million)8,600 Status
Committed
Seg. 9&10, and connection to R10
1. Secondary RoadExpressway,
3. NAIA Packages phase 2 69,10015,520 Proposed
Committed
2. Preparatory studies
4. CALA for several
Expressway, projects
stages 1 and 2 50014,232 Proposed
Committed
5. CLLEX
3. Other Central Phase
Luzon I (La
road Paz,Tarlac-Cabanatuan)
projects 16,00012,833 Committed
Committed
6. Calamba-Los
4. Other Southern Banosprojects
Luzon road Expressway 36,36016,900 Proposed
Committed
7.Other
C6 extension - Lakeshore Dike Road
Roads Total 121,96043,380 -Proposed
8. Segment 8.2 of NLEx to Comm. 7,000 Proposed
Expressways Total 148,265 -
Infrastructure
Guide: Philippines
Railways
1. LRT1 - Cavite Extension (Niyog) 30,764 Committed
2. LRT2 - East Extension 9,446 Committed
3. MRT3 Capacity Extension 10,200 Committed
4. MRT7 stage 1 (Quezon Ave. - Commonwealth Ave.) 51,870 Committed
5. AFCS CommonTicketing System 1,722 Committed
6. System Rehabilitations for LRT1 and 2 4,500 Committed
7. Mega Manila a. C4 EDSA-Taft Ave. to Roxas Blvd. 24,800 Proposed
North-South
b. C4: Roosevelt / Congressional Committed
Commuter
Railway c. C4: West Ave. / North Ave. / Mindanao Ave. Proposed
8. Metro Manila CBDTransit System Project Study 120 Proposed
Other Roads Total
9. F/S of NewTransport System (e.g. Monorail, AGT) 75 Proposed
146,897 -
1. Secondary Road Packages 69,100 Proposed
Road Public Transport
2. Preparatory studies for several projects 500 million)
Amount (PhP Proposed Status
Name of Project
3. Other Central Luzon road projects 16,000 Committed
1. ITS (3 Provincial BusTerminals) 6,300 Comitted
4. Other Southern Luzon road projects 36,360 Committed
2. Public Road PassengerTransport Reform Study 60 Proposed
Other Roads Total 121,960 -
3. BRT System 1 3,500 Proposed
Traffic Management Projects
Road-based Public Transport Total 9,860 -
Traffic Management Projects
1. Modernization of traffic signaling system 5,000 Comitted
2. Systematic Road Safety Interventions 1,000 Proposed
1. Modernization of traffic signaling system 5,000 Comitted
3. ComprehensiveTraffic Management Study 60 Proposed
2. Systematic Road Safety Interventions 1,000 Proposed
Traffic Management Projects Total 6,050 -
3. ComprehensiveTraffic Management Study 60 Proposed
Airports
Traffic Management ProjectsTotal Amount (PhP million) 6,050 Status -
Name of Project
Airports
1. NAIA a. NAIA improvements - airside package 4,249 Committed
Amount (PhP million) Committed Status
b. Name of Project - landside package
NAIA improvements
1. NAIA
2. Clark c. a. NAIA
Clark improvements
improvements - airside
- airside packagepackage 6,802 4,249 Committed Committed
d. Clark improimpro
b. NAIA vements - landside
vements packagepackage
- landside Committed
Committed
3. Feasibility study of a new NAIA
2. Clark c. Clark improvements - airside package 50 6,802 ProposedCommitted
Airport Infrastructure Total d. Clark improvements - landside package 11,125 - Committed
Ports*
3. Feasibility study of a new NAIA 50 Proposed
Airport Infrastructure Total 11,125 -
1. Projects for North Harbor 6,000 Committed
Ports
2. Projects for South Harbor
Name of Project Amount1,000
(PhP million) Committed Status
3. MICT 4,000 Committed
1. Projects for North Harbor 6,000 Committed
4. Feasibility Study of NH Redevelopment 75 Proposed
2. Projects for South Harbor 1,000 Committed
5. Other Ports 1,010 Proposed
3. MICT 4,000 Committed
Port Projects Total 12,085 -
4. Feasibility Study of NH Redevelopment 75 Proposed
Notes: *Planned expansion projects recommended for rescheduling to promote diversion of cargo to Batangas and Subic ports as well as decongest Proposed
1,010
5. Other Ports
roads of Metro Manila
Short-term Program (2014-2016) = PhP520 billion 12,085

Port Projects Total
Source: Japan International Cooperation Agency Presentation on Roadmap for Transport Infrastructure Development for Metro Manila and Its

Surrounding Areas (Region III and Region IV-A) Summary of the Outputs September 2013
Infrastructure Development for Metro Manila and Its Surrounding Areas (Region III and Region IV-A)
Summary of the Outputs September 2013
Notes: *Planned expansion projects recommended for rescheduling to promote diversion of cargo to Batangas and Subic ports as well as decongest roads of Metro Manila
Short-term Program (2014-2016) = PhP520 billion
Philippines
The latestThe latest Plan”
“Dream “Dream forPlan”
Metrofor Metroconducted
Manila Manila conducted
by The plan proposes development strategies that
JICA andby JICA and
recently recently
approved byapproved by the government
the government breaks stretch to the year 2030, and a massive infrastructure
down thebreaks down
problem intothe
fiveproblem into five areas:
areas: uncontrolled development program for railways, roads, airports,
uncontrolled
urbanization, urbanization,
environmental environmental
degradation degradation
and hazard risk, and seaports with a total cost of US$58.88 billion,
lack of affordable housing, traffic congestion, and traffic
and hazard risk, lack of affordable housing, including US$11.78 billion for 2014-16, as against the
congestion,
concentrated and concentrated spatial structure.
spatial structure. estimate of traffic congestion of US$54.35 million a
day cited by the study.
The urban The urban infrastructure
infrastructure challenges challenges in Metro
Metro Manila Manila
complex
are complex
and formidable. and way
The only formidable.
to makeThe only way
a sensible to make
plan to a Private investors can consider several projects in the
sensible
resolve these plan toisresolve
problems thesedevelopment
to consider problems is to Metro Manila plan which are expected to be
strategiesconsider development
for a wider area, longerstrategies for a wider
time horizons, and area, executed under the PPP mode.
longer time horizons, and
multi-sectoral and multi-modal solutions.multi-sectoral and
multi-modal solutions.
Thus the current plan identifies a Greater Capital Region
Thus the current
the encompasses an areaplan
muchidentifies
wider thana Greater Capital
the current For further information, please contact:
RegionArea.
Greater Manila the encompasses
The plan proposes an area much wider than
development For further information, please contact:
strategiesthe current
that stretchGreater
to theManila Area.and a massive
year 2030, Ma. Cynthia C. Hernandez
infrastructure development program for railways, roads, Roberto
AdvisoryG. Manabat
Director
airports, and seaports with a total cost of P2.6 trillion, Chairman & CEO
including P520 billion for 2014-16, as against the estimate KPMG in the Philippines
KPMG
T: +63 2 885Philippines
in the 7000 ext. 485
of traffic congestion of P2.4 billion a day cited by the study.
Private investors can consider several projects in the Metro T:E:+63 2 885 7000
mchernandez@kpmg.com
Manila plan which are expected to be executed under the E: rgmanabat@kpmg.com
PPP mode.

Enhancing
Water
Water Resources
Resources
Jerome Andrew H. Garcia, Advisory Principal, KPMG in the Philippines
TheThe
Philippines
Philippinesis eisxpected
expected to to
be be
on on
track to
trac meet
k to meetthethe
201201
5 Millennium
5 Millennium DeDevelopment
velopment Goal (MDG)
Goal (MDG) on
on wwater
ater and
and sanit
sanitation.
ation. TThe
he MDG
MDG ttarget
arget was
was toto cut
cut in
in half
half the
the proportion
proportion of of the
the population
population without
without sustainable
sustainable access access
to safetodrinking
safe drinking
waterw aterimprove
and and impro ve sanitation.
sanitation. This translates
This translates to an
to an increase in the
increase in the
proportion ofproportion of Filipino
Filipino families withfamilies
access towith access
water fromto73water fromin73
percent percent
1990 in 1990
to 86.5 to 86.5
percent by 2015.
percent
Citingby 2015.
data fromCiting data from the
the Association Association
of South of South
East Asian East(ASEAN)
Nations Asian Nations (ASEAN)
statistical statistical
unit, the National
unit, the National
Statistical Statistical
Coordination Coordination
Board Board (NSCB)
(NSCB) recorded stated that
that Filipinos withFilipinos
access with
to safeaccess to safe
drinking water
drinking water represented
represented 84.8 percent84.8 percent
of the of theaspopulation
population of 2010. On as of 2010.
this basis,Onthe
this basis,tagged
NSCB the NSCB
this target as
tagged
havingthis target
a high as havingofa being
probability high probability
achieved by of 2015.
being achieved by 2015.
Percentage
Percentage Access Access to Safe Water
to Safe Water
90 90
Percentage (%)
PERCENTAGE (%)
(%)
Percentage(%)
85
85
PERCENTAGE
80
80
75
75
70
70
1990 1995 2000 2005 2010 2015
1990 1995 Year

2000 2005 2010 2015
Source: Philippines Progress Report on the Millennium Development Goals 2010
Year
Source: Philippines Progress Report on the Millennium Development Goals 2010
39 | 2
Philippines
St atisticsStatatistics at aofglance
a glance of the Philippines'
the Philippines' ProgressProgress
based onbased on the
the MDG MDG indicators
indicators
Goals/Targets/Indicators Baseline Target Latest Probability
Goals/Targets/Indicators Baseline Target Latest Probability
Goal 7: ENSURE ENVIRONMENTAL SUSTAINABILITY
Goal 7 : ENSURE ENVIRONMENTAL SUSTAINABILITY
Target 7.C Halve, by 2015, the proportion of population without sustainable access to safe
Target 7.C drinking
Halve, by 2015, water and of
the proportion improved sanitation
population without sustainable access to safe
drinking water and improved sanit

ation
Target 7.7a 73 86.5 84.4
Target 7.7a Proportion of families with 73 86.5 2015 84.4 2011 High
1990
Proportion of f amilies
access with water
to safe 1990 2015 2011 High
access to safe water
Target 7.8a
Target 7.8a Proportion of families with 67.6 67.6 83.8 83.8 91.9 91.9
Exceeded
Proportion of f amilies
sanitary withfacility
toilet 1990 1990 2015 2015 2011 2011 Exceeded
sanitary toilet facility
Source: Philippine Statistics Authority – Makati’s MDG Watch May 2014 publication
Source: Philippine Statistics Authority – Makati’s MDG Watch May 2014 publication
This however,
This implies, implies, however,
that 15.73that 15.73people
million millioncontinue
people continue notaccess
not to have to havetoaccess to safe water.
safe drinking drinkingThe
water. The
broad MDGbroad
indicator MDG
masksindicator masks the
the complicated complicated
issues issues
in the water in the Up-to-date
sector. water sector. Up-to-date
information on information onwater
the status of the status of water
facilities and
access isfacilities andavailable
either not access isor either not available
not consistent and or not consistent and consolidated.
consolidated.
Levels ofLevels
Accessofto
Access to Safe Drinking
Safe Drinking Water Water
Access to formal levels of service: 80% Informal Access: 20%
Access to formal levels of service: 80% Informal Access: 20%
Level 3: 45% Level 2: 10% Level 1: 25%
Self-provision through private
Level 3: Level 2: Level 1: wells, tanked or vended water
45% 10% supply or through

piped supply
WDs:
20% POs: 5% LGUs and CBOs: 20% LGUs25%
and CBOs: 35% Self-provision private
wells,provided by vended
tanked or SSIPs water
supply or piped supply
WDs: Notes: 1. WDs: Water Districts,
POs: 2. PO:
LGUs andPrivate Operators (e.g.,
LGUs concessionaires,
and CBOs: private developers, etc.), 3. CBOs: Community-based
provided by SSIPs Organizations (e.g.,
rural or barangay water service associations, cooperatives, etc.)
20% 5% CBOs: 20% 35%
Source: WB Report, Philippines: Meeting Infrastructure Challenges, 2005, as quoted in the NEDA Philippine Water Supply Sector Roadmap 2nd Edition
Source: WB Report, Philippines: Meeting Infrastructure Challenges, 2005, as quoted in the NEDA Philippine Water Supply Sector Roadmap 2nd Edition
Notes:
1. WDs: Water Districts
2. PO: Private Operators (e.g., concessionaires, private developers, etc.)
3. CBOs: Community-based Organizations (e.g., rural or barangay water service associations, cooperatives, etc.)
Infrastructure
Guide: Philippines
As defined in NEDA Board Resolution No. 12, Series of 1995:
Level I A protected well or a developed spring with an outlet but without a distribution system as it is
As defined in NEDA Board Resolution No. 12, Series of 1995:
generally adaptable for rural areas where the houses are thinly scattered serving an average of 15
Level I A protected well or a developed spring with an outlet but without a distribution system as it is generally
households
adaptable with
for people having
rural areas to fetch
where water from
the houses up to scattered
are thinly 250 meters distance
serving an average of 15 households with
Level II A piped system with communal or public faucets usually
people having to fetch water from up to 250 meters distanceserving four to six households within 25
Level meters distance
II A piped system with communal or public faucets usually serving four to six households within 25 meters
Level III A fully reticulated system with individual house connections based on a daily water demand of
distance
Level more
III A than 100 liters per
fully reticulated person
system with individual house connections based on a daily water demand of more than
100 liters per person
Based on the National Statistics Office (NSO), the proportion of households in the Philippines in 2004 with access
to water
Basedwas around
on the 80.2Statistics
National percent. Office
Of the(NSO),
80.2 percent with access
the proportion to water from
of households in theformal providers,
Philippines onlywith
in 2004 44 access to
percent are connected to Level III waterworks systems with piped distribution systems
water was around 80.2 percent. Of the 80.2 percent with access to water from formal providers, only 44 which are subject to percent are
national quality standards. The rest of the population get their water from Level II – communal
connected to Level III waterworks systems with piped distribution systems which are subject to national quality faucets or
standpipes,
standards.or The
Level I –get
rest protected wellsfrom
their water without
Levela II
distribution
– communal system of the
faucets or population.
standpipes, The local Igovernment
or Level – protected wells without
units (LGUs) and community-based organizations (CBOs) provide water service
a distribution system. The local government units (LGUs) and community-based organizations to 55 percent of those
(CBOs)with access
provide water
to water. While the Level III coverage for the country as a whole is 42 to 48 percent, there are wide disparities
service to 55 percent of those with access to water. While the Level III coverage for the country as a whole is 42 to 48
between
percent,thethere
urbanareareas
wideoutside of the
disparities Nationalthe
between Capital
urbanRegion (NCR) and
areas outside rural
of the areas. Capital Region (NCR) and rural
National
areas. Level III Coverage, Philippines
Estimated
Population (2010 Est. % of Total Est. Level II
Estimated Level III Coverage, Philippines
Census) (millions) Population Coverage
Water Supply Providers
Population (2010 Census) Est. % of Total Est. Level II Water Supply Providers (s)
Urban - NCR 11.9
(millions) 13%
Population 88% (1)
Coverage Manila Water, Maynilad
Urban - Outside NCR 33.0 36% 50%-65% Water Districts
Urban - NCR 11.9 13% 88% (1) Manila Water, Maynilad
LGUs
Urban - Outside NCR 33.0 36% 50%-65% WaterPDistricts
riv
rivate
ate operators
Rural 47.4 51% 25% (2) Coops, BWSAs, RWSAs
LGUs
Total 92.3 100% 42%-48%
Notes: 1. BWSA: barangay water and sanitation association, 2. Est: estimated, 3. LGU: local government unit, 4. NCR:Private operators
National Capital Region, 5.
RWSA: rural waterworks association
Asian Development Bank report47

Rural
Source: on.4Philippine Water Supply and
51% 25% (2) Strategy and Road
Sanitation Sector Assessment, Coops,
Map BWSAs, RWSAs
January 2013; (1) MWSS;
(2) JPM March 2012 Report

Total 92.3 100% 42%-48%
The MWSS reports Level III service coverage of 88 percent for Metro Manila and 11 percent for total households in
Source: Asian Development Bank report on Philippine Water Supply and Sanitation Sector Assessment, Strategy and Road Map January 2013; (1) MWSS; (2) JPM March 2012
theReport
country. The Asian Development Bank (ADB) notes:
Notes:
1. BWSA: barangay water and sanitation association
“At the end of 2011, the Local Water Utilities Administration (LWUA) reported that the 502 operational water
2. Est: estimated
3. districts servicedunit
LGU: local government about 3.5 million households. This is roughly 53 percent of urban households outside the
4. NCR, or 19Capital
NCR: National percent
Regionof total households nationally. Assuming 350 LGUs run water utilities with
5. RWSA: rural waterworks association
approximately 900 service connections on average, these utilities supply Level III water to about five
III connections, compared to about seven percent for
percent of the country’s total number of households. Looking specifically at urban areas outside the NCR,
The MWSS reports Level III service coverage of 88 percent LGU-run water utilities.”
water districts (WDs) are estimated to account for about 80 percent of Level III connections, compared to
for Metro Manila and 11 percent for total households in the
about seven percent for LGU-run water utilities.”
country. The Asian Development Bank (ADB) notes: This information indicates that 60 to 71 percent is a rough
estimate for Level III water service coverage in all urban
This information indicates that 60 to 71 percent is a rough estimate for Level III water service coverage in all urban
“At the end of 2011, the Local Water Utilities areas in the country (broadly in line with the Joint
areas in the country (broadly in line with the Joint Monitoring Programme’s (JMP) March 2012 estimate of 61
Administration (LWUA) reported that the 502 Monitoring Programme’s (JMP) March 2012 estimate of 61
percent in 2010). The estimated 50 to 65 percent Level III coverage in urban areas outside NCR is much lower than
operational water districts serviced about 3.5 million percent in 2010). The estimated 50 to 65 percent Level III
the 88 percent already achieved in Metro Manila. While coverage appears to be increasing, a report prepared for
households. This is roughly 53 percent of urban coverage in urban areas outside NCR is much lower than
the World Bank in November 2009,1 which evaluated the performance of water utilities outside Metro Manila, found
households outside the NCR, or 19 percent of total the 88 percent already achieved in Metro Manila. While
that many of the performance targets for water service (including access to safe water, hours of service,
households nationally. Assuming 350 LGUs run coverage appears to be increasing, a report prepared for the
compliance with national drinking water standards, and cost recovery) are not being met, particularly in the case of
water utilities with approximately 900 service World Bank in November 2009, which evaluated the
LGU-run utilities.
connections on average, these utilities supply Level performance of water utilities outside Metro Manila, found
III water to about five percent of the country’s total that many of the performance targets for water service
number of households. Looking specifically at urban (including access to safe water, hours of service,
1
The Water andareas outside
Sanitation the(WSP)
Program NCR, water
Field districts
Note (2009), (WDs)and
“Prospects are compliance
Pitfalls in Integrated Water with national
Services drinking
in the Philipines: water ofstandards,
an analysis 35 Water and cost
Districts”, WSP Field Note August 2009. World Bank. Available at http://www.wsp.org.
estimated to account for about 80 percent of Level recovery) are not being met, particularly in the case of
Philippines
Other sector studies have found that water districts The physical challenges of the Philippine water
percent to 52 percent
provide betteronly.
water The improving
service, citingratios are
the corporatized behind the seriousinclude:
situation deficit in investment
localized levels shortages,
raw water to develop
weighed nature
down by of the
watersignificant
districts drop for Metro
and the benefits Manila
of the water resources to meet the rising demand.
flooding, water pollution, overexploitation A main of
from 122LWUA
to 113 credit
percent.andThe NEDA notes
institutional that by 2017
development ,
support. hindrancegroundwater
is the low tariffs which do not allow for
particularly in major cities, and costoveruse
there will be a water deficit in the Metro Manila area. While recovery.ofAnother
surface factor
water.isThere
the absence of a coherent
is increasing pollution of
overall supply
In the(including
revalidatedforresults
irrigation) is close
matrix to sufficiency
for the midterm financinggroundwater
framework for investments
and surface water in water infrastructure.
in many localities
for the country
reviewas ofathe
whole, thereEconomic
National are seasonal and
and Development There haswhile
also marginal
been a bias for Metro
agricultural Manila and
activities haveother
resulted in
geographic shortages.
Authority There
(NEDA) are major
Philippine water constraints
Development in
Plan, the urban areas, including spending
deforestation for water
and degradation of supply, sewerage
watersheds and
Metro Manila and Cebu
government which
target posepercent
is 100 a serious problem
Level to
III coverage and septage
uppermanagement.
catchments,The lack ofina major
resulting monitoring
flooding system
the further
bydevelopment
2016. of these major urban areas. makes it problems.
difficult to assess andalso
There are address the sustainability
few facilities for storageof
developed infrastructure.
infrastructure, specifically reservoirs and tanks, which
The physical challenges
Another dimensionof the Philippine
targeted water
in the situation plan
government is a reflection of their high cost.
include: localized raw water shortages,
is the demand-supply situation.flooding, water
The performance Another major issue is the institutional fragmentation of
pollution,indicator
overexploitation of groundwater
for sufficiency of supply particularly
versus demand in both the The
regulatory bodies
ADB cites theand agencies
database andWorld
of the the water
Resources
major cities, and overuse
projects of surface
a deterioration fromwater. There isin 2011 to
116 percent service providers (WSPs).
Institute which reports that the Philippines compares
increasingonly
pollution of groundwater
92 percent by the end and surface
of the water in
plan period. favorably with other Asian countries in terms of the
many localities while marginal
Improvements agricultural activities
in the demand-supply ratio have
are The World Bank renewable
annual observed that,water“Water Code with
resources, (1976)
anhas
annual
resulted in deforestation and degradation of
projected in Metro Cebu, Bulacan, Cagayan de Oro watersheds been weakly enforced and the National Water Resources
per capita availability of about 6,100 m3 (cubic meter)
and upperand catchments, resulting
Davao, although theinimprovement
major flooding in problems.
Cebu is Board (NWRB) has been unable
from groundwater to mediate
and surface conflicts
sources, in is
which
There arefrom
also 38
fewpercent
facilities
tofor
52 storage only. The improving water demand,
percent infrastructure, twice theandlevel
provide sufficient
of Asia and sixplanning
times the andglobal
specifically reservoirs
ratios and tanks,
are weighed downwhichby theissignificant
a reflectiondropof for coordination of Water
scarcity Resource
threshold Management
of 1,000 m3.2 (WRM).
their highMetro
cost. Manila
The ADB fromcites
122 thetodatabase
113 percent.of theTheWorld
NEDA NWRB's original location under the Department of Public
Resources Institute
notes which
that by 2017reports thatbe
, there will thea Philippines
water deficit in the Works and Highways (DPWH) created a conflict
The Philippine Development Plan highlights of interest
the
comparesMetro
favorably with other Asian countries in terms
Manila area. While overall supply (including for of between its water resources planning, management
issues behind the serious deficit in investment andlevels
the annual renewable water resources, with an annual
irrigation) is close to sufficiency for the country as a per regulation roles, and the development function
to develop water resources to meet the rising of a public
capita availability of about
whole, there 6,100 m3and
are seasonal (cubic meter) from
geographic shortages.works =ministry.
demand.The original
A main NWRB was
hindrance is thegoverned
low tariffsbywhich
groundwater
There and
aresurface sources,
major water which is in
constraints twice
Metro theManila
level water-users suchallow
do not as LWUA, National
for 1cost Irrigation
recovery. Another factor is the
of Asia and
andsix times
Cebu the global
which pose ascarcity
seriousthreshold
problem to 1,000 Administration
of the absence (NIA),
of aMetropolitan Waterworks
coherent financing and for
framework
m3. further development of these major urban areas. (See Sewerage System (MWSS), National Power Corporation
investments in water infrastructure. There has also
Appendix G) (NPC) and wasachaired
been bias forby DPWH.
Metro ”
Manila and other urban areas,
The Philippine Development Plan highlights the issued
In 2002, the NWRB was transferred to the Office of the
2
ADB (2013), Philippines: Water Supply and Sanitation Sector Assessment, Strategy, and Road Map. January 2013., p. 2.
1
NEDA Philippine Development Plan 2010-2016. Chapter 5: Accelerating infrastructure Development. p. 134.
Infrastructure
Guide: Philippines
The institutional stakeholders in the water sector include:
Responsible for administration and enforcement of the 1976 Water
TheWater
National institutional
Resourcesstakeholders
Board (NWRB) in the water sector include:
Code, the framework for water resource management
National Water Resources Board (NWRB) Responsible for administration and enforcement of the 1976 Water
Department of Energy and Natural Resources (DENR) Watershed management
Code, the framework for water resource management
Department of Energy and Natural Resources (DENR) Watershed management

National Irrigation Administration (NIA) under the Department of
Construction and management of irrigation systems
Agriculture (DA)
National Irrigation Administration (NIA) under Department of Construction and management of irrigation systems
With significant powers to invest and fund projects under the LGU
Local government
Agriculture (DA)units (LGUs)
code
Local government units (LGUs) With significant powers to invest and fund projects under the LGU
Irrigation Associations Operations
code and development of irrigation systems
Irrigation Associations Operations and development of irrigation systems

Local Water Utilities Administration (LWUA) Finance and oversee autonomous Water Districts (WDs)
Local Water Utilities Administration (LWUA) Finance and oversee autonomous Water Districts (WDs)
Serves and regulates Metro Manila water supply and sanitation
Metropolitan Waterworks and Sewerage System (MWSS)
services
Metropolitan Waterworks and Sewerage System (MWSS) Metro Manila serves and regulate Metro Manila water supply and
Metrosanitation
Manila concessionaires:
services Manila Water and Maynilad; Subic
Private providers
Bay, LGU sponsored private firms, and housing subdivisions
Private providers Metro Manila concessionaires: Manila Water and Maynilad; Subic Bay,
Department of Public Works and Highways (DPWH) LGU sponsored
Construction private
of flood firms, and housing subdivisions
control
Department of Public Works and Highways (DPWH) Construction of flood control
Bureau of Fisheries and Aquatic Resources (BFAR) Inland fisheries
Bureau of Fisheries and Aquatic Resources (BFAR) Inland fisheries
National Power Corporation (NPC) Hydropower development and operations
National Power Corporation (NPC) Hydropower development and operations
National Economic and Development Authority (NEDA) Highest policy-making body
National Economic and Development Authority (NEDA) Highest policy-making body
Source: NEDA 2010 The Philippine Water Supply Sector Roadmap 2nd Edition. p. 19-25
including spending for water supply, sewerage and Natural Resources (DENR) as chair and NEDA as
The World
septage Bank observed
management. The lack that,
of “Water Code (1976) has
a monitoring co-chair.
Outside Metro Manila, front line water services are
been makes
system weaklyitenforced
difficult to and the National
assess Waterthe
and address Resources provided by LGUs. The LWUA Water District concept was
3
Board (NWRB)
sustainability has beeninfrastructure.
of developed unable to mediate conflicts in In terms
createdof water
in 1973service
under providers,
the Local Water there is a wideAct. LGUs
Utilities
water demand, and provide sufficient planning and variety
wereof encouraged
institutional to arrangements
transfer theirand capabilities.
water supply systems to
Thecoordination
World Bankof Water Resource
observed that, “WaterManagement
Code (1976) (WRM). In the Metro
water Manilawhich
districts, franchise area, water services
are corporatized stand-alone entities
hasNWRB's
been weaklyoriginal locationand
enforced under
the the Water of Public are supplying
Department
National provided by MWSS
water in a and two private
franchise area. As government-owned
Works and
Resources Highways
Board (NWRB) (DPWH)
has been created
unablea conflict
to of interest concessionaires:
specialized lender Manila to Water Company,LWUA
water districts, Inc. has the dual role
between
mediate its water
conflicts resources
in water demand, planning, management and (MWCI),
and provide serving
of tariff Manila’s
regulator east zone, and
and institutional Maynilad advisor.
development
regulation
sufficient roles,and
planning andcoordination
the development function of a public Water Services, Inc. (MWSI), serving Manila’s west
of Water
works =ministry.
Resource Management The (WRM).
original NWRBNWRB's was governed by
original zone.As Outside
summarized Metro byManila,
the ADB: front line water
water-users
location under the suchDepartment
as LWUA, National
of PublicIrrigation
Works and services are provided by LGUs. The LWUA Water
Administration (NIA), Metropolitan
Highways (DPWH) created a conflict of interest Waterworks and District concept
“At was
present, created
the in
major 1973 under
utilities the Local
operating Level III
Sewerage
between System
its water (MWSS),
resources Power Corporation Water Utilities
Nationalmanagement
planning, Act. in
systems LGUsurban wereareasencouraged
are (i) water to districts, which
and(NPC) and was
regulation chaired
roles, by DPWH.
and the ”
development function of transfer theirarewater supply systems
local corporate entities toformed
water at the option of
a public works ministry. The original NWRB was districts, which are corporatized
the LGU; (ii) LGU-owned stand-alone
and operatedentities
water
In 2002,bythe
governed NWRB was
water-users suchtransferred the Office of the supplying water
as LWUA,toNational in aand
utilities; franchise
(iii) a few area. As the
private sector operators that
President
Irrigation and reconstituted
Administration to include agencies which are government-owned
(NIA), Metropolitan have beenspecialized lender to
given a franchise or water
authority to operate
not claimants
Waterworks and to water resources,
Sewerage specifically
System (MWSS), the
National districts, LWUA
within hasthethe dual
geographicalrole of tariff regulator
jurisdiction of an LGU or an
Department
Power Corporation of Environment
(NPC) and was andchaired
Naturalby Resources
the (DENR)and institutional development
industrial zone.” advisor.
as chair
DPWH. ”4 and NEDA as co-chair.
As summarized
According toby thethe ADB: at of the end of 2011, 861 water
LWUA,
In terms
In 2002, theofNWRBwater wasservice providers,
transferred to there
the Officeis a wide
of variety “At present,
districts had been theestablished,
major utilitiesofoperating
which 502 Level III
were
theofPresident
institutionalandarrangements
reconstituted and capabilities.
to include agencies In the Metro operational, systems in urban
their areas of
number areservice
(i) waterconnections
districts, ranging
Manila
which are franchise
not claimants area,towater
water services are provided by
resources, fromwhich
500 are local corporate
to 200,000 (with an entities
average formed at the
of 7,011 connections
MWSS and two private concessionaires:
specifically the Department of Environment and Manila Water option
each). of the LGU; (ii) LGU-owned and
Company, Inc. (MWCI), which is the concessionaire serving
Manila’s east zone, and Maynilad Water Services, Inc.
3
(MWSI),
NEDA theDevelopment
Philippine concessionaire serving
Plan 2010-2016. Manila’s
Chapter west zone.
5: Accelerating infrastructure Development. p. 134.
4
World Bank (2003), Philippines: Country Water Resources Assistance Strategy 2003” East Asia Pacific Region p. 7
Philippines
Water Supply Providers Outside NCR
Water Supply Providers
Urban Outside Outside NCR
NCR: Est. Est. Average Est. % of Level III Est. % of Urban
Est. NCR:
Urban Outside Level III WSP WSP Est. NumberEst.
of Average
Connections Est.
per %Connections
of Level III in Urban
Est. % of Outside
Urban NCR
Est. Level IIICoverage WSPsConnections WSP Connections
Number of - outside
in NCR Outside NCR Population
Coverage Water DistrictsWSPs 502 per WSP7,0
,011 Urban - outside NCR
(1)
(1) 82 Population 53
50-65% 50-65%
Water DistrictsLGUs
LGUs 502 (1) Est. % of Level III7 Est. % of Urban5
350 7,011 900 (2)
Private operators
Private 350
rivate operators 900 (2) Connections in 11 Outside NCR 7
Urban - outside NCR Population
Source: Asian Development Bank report on Philippine Water Supply and Sanitation Sector Assessment, Strategy and Road Map January 2013; (1) Local Water
Source: Asian Development
Utilities Bank
Administration asreport on Philippine
of 31 December Water
2011; Supply and Sanitation
(2) Department of InteriorSector Assessment,
and Local GovernmentStrategy and Road Map January 2013; (1) Local Water
estimate
Utilities Administration as of 31 December
Notes: 1. Est: estimated, 2. LGU: 2011; (2) Department
local government unit,of3.Interior
NCR: and LocalCapital
National Government
Region,estimate
4. WSP: water service provider
Note:
1. operated water utilities; and (iii) a few private
Est: estimated making, coordination, and resource regulation for
2. LGU: local sector
government unit
operators that have been given a franchise the sector. It shall be provided with sufficient
3. NCR: National Capital Region
4. WSP: water orservice
authority to operate within the geographical
provider capacity and authority to implement key policies,
jurisdiction of an LGU or an industrial zone.” plans and projects in the water resources sector.
In the meantime, NWRB should be
operated
Accordingwater utilities;
to the LWUA, and
as(iii) a few
of the private
end sector
of 2011, 861 strengthened so it can continue its function as
operators that have
water districts hadbeen
beengiven a franchise
established, or 502 Development Plan
of which theto prioritize
sector’s the economic
overall creation ofand
a lead agency
resource
authority to operatetheir
within the geographical for the water sector and for
regulator.” capacity building among the
were operational, number of service
jurisdiction
connections of an LGU or
ranging froman 500
industrial zone.” (with an WSPs:
to 200,000
average of 7,011 connections each). “Develop capacities of national government
According to the LWUA, as of the end of 2011, 861 water “Work towards
agenciesa (NGAs),
lead agency
LGUs, for andtheWSPswater sector
for the
districts had been established, of which 502 were
“It is estimated that about 1,000 LGU-run water A lead agency for
sustainable the entire
management water ofsector should
infrastructure and
operational, theirutilities
number of service
operate in urbanconnections
and rural areasranging ultimatelybetter service provision.
be developed. The lead agency should be
from 500 to 200,000 (with the
throughout an average
country. of 7,011 connections
According to the Project The capacities
able to assume of planning
the functions and implementing
of policy making,
each). Management Unit of the Department of the institutions
coordination, and must
resource be developed
regulation to
for improve
the the
sector.
Interior and Local Government (DILG), there are It shall beperformance
provided with of various
sufficient structural
capacity and and
“It is estimated
about 350 that about 1,000Level
LGU-operated LGU-run water with
III systems, authority nonstructural
to implementinfrastructures
key policies, for theand
plans water sector.
an average
utilities operate of about
in urban and900 ruralconnections each.
areas throughout projects in the water resources sector. In the capacities
NGAs and LGUs should enhance their
These utilities are partProject
of the LGU concerned, meantime, in effective
NWRB should water governance,
be strengthened sustainable use of
so it can
the country. According to the Management
with budgetary allotments coming 2 water resources, and planning for climate
Unit of the Department of the Interior anddirectly
Local from continue its function as the sector’s overall
change adaptation (CCA), among others. LGUs
the LGUs. These systems
Government (DILG), there are about 350 are basically economic and resource regulator.”
self-regulated and WSPs should be assisted in developing
LGU-operated Level IIIby the LGU’s
systems, executive
with an average and of
relevant, practical, and up-to-date management
legislative units. LGU-run water
about 900 connections each. These utilities are part utilities face “Developtools capacities of national government
strong political pressure to keep water tariffs that support integrated water resources
of the LGU concerned, with budgetary allotments agenciesmanagement
(NGAs), LGUs, and and WSPs
technologies. for the
Service
low, often below cost recovery levels, and the sustainable management of infrastructure and
coming directly from the LGUs. These systems are providers should likewise be capacitated in plan
absence of commercial practices such as better service provision
basically self-regulated 5 by the LGU’s executive and development, budgeting and operations, among
‘ring-fencing’ likely masks the indirect material
legislativesubsidies
units. LGU-run water utilities face strong
6 The capacities
others, ofinplanning
order to and implementing
improve coverage, efficiency
they receive for water supply.”
political pressure to keep water tariffs low, often institutions
andmust be developed
sustainability to improve”7the
of infrastructure.
below cost recovery levels, and the absence performance of various structural and nonstructural
The institutional fragmentation of the waterof sector in
commercial practices such as ‘ring-fencing’ likely infrastructures
These are basic for requirements
the water sector. NGAs
for the and LGUsto
government
terms of stakeholders and their roles, and the variety
masks the indirect material subsidies they receive should enhance
be able their capacities
to implement integrated in effective water
water resource
of water service providers has prompted the NEDA in
forthe
water supply. ” governance,
management sustainable
practicesuse andof wateraresources,
pursue coherent and
Philippine Development Plan to prioritize the
planning for climate
investment change program
and financing adaptation for(CCA),
the sector.
creation of a lead agency for the water sector and for
The institutional fragmentation of the water sector in terms among others. LGUs and WSPs should be assisted
capacity building among the WSPs:
of stakeholders and their roles, and the variety of water inOpportunities
developing relevant,
for thepractical, and up-to-date
private sector
service providers has prompted the NEDA in the Philippine management
The toolsof
privatization that
thesupport
MWSS integrated
franchise area waterto two
“Work towards a lead agency for the water
sector. concessionaires, Manila Water and Maynilad, was the
A lead agency for the entire water sector should largest water privatization in the world when this was
ultimately be developed. The lead agency should executed in the 1990s.
be able to assume the functions of policy
5
Ring-fencing of regulatory accounts is needed when a regulated public utility (e.g., water supply) financially separates itself from a parent entity that
engages in non-regulated business. This is done mainly to protect consumers of essential services such as power, water, and basic telecommunications
from financial instability or bankruptcy on the part of the parent corporation that might result from losses in the parent’s open-market activities.
2
Ring-fencing ofRing-fencing also keeps
regulatory accounts customer
is needed information
when within
a regulated the utility
public public(e.g.,
utilitywater
business private
supply) from the
financially parent corporation’s
separates itself from a other
parentbusiness, Source: ADB, op.
entity that
cit. p. 22. business. This is done mainly to protect consumers of essential services such as power, water, and basic telecommunications
engages in non-regulated
from financial6 instability
PhilippineorDevelopment
bankruptcy on Plan
the2011-2016
part of the(PDP),
parentp.corporation
135. that might result from losses in the parent’s open-market activities.
7
Ring-fencing also PDP , p. 136.
keeps customer information within the public utility business private from the parent corporation’s other business, Source: ADB, op. cit.
p. 22. Infrastructure
Guide: Philippines
Philippines |3 | 44
Opportunities
Since then, there for have the private
been sectorprivate sector
increasing mustbecause of climate
be developed in a change
timely mannerwould to further
ensureexacerbate
participation and investment
The privatization of the MWSS in urban water area
franchise systemsto two domestic water supply.
the demand ThisThus,
for water. may adopt
new water sources
8
in Metro Manila as private
concessionaires, Manila companies were awarded
Water and Maynilad, was the ecoefficient measures,in
must be developed including
a timelythe reuse to
manner of ensure
congressional
largest water franchises or were
privatization in thegranted
world when this was excessive
domesticrainwater and recycled
water supply. This maywastewater for
adopt ecoefficient
concessions
executed inbythe LGUs or special economic zones.
1990s. non-household
measures, 3 purposes to rationalize water
including the reuse of excessive
Private developers have also built water systems in distribution.
rainwater” 9and recycled wastewater for
private
Sincesubdivisions.
then, there have Medium
beento large-scale
increasing private
private sector non-household purposes to rationalize water
WSPs include Boracay
participation Island Water,
and investment in urbanLaguna Water,
water systems in Two large distribution.
new water ”sources projects have been
Clark Water
Metro at the
Manila asClark Freeport
private companiesEconomic
were Zone,
awarded congres- launched under the PPP mode:
Subic Water
sional and Sewerage
franchises or were Company, Inc., Balibago
granted concessions by LGUs or Two large new water sources projects have been launched
Waterworks System,zones.
special economic MactanPrivate
Rock Industries,
developers have also built under 1. New Centennial
the PPP mode: Water Source – Kaliwa Dam
Project (NCWSP) costing US$416.1 million
PrimeWater
water systems Infrastructure
in privateCorporation,
subdivisions. and Calapanto large-
Medium
“The new dam will help gain water security for
Waterworks.
scale private WSPs include Boracay Island Water, Laguna 1. New Centennial Water Source – Kaliwa Dam Project
Metro Manila and its adjoining areas by
Water, Clark Water at the Clark Freeport Economic Zone, (NCWSP) costing US$416.1 million (PhP18.2 billion)
increasing the supply of raw water and reducing
TheSubic
next Water
big ticket
anditems for theCompany,
Sewerage private sector,
Inc., Balibago “The
Metro new dam
Manila’s will help on
dependence gain thewater
Angatsecurity for
however, will beSystem,
Waterworks in the development
Mactan RockofIndustries,
new raw PrimeWater Metro Manila
Reservoir. The privateand proponents
its adjoiningwill areas by increasing
construct
water sources which
Infrastructure is also a priority
Corporation, in theWaterworks.
and Calapan Philippine the supply of raw water and reducing
the 600 million liters a day (MLD) dam as well Metro
as Manila’s
Development Plan: dependence on the Angat
the 2,400 MLD water conveyance tunnel, Reservoir. The private
The next big ticket items for the private sector, however, access roads, bridges and drainage to be used liters
proponents will construct the 600 million in a day
“Develop
will be sustainable new
in the development waterraw
of new sources
watertosources which (MLD)
building dam
the dam.asHowever,
well as the the2,400
projectMLDdoeswater
not
meet
is also demand
a priority in the Philippine Development Plan:
conveyance
include tunnel, access
the construction roads,treatment
of the water bridges and
A comprehensive approach, adhering to the

drainage
plant and its to be usedand
operation in maintenance.
building the dam. The However,
Integrated
“Develop Water Resourcesnew
sustainable Management
water sources to meet New theCentennial

project does Water not include
project willthe
be construction of the
(IWRM)
demand framework for projecting the undertaken through the
water treatment BOT
plant and law’s Build-Transfer
its operation and
demand-supply
A comprehensive gaps across
approach, the country
adhering and
to forthe variant. The privateThe
maintenance. sector
Newpartner will recover
Centennial Waterits
project will
planning the development of new water sources investments from the
be undertaken amortization
through the BOT payments
law’s Build-Transfer
Integrated Water Resources Management (IWRM)
should be developed not only to support the during the 25
framework for projecting the demand-supply gaps variant. Theyears contractual
private agreement.
sector partner will recover its
growing population, but also economic activity in MWSS plans to publish the Invitation to payments during
across the country and for planning the development investments from the amortization
growth centers – based on a viable national Pre-qualify and Bid within June 2014, whileMWSSbid
of newplan.water sourcesdry should be developed the 25 years contractual agreement. plans to
land-use Extended seasons because ofnot only submissions are expected in December 2014.
to support the growing population,
climate change would further exacerbate the but also publish the Invitation to Pre-qualify and Bid within
The indicative timelines for the issuance
economic
demand activity
for water. in growth
Thus, new water centers – based on a
sources June 2014, while bid submissions are expected in
viable national land-use plan. Extended dry seasons December 2014. The indicative timelines for the
8
Ecoeffciency is having “more value with less impact on the environment”; it emphasizes monitoring of material and
energy flows of stocks and life cycle assessment. Source: NEDA op. cit. p. 139
9 PDP, p. 139.
3
International Energy Agency, Power Generation Investment in Electricity Markets
Philippines
issuance of the notice to proceed and the Resolving the issues of water supply has significant
signing of the contract is set for the first short term and long term implications for country’s
quarter of 2015.”10 economic development and sustainability. A major
of the notice to proceed and the signing of the contract task involves the rationalization of the institutional
is set for the firstBulacan
2. The quarter of 2015.
Bulk ”
Water Supply Project Robertoframework
and regulatory G. Manabat for the water sector, given
(BBWSP) costing US$542.22 million Chairman
the interests & CEO social sectors, and the
of different
Source: MWSS presentation on New Centennial Water Source – Kaliwa Dam
“The
Project (NCWSP) - June 2014 PhP 24.4 billion peso Bulacan Bulk Water
KPMG
multiple in theuses
economic Philippines
of water. The parallel major
System project will provide universal access to task is the development
T: +63 2 885 7000 of physical infrastructure in
2. The Bulacan potable
Bulk water
Waterspecifically
Supply Project for the Bulacan
(BBWSP) termsE:ofrgmanabat@kpmg.com
new raw water sources and production and
Province, increasing
costing US$542.22 the volume
million (PhP23.7 of potable
billion). distribution water in which includes specific projects
“The PhPwater supplied,
24.4 billion pesothe serviceBulk
Bulacan coverage
Waterand the initially identified opportunities for private investors
System project will provide universal access project
number of households served. The to will such as the Kaliwa dam and the Bulacan Bulk Water
be undertaken using the
potable water specifically for the Bulacan Province, projects, and other projects down the road.
increasingBuild-Operate-Transfer
the volume of potable(BOT) waterlaw under athe
supplied,
30-year contract.
service coverage It will cover
and the number the financing,
of households
served. Theconstruction,
project willoperation
be undertakenand maintenance
using the of
Build-Operate-Transfer (BOT) law under a bulk
the needed facilities for treated water
30-year
supply. Bidding for the Bulacan
contract. It will cover the financing, construction, Bulk Water
operationproject will be conducted
and maintenance using a facilities
of the needed performance
or output-based specification
for treated bulk water supply. Bidding for the approach and
bulk Water
Bulacan Bulk water project
charge as willits
bebidding
conductedparameter.
using
The MWSS
a performance hopes to publish
or output-based its Invitation to
specification
approachPre-Qualify
and bulk water and Bid
charge within June
as its 2014.”11
bidding
parameter. The MWSS hopes to publish its Invitation
toThe government
Pre-Qualify willwithin
and Bid also tender, under
June 2014. ” the PPP For further information, please contact:
mode, the transmission improvement project for the
Angat
Source: MWSS Dam worth
presentation US$131.35
on Bulacan million.
Bulk Water Supply Project (BBWSP) -
June 2014 Jerome Andrew H. Garcia
Advisory Principal
The government will also tender, under the PPP mode, the KPMG in the Philippines
transmission improvement project for the Angat Dam worth T: +63 2 885 7000 ext. 208
US$134 million or PhP5.8 billion.
E: jhgarcia@kpmg.com
10
MWSS, Presentation on New Centennial Water Source – Kaliwa Dam Project (NCWSP) - June 2014
11
MWSS, Presentation on Bulacan Bulk Water Supply Project (BBWSP) - June 2014
Infrastructure
Guide: Philippines
Issues in
developing
Dev eloping
Energy
Ener resources
gy Resour

Henry D. Antonio, Head of Advisory, KPMG in the Philippines
Pow er er
Pow generation is one
generation sector
is one where
sector whereinv inv
estments
estmentsareare
crucially dependent
crucially dependent ononthethe
privateate
priv sector .
sector. Under
Under therent
the cur current regulator
regulatory y framew
framew ork, additional
ork, additional generation
generation capacit
capacity y, particularly
, particularly for baseload
for baseload plants, can only
plants, can only be
be undertaken byundertaken by private
private investors. New investors. New have
power plants powertoplants have
be built to be builtpower
as merchant as plants, with
merchant power plants, with no government guarantees on market
no government guarantees on market demand risk and no guaranteed offtaker. demand risk and no guaranteed
offtaker.
Today
Today , the
, the tight
tight demand-supply
demand-supply balance
balance is being
is being feltfelt in the 2016, Target
and the capacity
decline of in
committed
Mindanaoand from indicate private
107.7 percent
Visayas
in the andand
Visayas Mindanao
Mindanao regions,
regions,andandepisodically in Luzon. in 2010 sector-initiated
to 100 percent power by plant
2016. projects,
Only the2013-2016Visayas will
Given the in
episodically lead time Given
Luzon. for construction
the lead time beforefor plants can be show a slight increase in the ratio from 103 percent
commissioned,
construction beforethe immediate
plants can be period and the next
commissioned, the two to to 105 percent Particulars
for the same period. Nevertheless, Grid
Luzon Visayas Mindanao
three years
immediate will and
period be athe testnext
of whether
two to three the current
years power the government expects to meet the target of 100
willindustry
be a test framework
of whether canthe
engender
current powera sufficient response percent
industry Capacityin allof the regions
committed by 2016. (See767
power Appendix
.4 429.6H) 515.0
from private
framework can investors
engenderso that adequate
a sufficient response new from
capacity can plant projects (2013-2016, in MW
be installed
private investors in asotimely manner to
that adequate newmeet the projected
capacity can Target capacity of committed and indicate private
Capacity of indicative 9,702.5 718.0 1,928.0
bedemand.
installed in a timely manner to meet the projected sector-initiated
power plant projectspower(2013-2016,
plant projects,
in MW2013-2016
demand. Particulars Grid 100.0%
Peak demand according to the Philippine Development Plan Ratio of dependable capacity 107Luzon .86% 105.32%
Visayas Mindanao
to peak demand and required reserve (2016)
is expected
Peak to increase
demand according toatthe
4.5Philippine
percent annually from 2009Capacity of committed power
767.4 429.6 515.0
to 2030. ForPlan
Development theisperiod
expected2010to toincrease
2016, this at translates
4.5 to a plant projects (2013-2016), in MW
total of
percent 11,900MW
annually fromcapacity
2009 to required
2030. For forthetheperiod
Luzon grid; Capacity of indicative power plant
9,702.5 718.0 1,928.0
2,150MW
2010 to 2016,for thisthe Visayas grid;
translates and 2,500MW
to a total of 11,900MW for the projects (2013-2016), in MW
Mindanao
capacity grid. for
required Thetherevalidated
Luzon grid; results
2,150MW matrix forin the Ratio of dependable
These targets capacity
are totobe peak
met107.86%
through new 105.32%power projects
100.00%
midterm update of the plan
the Visayas grid; and 2,500MW for the Mindanaocalls for power demand up todemand and required reserve (2016)
totalling 10,469MW in Luzon, of which 767.4MW are
2016
grid. Thetorevalidated
be met – defined as maintaining
results matrix in the midtermabove 100 percent Source:committed.
Philippine Development Plan 2011-2016
The remaining 9,702MW of indicative power
the ratio
update of theof dependable
plan calls forcapacity
power demandto total peakup to demand plus plants are expected to come mostly from brownfield
required
2016 to be metreserves.
– defined For asthemaintaining
country as aabove whole, 100the ratio is expansions of existing plants. In the Visayas, total capacity
projected
percent to goofdown
the ratio from 108.14
dependable capacitypercent as of the 2010 These
to total targets
through areistoprojected
2016 be met through to reachnew power of which
1,147MW,
baseline
peak demand to 104.39 percent
plus required by 2016. The
reserves. For thedecrease in the projects 429.6MW totallingare10,469MW
committed.inIn Luzon,
Mindanao,of which total capacity is
ratio isasweighed
country a whole,down by the
the ratio decline into
is projected Luzon
go downfrom the 767.4MW
projected are atcommitted.
2,443MWThe withremaining
515MW committed. 9,702MW of
113.4
from percent
108.14 baseline
percent as ofinthe20102010to baseline
107.86 percentto by 2016, indicative power plants are expected to come mostly
and the
104.39 decline
percent by in Mindanao
2016. from 107
The decrease in.7thepercent
ratio isin 2010 to fromThe brownfield
government expansions
has alsoofset existing
the target plants. In the
of increasing the
100 vbydown
weighed 2016.byOnly the Visayas
the decline will show
in Luzon from the a slight increase Visayas, country’stotal energy
capacityself-sufficiency
through 2016 is projected
(ratio to
of indigenous energy
in the
113.4 ratio from
percent 103 in
baseline percent
2010 to to107
105 .86percent
percent forbythe same reach 1,147MW,
sources such of aswhich 429.6MW
geothermal energy areandcommitted.
natural gas from
period. Neverthless, the government expects to meet the Malampaya) from 58.3 percent in 2010 to 60 percent by
target of 100 percent in all the regions by 2016.
For a more in-depth look on the Philippine electric energy industry, you can refer2016. to R.G. Manabat & Co.s ’ 2013-2014 annual investment guide
entitled The Energy Report: Growth and Opportunities in the Philippine Electric Power Sector available for download at www.kpmg.com.ph.
Philippines
worth noting that increasing private sector participation in
The government has also set the target of increasingthe power sectorLight
Electric and more market-based
and Railroad Company regulatory
(MERALCO)
the country’s energy self-sufficiency (ratio of regimes was
has been the global trend during
awarded the franchise to sell electricity the same periodto
indigenous energy sources such as geothermal both in industrial
Manila and as well as emerging around
52 municipalities countries. the The
city.power
1
http://plans.neda.gov.ph/pdp/chapter-10-accelerating-infrastruct
energy and natural gas from Malampaya) from 58.3 sector in many countries are more or less in the same
ure-development/
percent in 2010 to 60 percent by 2016. situation The
as inNational
the Philippines with new capacity to be in the
Power Corporation (NPC), created
mandated as merchant
1930s through power plants assume
Commonwealth Act 120, market
was
These targets are to be and
The liberalized met market-based
through new power power projects
industry put demand originally
risk. intended to develop the country’s
totalling 10,469MW
in place by thein Luzon,
Electric of Power
which 767 .4MWReform
Industry are Act hydroelectric resources.
committed. The remaining 9,702MW of indicative
(EPIRA) relies on the private sector to construct power In fact, the earlier phases of electric power industry in the
plants aregeneration
expected to come
plants to mostly from brownfield
meet demand. Private sector country have been managed by private enterprise.
In 1939, NPC constructed its first project, the
expansions of existing plants. In
investments in power generation, the Visayas, total capacity
however, have 8MW Caliraya Storage Hydro Power Station in
through 2016
beenislower
projected to reach 1,147MW,
than expected of whichenergy
vis-à-vis projected ElectricityLumban,
was first introduced
Laguna. in the Philippines
NPC continued in
to build other
429.6MWdemand.
are committed. In Mindanao, total capacity is 1890 with hydropower facilities,
the installation and by
of three 1956, NPC
electric arc lamps
projected at 2,443MW with 515MW committed. in Escolta, generation
Manila, and accounted
the firstforpower
aboutstation
one-third of the
built in
The current regulatory configuration of the power 1895. Incountry's
1901, Manilatotal Electric
generation Lightcapacity. The
and Railroad
The government has also
sector stems fromsetthetheoutcome
target ofofincreasing the
the Investment Companyremaining
(Meralco)two-thirds
took overwas the infranchise
the hands forof 336
country’sPriority
energyPlan self-sufficiency (ratio of indigenous
(IPP) program used by the country to energy private and municipally-owned
providing electricity to Manila and 57 municipalities electric utilities,
sources such as geothermal energy and natural
resolve the power crisis in the early 1990s and the gas from of which Meralco was the largest,
around the city. Private electric utilities were also accounting for
Malampaya) from 58.3 percent in 2010 to 60
consequences of the program in the aftermath of the percent by 990MW of 1,745.5MW total
established during this period in other major cities demand. Most of
2016. this private generating capacity was thermal
Asian Financial Crisis. It is worth noting that and towns throughout the country.
plant. NPC acquired Meralco's generation and
increasing private sector participation in the power
The liberalized and market-based power industry put in distribution systems outside Manila in 1953
sector and more market-based regulatory regimes The National Power Corporation (NPC), created in the 1930s
place by the Electric Power Industry Reform Act (EPIRA) when Meralco decided to concentrate its
has been the global trend during the same period through CommonwealthelectricityAct 120, was
business in the originally
Manila area.intended
2 to
relies on both
the private sectoras
in industrial towell
construct generation
as emerging plants to develop the country’s
countries. hydroelectric resources.
meet demand. Private sector
Many countries investments
are more or less in in the
power
same
generation, however, have been lower than expected Outside Manila, the electricity services were
situation as the Philippines with new capacity to be Inprovided
1939, NPC by constructed
private companiesits firstorproject, the 8MW
rural cooperatives,
vis-à-vis projected energy demand.
mandated as merchant power plants assume market Caliraya StoragepowerHydrofrom Power Station in Lumban,
either buying private generators or from
demand risk. Laguna.
NPC. NPCforward
Fast continued to to build
1972 when other hydropower
under martial law,
The current regulatory configuration of the power sector facilities, and by 1956, NPC generation accounted
stems from the outcome the government nationalized the generation and
In fact, the earlierofphases
the Investment Priority
of the electric Plan
power fortransmission
about one-third phasesof the
andcountry's
2
regulatedtotal the generation
(IPP) program used by the country to resolve
industry in the country have been managed by the the power capacity.
crisis in the earlyenterprise.
1990s and When,the consequences of the privately-owned distribution sector. in the hands
The remaining two-thirds was
private starting in 1901, Manila of 336 private and municipally-owned electric
program in the aftermath of the Asian Financial 1 Crisis. It is utilities, of which Meralco was the largest,
1
1 Cham Rowena M, The Philippine power sector: issues and solutions. The Philippine Review of Economics. Vol XLIV No 1 June 2007 p. 33-63ic Studies.
Cham Rowena
25 MarchM, The Philippine power sector: issues and solutions. The Philippine Review of Economics. Vol XLIV No 1 June 2007 p. 33-63ic Studies.
2014.
25 March 2014. op. cit.
2 Cham,
2 Cham, op. cit.

The power sector was viewed as a strategic asset, rating, the government provided take-or-pay contracts
requiring large amounts of capital which the public which transferred market demand risk to the
sector could provide. NPC embarked on an government, and guaranteed NPC’s obligations
aggravated the weak operational and financial performancethrough The NPC contracted
performance 9,085MW of
undertakings bypower from IPP plants
the national
aggressive development program of the power
of NPC and resulted in undercapacity in generation and government. (In contrast, it has been pointed out energy sales
which at one point, accounted for half of total
system with significant support from official
transmission capacity in the country. thatin the Philippines.
Thailand bidded out The
itsIPP program succeeded
independent power in drawing
development assistance (ODA) financing.
sufficient
producer [IPP]response
contractsfrom at a thetimeprivate
when sector.
its economicThe provisions
No new generating capacity was added to the in the IPP was
performance contracts, however,
attractive to foreign turned out to be
investors suchfiscally
The deep political, economic, and external debt crisis
system in the Luzon grid at the time because of thethatburdensome they submitted particularly
competitive in the aftermath
proposals of the Asian
including
which marked the culmination of the martial law
expectation that the Bataan Nuclear Power Plant assuming Financial Crisisexchange
foreign which resultedrisks and in economic
offering 10recession (weak
regime in 1986 aggravated the weak operational and
would begin operation in 1984. NPC was also in a times demand
the power being contracted for bygovernment
for electricity on which the the was paying
financial performance of NPC and resulted in
poor financial position as tariffs were not adjusted toElectricity whether or not the plants were
Generating Authority of Thailand [EGAT], dispatched) and major peso
undercapacity in generation and transmission
keep in step with costs. Thus, internally generated the Thai devaluation
power which impacted NPC’s dollar denominated
company.)
capacity in the country.
resources were insufficient to finance new capacity. take-or-pay contracts and capitalized lease payments. The
The existing generating plant was unable to meet Thefinancial impact were
NPC contracted stranded
9,085MW costs of
of power from US$1.7
IPP billion from
No new generating capacity was added to the
the power requirements because it was nearing its plants payments
which atto IPPs
one not
point, recovered
accounted from
for power
half of sales, and
total
system in the Luzon grid at the time because of
maximum life. Installed generating
the expectation that the Bataan Nuclear Power capacities in the energy sales in the Philippines. The IPP program NPC’s
US$6 billion in stranded debt incurred to cover
two major grids, Luzon and
Plant would begin operation in 1984. NPC was Mindanao, were deficits in
succeeded and accumulated
drawing sufficient subsidies
response to consumers
from the with
operated at less than their nameplate
also in a poor financial position as tariffs were ratings generation
private sector. charges
The not
provisionsfully in reflected
the IPP in the electricity bill
contracts,
notbecause
adjustedof to age.
keepFor example,
in step in theThus,
with costs. Luzon grid, but absorbed
however, turned out by NPC.
to be fiscally burdensome
availability
internally rangedresources
generated from 2,300MW to 3,100MW
were insufficient particularly in the aftermath of the Asian Financial
against new
to finance an installed
capacity.capacity
The existingof 4,321MW.
generatingSeveral Crisis Republic Act 9136,inoreconomic
which resulted the EPIRA, was passed
recession (weakin June 2001
older
plant wasoil-fired
unable thermal
to meet the plants,
power used as base load, alsodemand to restructure
for electricitythe power
on which industry and privatize
the government NPC. The
was
broke down.
requirements With no
because newnearing
it was plant toitssupplement Power Sector Asset Liability
paying whether or not the plants were dispatched) Management Corporation
existinglife.
maximum capacity,
Installed NPC ran its remaining
generating capacities plantin to the and(PSALM)
major peso was created towhich
devaluation assume the generation
impacted NPC’s assets of
themaximum,
two major grids,whichLuzonled toand Mindanao,
further were Since dollar
breakdowns. thedenominated
NPC for eventual privatization
take-or-pay contracts andand to manage its
operated
NPC was at less
in athan
weak their nameplate
financial ratings
position, rehabilitation capitalized
liabilities.leaseThepayments.
restructuring Thecentered
financialon: impact
because
and maintenance were on a piecemealgrid,
of age. For example, in the Luzon basis. were stranded costs of US$1.7 billion from payments
availability ranged from 2,300MW to 3,100MW
to IPPs a.notunbundling
recovered the fromgeneration
power sales, andand distribution
US$6 sectors
against an installed
The power crisiscapacity
precipitatedof 4,321MW.
an economic crisis. In billion in stranded from the transmission function
debt incurred to cover NPC’s
Several
1990,older
there oil-fired
were thermal
103 daysplants, used asfor an annual
of blackouts b. introduction of subsidies
competition in generation with the
base load, also broke down. With no new plant deficits and accumulated to consumers
duration of 1,273 hours, resulting in 251GWh of lostwith generation open charges
market to be triggered
not fully reflected by the privatization of
in the
to supplement existing capacity, NPC ran its
energy sales]. Daily 8 to 12-hour-long blackouts electricity 70 but
bill percent of NPC’s
absorbed by generating capacity. As of
NPC.
remaining plant to the maximum, which led3 to
severely crippled the economy as factories were June 2010, the government was able to privatize 26
further breakdowns. Since NPC was in a weak
forced to close or reduce operations.
financial position, rehabilitation and maintenance Productivity fell
Republic Actof 9136,
its generating
or the EPIRA,or operating
was passed plantsinand four
June
wereandonunemployment
a piecemeal basis. rate increased. decommissioned
2001 to restructure the power assets.
industry 20 and
of these assets
privatize
NPC. The Power comprise 91.7Asset
Sector percent of PSALM-owned
Liability Managementcapacities
To solve the crisis, the government resorted
The power crisis precipitated an economic crisis.
to the in the Luzon and Visayas.
Corporation (PSALM) was created to assume the
build-operate-transfer
In 1990, there were(BOT) 103 days format for involving
of blackouts for an
the private generationc. access
assets to of the
the transmission
NPC for eventual and distribution network,
sector in the
annual design,ofconstruction,
duration financing,
1,273 hours, resulting in and operation privatization privatized
and to manage as a long itsterm concession.
liabilities. The This took place
of the new generation
251GWh of lost energy capacity.
sales. Given
Daily 8the to urgency of restructuring in 15 January
centered on:2009 when the transmission company
resolving the economic
12-hour-long blackouts crisis caused
severely by the
crippled thepower crisis formally turned over the 25-year concession of the
and the weak as
economy negotiating
factories were position
forcedduetotoclose
its weak
or
Nationalthe
1. unbundling Transmission
generation and Corporation
distribution (TransCo) to the
reduce operations.
macroeconomic position Productivity
and creditfell and
the government
rating, National
sectors from Grid Corporation function
the transmission of the Philippines (NGCP),
3
unemployment
provided take-or-payrate increased.
contracts which transferred market which is of
2. introduction responsible
competition forinthe development,
generation with
demand risk to the government, and guaranteed NPC’s the upgrading,
open marketand rehabilitation
to be triggered byofthe the electricity grid.
To obligations
solve the crisis,
throughthe performance
government resorted undertakings to theby the privatization
d. unbundling of 70of percent
tariffs into of NPC’s generating
generation, transmission,
build-operate-transfer
national government. (In contrast, it has beenthe
(BOT) format for involving pointed out capacity. As of June
distribution, 2010, the
systems government
losses, and strandedwas costs,
private sector inbidded
that Thailand the design, out itsconstruction,
independentfinancing, power producer ableand to privatize 26 of its generating or operating
and[IPP]
operation
contractsof the
at anew timegeneration capacity. Given
when its economic performance plants and four for
e. provisions decommissioned
resolving the stranded assets. 20costs of and
thewas
urgency of resolving
attractive to foreign theinvestors
economic suchcrisis
thatcaused
they submitted these assets comprise
stranded debts through 91.7 percent
universal of levies. The
by competitive
the power crisis and the
proposals weak negotiating
including assuming foreign positionexchange PSALM-owned
governmentcapacitieswould noinlonger the Luzon offerandto guarantee
duerisks
to its weak macroeconomic position
and offering 10 times the power being contracted forand credit Visayas.
market risks through take-or-pay contracts, and
by the Electricity Generating Authority of Thailand (EGAT), would not engage in power generation.
the Thai power company. )
3 3
Cham op.
Chamcit.op.
p. 38
cit. p. 38
Philippines
3. access to the transmission and distribution participate on the demand side. WESM started
network, privatized as a long term concession. commercial operations on 26 June 2006. Currently
This took place in 15 January 2009 when the participating in the WESM are 13 generating
transmission company formally turned over the companies with 11 distribution utilities (DUs) and five
25-year concession of the National Transmission registered direct suppliers.
Corporation (TransCo) to the National Grid able to bid out 68.22 percent of NPC contracts to IPPAs.
3. access to the transmission and distribution network,
Corporation of the Philippines (NGCP), which is PSALM is also required to privatize 70 percent of the
Critical Periods
privatized as a long term concession. This took place in
responsible for the development, upgrading, and
15 January 2009 when the transmission company The total energy
On Available
Department output
Capacity:
of Energyof power
(DOE), plants
On Available under contract
Capacity
in its assessment + of the
rehabilitation of the electricity grid. Committed:
formally turned over the 25-year concession of the with NPC to independent power producer
demand-supply situation, has identified critical periods in
4. unbundling of tariffs into generation,
National Transmission Corporation (TransCo) to the administrators
the Luzon, Visayas and (IPPAs) prior togrids.
Luzon
Mindanao the start
Theof an open
largest deficits
transmission, distribution, systems losses, and April-May 2015: Projected Deficit April-June 2017: Projected
National Grid Corporation of the Philippines (NGCP), access
will occur in market.
Luzon of To-date,
up to 635MWPSALM bywas
MarchabletotoJuly
bid 2016,
out
stranded costs, and of 184 MW Deficit of 200 to 450MW
which is responsible for the development, upgrading, and up 68.22 percent in
to 940MW ofthe
NPC contracts
March to IPPAs.2018 period.
to December
5. provisions for resolving the stranded costs and
and rehabilitation of the electricity grid. The deficits in Projected
the Visayas andMarch-December
Mindanao will2018: not be as
stranded debts through universal levies. The March-July 2016: Deficit
4. unbundling of tariffs into generation, transmission, large The
but Department
will be moreof Energy
frequent. (DOE),Deficit
in itsofassessment
government would no longer offer to guarantee of 240 to 635MW Projected 270 to 940
distribution, systems losses, and stranded costs, and of the demand-supply situation, has identified critical
market risks through take-or-pay contracts, and MW
5. provisions for resolving the stranded costs and periods inthe theyears
Luzon, Visayas andareMindanao
would not engage in power generation. In Mindanao, 2013 to 2015
Visayas expectedgrids.to be
stranded debts through universal levies. The
The
critical largestbased
November-December
periods deficits
2014:on will occur in Luzon
December
available of up
2015:prior
supply, to to
Projected
the plants
government would no longer offer to guarantee market Projected Deficit of 30 to 90MW
Suppliers 635MW
committed in by
the March to July Deficit
pipeline. 2016,ofand 60MWup to 940MW in
risks throughwere encouraged
take-or-pay to enter
contracts, into long-term
and would not
bilateral contracts with
engage in power generation. users, with the power to be the March to December 2018 period. The deficits in
April-December 2015: Projected April-June 2016: Projected
delivered through the transmission grid which would the Visayas and Mindanao will not be as large but will
Deficit of 80MW to Max 220MW Deficit of 70 to 100MW
Suppliersbe paidencouraged
were through wheeling
to entercharges. The Wholesale
into long-term bilateral be more frequent. December 2017-December
Electricity Spot Market (WESM) was
contracts with users, with the power to be deliveredcreated 2018: Projected Deficit of 120 to
consisting
through the of IPPs,
transmission gridprivatized
which wouldNPCbegenerators, and
paid through In Mindanao, the years 2013 to 2015 are expected to
305MW
wheelinggenerating
charges. Theplants not yetElectricity
Wholesale privatized Spot
on the supply
Market be critical periods based on available supply, prior to
Mindanao
2013:the plantsDeficit
Projected committed
of 50 to in the pipeline. 2015:
January-February
(WESM) side, while distribution
was created consisting companies, large commercial
of IPPs, privatized NPC
and industrial users, and aggregators wouldon the 110MW
Projected Deficit of 100 to
generators, and generating plants not yet privatized 130MW
supply On
side, whileCapacity:
Available distribution companies, large CriticalCapacity
On Available Periods
2014: + Committed:
Projected Deficit of 50 to November-December 2017:
commercial and industrial users,Capacity
On Available and aggregators would 190MW On AvailableProjected
Capacity + Committed
Deficit of 20 to 50MW
participate on the demand side. WESM started commercial 2015:
Luzon Projected Deficit of 120 to 2018: Projected Deficit of 50 to
operations on 26 June 2006. Currently participating
April - May 2015: Projected Deficit of 184 MW
in the 280MW 200MW
April - June 2017: Projected Deficit of 200 to 450MW
WESM are 13 generating companies with 11 distribution
March - July 2016: Projected Deficit of 240 to 635MW March - December 2018: Projected Deficit of 270 to 940 MW
utilities (DUs) and five registered direct suppliers.
Visayas
November - December 2014: Projected Deficit of 30 to 90MW December 2015: Projected Deficit of 60MW
PSALM is also required to privatize 70 percent of the total
April - December 2015: Projected Deficit of 80MW to Max 220MW April - June 2016: Projected Deficit of 70 to 100MW
energy output of power plants under contract with NPC to
December 2017 - December 2018: Projected Deficit of 120 to 305MW
independent power producer administrators (IPPAs) prior to
Mindanao
the start of an open access market. To-date, PSALM was
2013: Projected Deficit of 50 to 110MW January - February 2015: Projected Deficit of 100 to 130MW
2014: Projected Deficit of 50 to 190MW November - December 2017: Projected Deficit of 20 to 50MW
2015: Projected Deficit of 120 to 280MW 2018: Projected Deficit of 50 to 200MW
Source: Department of Energy presentation on 2013 to 2020 Supply-Demand Outlook and Updates on Mindanao Power Situation August 2013
Infrastructure
Guide: Philippines
Luzon Supply-Demand Outlook 2013-2020
13500 Luzon Supply-Demand
2014 Outlook 2013-2020
2015 There have
2016 been recent discussions, however, on revising
13000
Mar: Maibarara Geo - 20MW Feb: Southwest Luzon 2 - 150MW the Anda
Mar: EPIRA
Powerframework,
- 82MW prompted by a spike in prices and a
Aug: Puting Bato 1 -135MW Mar: SJCI Power - 9.9MW Dec: EWC Phase 3 - 200MW
12500
Sep: Pililia Wind - 67.5MW Isabela Bio - 18 MW seeming lack of coordination between PSALM, DOE, and
Sep: Avion - 100MW Nov: Puting Bato 2 - 135MW the Energy Regulatory Commission (ERC). Such uncer
Nov: Southwest Luzon 1 - 150 MW Dec: EWC Phase 2 - 200MW
tainty in the regulatory framework may affect investment
12000
Dec: EWC Phase 1 - 200MW
11500
decisions and execution of capacity expansions.
11000
10500 It would be useful to take a page from the experience of

10000 other countries with merchant power. In the Organisation
9500 for Economic Co-operation and Development (OECD)
9000
countries and emerging markets, merchant power projects
Source: Department of Energy presentation on 2013 to 2020 Supply-Demand Outlook and
are becoming more common. In OECD countries, it is
May 13
Jul 13
Sep 13
Nov13
Jan 14
Mar 14
May 14
Jul 14
Sep 14
Nov 14
Jan 15
Mar 15
May 15
Jul 15
Sep 15
Nov 15
Jan 16
Mar 16
May 16
Jul 16
Sep 16
Nov 16
Jan 17
Mar 17
May 17
Jul 17
Sep 17
Nov 17
Jan 18
Mar 18
May 18
Jul 18
Sep 18
Nov 18
Jan 19
Mar 19
May 19
Jul 19
Sep 19
Nov 19
Jun 20
Mar 20
May 20
Jul 20
Sep 20
Nov 20
Updates on Mindanao Power Situation August 2013
shown that merchant power investor response has been
Visayas Supply-Demand
Visayas Supply-Demand Outlook 2013-2020
Outlook 2013-2020 adequate to match the capacity requirements, as long as
2016 wholesale prices for base load and for peaking plants are
3200
2014 2015
3000
Mar: Villasiga - 8MW Mar: Sn Carlos Bio - 16MW Jul: Concepcion Coalallowed
1 - 135MW to accurately signal emerging demand situations.
Jun: ASIAN Bio - 3.6MW Sep: Concepcion Coal 2 -135MW
2800 Jun: Nasulo Geo - 50MW Investors are able to plan on base load demand given the
Sep: Toledo - 82MW
2600 expectation that consumers put value and are willing to pay
2400 for security of supply.
2200
1800 The International Energy Agency (IEA) has the following

1600
recommendations:4
Mar 14
May 14
Nov 17
Jan 18
Mar 18
May 18
Jul 18
Sep 18
Nov 18
May 13
Jul 13
Sep 13
Nov13
Jan 14
Jul 14
Sep 14
Nov 14
Jan 15
Mar 15
May 15
Jul 15
Sep 15
Nov 15
Jan 16
Mar 16
May 16
Jul 16
Sep 16
Nov 16
Jan 17
Mar 17
May 17
Jul 17
Sep 17
Jan 19
Mar 19
May 19
Jul 19
Sep 19
Nov 19
Jun 20
Mar 20
May 20
Jul 20
Sep 20
Nov 20
 Define clearly the government’s role in electricity
Updates on Mindanao Power Situation August 2013 market reform and the terms of its involvement as
Mindanao Supply-Demand Outlook 2013-2020
precisely as possible.
Mindanao Supply-Demand
2900
2015 Outlook 2013-2020
2016
2700
Mar: Therma South 1 - 150MW Sep: FDC Coal - 405MW
2500
Jun: Therma South 2 - 150MW
2300
Sep: Southern Mindanao Coal - 200MW
2100
1900
1700
1500
1300
1100
Jul 18
Sep 18
Nov 18
Jan 19
Mar 19
May 19
Jul 19
Sep 19
Nov 19
Jun 20
Mar 20
May 20
Jul 20
May 13
Jul 13
Sep 13
Nov13
Jan 14
Mar 14
May 14
Jul 14
Sep 14
Nov 14
Jan 15
Mar 15
May 15
Jul 15
Sep 15
Nov 15
Jan 16
Mar 16
May 16
Jul 16
Sep 16
Nov 16
Jan 17
Mar 17
May 17
Jul 17
Sep 17
Nov 17
Jan 18
Mar 18
May 18
Sep 20
Nov 20
Start of
Updates onCritical
Mindanao Power SituationProjected
Periods Demand
August 2013 Available Capacity Available + Committed
Source: Department of Energy presentation on 2013 to 2020 Supply-Demand Outlook and Updates on Mindanao Power Situation August 2013
What is significant in the pipeline of indicative power
What is significant
projects in theofpipeline
is that most them are of expansion
indicative power
projects projects
of is that most of them are expansion projects of
existing
existingpowerpower plants.
plants.This would
This wouldbe be
an an
indication
indication that power plants, which have been operating in the country
that
with a connectivity
power plants, which to and
havea track
beenrecord of supplying
operating to the grid, are in a position to expand capacity and obtain
in the country
financing support to take
with a connectivity advantage
to and of the expected
a track record of supplying increases
to the in demand. For those with existing take-or-pay
contracts,
grid, are in a position to expand capacity and obtain financ critical periods in the demand-supply balance, they
this is also a sign that as they look at the expected
willing
besupport
able to take market
to take demand
advantage risksexpected
of the under a merchant
increases contract
in and/or expect to sell into the WESM at
market-based pricing.
demand. For those with existing take-or-pay contracts, this
is also a sign that as they look at the expected critical
There haveinbeen
periods recent discussions,
the demand-supply however,
balance, on revising
they will be able theto EPIRA framework, prompted by a spike in prices and
a seeming
take market lack demand
of coordination between
risks under PSALM,
a merchant DOE, and
contract the Energy Regulatory Commission (ERC). Such
and/or
uncertainty
expect toinsell theinto
regulatory
the WESM framework may affect
at market-based investment decisions and execution of capacity expansions. It
pricing.
would be useful to take a page from the experience of other countries with merchant power. In the Organisation
for Economic Co-operation and Development (OECD) countries and emerging markets, merchant power projects
are becoming more common. In OECD countries, it is shown that merchant power investor response has been
4
adequate to match
International the capacity
Energy Agency, requirements,
Power Generation Investmentas long as Markets
in Electricity wholesale prices for base load and for peaking plants are
allowed to accurately signal emerging demand situations. Investors are able to plan on base load demand given
Philippines
the expectation that consumers put value and are e.g. through direct price caps which could drive
willing to pay for security of supply. away needed investment.
The International Energy Agency (IEA) has the  Monitor adequacy of gas markets and
following recommendations: 4 investments.
The preference of investors in some markets for
Define clearly the government’s role in
 Combined Cycle Gas Turbine (CCGT) for building
electricity market reform and the terms of its new power generating capacity means that gas
involvement as precisely as possible. markets assume a greater importance than ever
Attracting investment in power generation for power generation development. For
requires a clear market design, with predictable governments, this means moving forward on
changes and no interference into the market or liberalization of both the gas market and the
into the operation of the independent institutions electricity market, and monitoring the adequacy
established to implement the market reform. The of investment in both gas and electric
government’s role must be clearly set out both infrastructure.
as the agent of the reforms and in its energy
the expectation policy
that consumers
involvementput value
once theand are opens.
market willing to For emerging
Greater demandmarkets,
response similar prescriptions
in electricity markets andis
pay for security of supply. observations

needed to helphaveensurebeen made
that on themarkets
electricity policy and are
 Recognize that electricity price fluctuations are regulatory

always able tomerchant power
clear, i.e. environment
by rationing to draw
electricity

The Internationalintrinsic
Energy to well-functioning
Agency electricity
(IEA) has the following sufficient response from investors.
supply according to price rather than through
A key
recommendations:markets. recommendation
brownouts is to have
or blackouts. a rational
A stronger tariff
demand
Allowing markets to signal the need for new regulations,
response will ahelp
strong independent
mitigate regulator,
market5 power in and
 investment
Define clearly in generation means
the government’s role inthat prices will
electricity viable and
electricity financially
markets andstable
provide distribution utilities.5
potential investors
go high on occasion. Governments
market reform and the terms of its involvement need to with more predictable energy (and ancillary service)
anticipate that
as precisely as possible. such fluctuations will occur and Although
prices the government
and therefore decrease is reportedly
investmentconsidering
risks.
ensure that consumers are aware of price risks invoking the emergency powers of the President
Attracting investment in power generation requires a
and have options to mitigate these risks. under the existing EPIRA
clear market design, with predictable changes and  Be prepared to detect andlaw in order
to act upontowholesale
contract for
no interference into the market or into the operation additionalmarket
electricity power during possible low power reserve
manipulation.
 Develop demand response within electricity
of the independent institutions established to Insituations in 2015, concerns
order to address the basic about
industry structure that
wholesale
markets. has beenmarket
put in place under thegovernments
EPIRA law: must open
implement the market reform. The government’s electricity manipulation,
Fluctuating spot electricity prices offer rewards
role mustasbewell
clearly set out accessthat
competitive
electricitymerchant power plants in the
as risks. Theboth as the
low price agent of
elasticity ofthe ensure markets have monitoring
reforms and in its energy policy involvement once generation sector,
mechanisms a monopoly
that cannot only detectin themanipulation
national gridas
electricity demand, especially for small
the market opens. is at least partly due to the inability
customers,
operated by a private concessionaire,
it is occurring but also take prompt action andtoa regulated
to reward consumers for adjusting their distribution
mitigate utilities This
its impacts. will continue
will reduce to pressure
be the regulatory
on the
 Recognize that electricity
consumption whenprice
pricesfluctuations are
are high. Greater framework under which the power sector will
intrinsic demand
to well-functioning electricity markets.
response in electricity markets is develop and expand to meet electricity demand in
Allowing needed
marketstotohelp
signal the that
ensure needelectricity
for new markets the future. This framework has been proven in other
investmentarein generation
always able tomeans that
clear, i.e. byprices will go
rationing countries to work in attracting sufficient investments
electricityGovernments
high on occasion. supply according needto price rather than
to anticipate in merchant power capacity as long as there is an
that suchthrough brownouts
fluctuations or blackouts.
will occur and ensure A stronger
that independent tariff regulator and transparent market
consumers demand response
are aware will help
of price risksmitigate
and have market
options based pricing.
power in electricity markets and provide potential
to mitigate these risks.
investors with more predictable energy (and
 Develop ancillary
demandservice)
response prices and therefore
within decrease
electricity Roberto G. Manabat
markets.investment risks. Chairman & CEO
Fluctuating spot electricity prices offer rewards as KPMG in the Philippines
 Be prepared to detect and to act upon
well as risks. The low price elasticity of electricity
wholesale electricity market manipulation.
T: +63
For 2 885
further 7000
information, please contact:
demand, especially for small customers, is at least E: rgmanabat@kpmg.com
In order to address concerns about wholesale
partly due to the inability to reward consumers for
electricity market manipulation, governments Henry D. Antonio
adjustingmust
their ensure
consumption when prices
that electricity arehave
markets high.
Head of Advisory
monitoring mechanisms that cannot only detect
manipulation as it is occurring but also take KPMG in the Philippines
prompt action to mitigate its impacts. This will T: +63 2 885 7000 ext. 387
reduce pressure on the government to respond, E: hantonio@kpmg.com
4
5 International Energy Agency, Power Generation Investment in Electricity Markets
Anoop
5 Singh, Private Investment in Power Sector in Developing Countries: Lessons from Reforms in Asian and Latin American Countries
Anoop Singh, Private Investment in Power Sector in Developing Countries: Lessons from Reforms in Asian and Latin American Countries
Infrastructure
Guide: Philippines
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53 | 2Infrastructure
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in a taxable y
ear shall ytax.
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ear notduring
be hwhich
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of six (6) years Codefor of projects
the Philippines. with pioneer status
allowed
The Philippines
operating
operating as
has no
compan a deduction
ycontrolled
company was ex was in
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foreign
exempt
from year
corporation
income
from income during
tax.(CFC) which
tax. and 1. for

ITH1.projects
ofITH six of (6)located
six
years(6) years
fin
or aprojects
for projects
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statusstatus
he the
rules.TNeither operating
does
Philippines
The ithas
Philippines havecompany
no formal
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foreigncorporationincome
rules (CFC)
corporation tax. (CFC)(LDA); Theand tax
four incentives
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for projects
years under
located
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ules. registered
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ormalformal thin a debt-to-equity
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as
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status; (4)
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w years
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The
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orregistered
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enterprises, foreign
enterprises, corporation
is
a debt-to-equit also y
a debt-to-equity 1. ITH
non-pioneer of sixst(6)
non-pioneer
expansion/modernization years
at
us; statand for
us; projects
three
projects;and three
(3) yearswith
(3) yearspioneer
for for
ratio(CFC)
not allowed of as rules.
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ratio ofmust Neither
3:1company
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be maint bedoes
within it have
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ained. aTcorporate formal
ax consolidation thin is
group
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xpansion/modernization for projects
expansion/modernization
on imported located
projects;
capital in a Less
projects;
equipment,
taxednot capitalization
as allowed
a not
separate
allowed rules
entity.
as each as compan
each although
compan for
y within BOI-registered
y within
a corporate a corporate groupgroup is is spare 2. Duty 2.Developed
parts ex
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and ex Area
emption (LDA);
on imported
accessories; on imported four
capit(4)alcapit
years alfor
equipment, new
equipment,
Transfer
taxed enterprises,
pricing
tax
as ed guidelines
a separate a
as a separate debt-to-equity
were
entit ratio
issued by the
y.entity. of 3:1 must betax
Philippine 3. Exemption spare projects
spare
parts
from parts withaccessories;
and
wharfage non-pioneer
and dues andstatus;
accessories; any export and threetax, (3)
maintained. Tax consolidation is also not allowed as years for expansion/modernization projects;
each company within a corporate group is taxed as a 2. Duty exemption on imported capital
separate entity. equipment, spare parts and accessories;
Infrastructure
Infrastruct
Infrastruct
ure In-depth:
Infrastruct
Guide:
ure Guide:
ure Philippines
Philippines
Guide: | 3 || 54
Philippines
Philippines
3 |3
duty,
3. 3.Ex3.
impost
Ex
emption
emption
Exemption
andfrom fees;
from wharf
from
wharf wharf
age age dues
age
dues dues
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y export
yany export
tax, tax,
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incentiv
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for
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incentive on
ratesale
for on of
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yfuel
electrification;
missionar oforfuel
y po w
orerpowgenerated;
electrification;er generated;
4. Tax exemption
duty
export
, duty
imposttax,
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breeding
and
duty,fees;and
impoststocks
fees;
andand fees;
genetic 8. Tax 7.8.
exemption
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exemptionofincentive
carbon
e for
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for missionar
carbon yand
electrification;
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emption
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ks
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and genetic 9. Tax 8.9.
credit
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emption
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of carbon
capit
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credits;
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and
5. Tax credits
materials;
genetic
materials;
on imported
materials; raw materials; services.
9. Tax 9.credit
Tax credit
services. on domestic
on domestic capitalcapit
equipment
al equipment and and
6. Tax 5.and
5.
TaxT5.
ax
duty-fee
credits
Tcredits
ax credits
onimportation
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on imported ra
ofwra
consigned
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materials;
ramaterials;
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services.
equipment;
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ax
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axdut
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y-fy-f
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ee import
ation
ation ation
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duty exemptions are also areprovided for infrastructure
also provided for
7. Additional
equipment;
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equipment;
deduction for labor expense; projects
Tax funded
and
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and
infrastructurebyexduty
Development
emptions
exemptions
projects areCooperation
funded also
are
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Agreements
Development for infrastructure
for infrastructure
8. Employment
7. 7.Additional
A
7.dditional
Additional
of deduction
foreign
deduction
deduction
nationals;
forfor
labor
flabor
or labor
expense;
expense;
expense; (e.g. projects
AusAid).
projects
funded
CooperationExemptions
funded
by Dev
Agreements by
commonly
elopment
Dev elopment
(e.g. Cooperation
provided
AusAid). Cooperation
are Agreements
for: Agreements
Exemptions
9. Simplification
8. 8.Emplo
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yment
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provided Exare
emptions
commonly
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are for:
are for:
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9. 9.Simplification
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9.to Simplification
bonded of manufacturing
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10.
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acturing
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uring wawrehouse.
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arehouse. cooperating
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ononproject
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imported
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or
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2008
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which
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as
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into duties
the
the Philippines;
on personal
and and
Philippines; andand household effects,
1. ITH
as follows:
of seven (7) years and
3.3.motor
Taxes
3. Taxes
Taxes vehicles
andandduties
and for
dutiesduties
on
personal
onpersonal
on personal
personal use andimported
and household
and household
householdandeffects, effects,
2. Duty-free
1. ITH1.ofimportation
ITHseven
of seven
(7) yearsof(7)REyears
machinery, equipment exported
and motor
into
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Philippines
vehicles
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materials;
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ITH
2. -free
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-free (7) import
ation
years ation
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the Philippines
exported into b y the
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3. Net 2. Operating
and Duty-free
materials;
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er (NOLCO); country.
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(NOLCO);
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6. VAT-zero
5. 4.Accelerated
Corporate
5.rate
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on saledepreciation;
tax of rate
depreciation;
fuel
of or
(10%)
power after
generated;
ITH; Note that the details of the Development
5. Accelerated depreciation; Cooperation Agreement should be carefully and
6. VAT-zero rate on sale of fuel or power thoroughly analyzed to determine the coverage and
generated; duration of the tax exemption. Further, there must
55 | Infrastruct
| Infrastructure
2 | Infrastruct
2 2 |ure In-depth:
Infrastruct
Guide:
ure Guide:
ure Philippines
Philippines
Guide:
Philippines
Philippines
Notebe that the detailswith
compliance of the theDevelopment
formalities orCooperation
reportorial obligations
Agreement
Note
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corporate shareholders are subject to 30 percent final of corporation
tax incentives. to must not be lower than its book value, otherwise, a
Repatriation non-resident corporate shareholders
withholding tax. The tax rate may be reduced when there are subject to donor’s tax of thirty percent (30%) shall be imposed
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is treated as an ordinary asset or a capital asset. E: mquizon@kpmg.com
Infrastructure
Infrastructure
Infrastr
Infrastruct
ucture
Guide: In-depth:
ure Guide:
Philippines Philippines
| 3 | 3 | 56
Philippines
Project Risk
Funding of
Management
Infrastructure Projects
Geno Armstrong, Advisory Principal, KPMG LLP (U.S.)
Reid Tucker, Advisory Director, KPMG LLP (U.S.)
Jonathan Jong, Associate Director,

Sharad Somani, Partner and ASPAC Head for KPMG
Power &Services Pte. Ltd.
Utilities, KPMG (Singapore)
Singapore
TheProject
worldRisk
todayManagement
is faced withismultitude
challenges yet is one
pursuant of the more
to population critical(global
growth elements to successful
project deliveries.
population to reach 9 Generally, delivering
billion by 2050), a project’s
urbanization defined
(more thanscope on time
50 percent of and withinpopulation
the world budget are
characteristics
lives of project
in urban centers), success.
ageing Unfortunately,
infrastructure, theseimperatives
low carbon success factors are often
and need not achieved, especially
for poverty
for large complex
alleviation. The needprojects whereinfrastructure
is to develop both externalatinfluences
a pace thatand internal
can project
support strong requirements
economic may change
significantly
growth overcater
to not only time.to the growing population but also to help lift masses of people now
below the poverty line. Of the about 945 million people below poverty line globally, close to 21
percent lives in Southeast Asia.1
The challenge today is not the lack of infrastructure launched multiple social and economic
projects or financing. It is the availability of funding to infrastructure projects, Indonesia has a list of
the projects being made available to the market. The key PPP projects to be implemented as PPPs
quality of the regulatory framework, market 5. Financing Institutions – Clifford capital has been
attractiveness, commercial sustainability and set up in Singapore to fund infrastructure
transparency as well as lack of successful projects in the region
precedence for smooth implementation of the 6. Project preparation support – Asian
Development Bank (ADB) and International
infrastructure projects in various developing countries
Enterprise (IE) Singapore have set up a center of
pose major impediments. A few commendable
excellence in Singapore to help identify and
steps have been taken by the governments in the
prepare infrastructure opportunities for potential
region including – PPP
1. Setting up of Public-Private Partnership (PPP)
Given the need of infrastructure investments in the
Center – The Philippines reorganized the
Build-Operate-Transfer Center into the PPP
region (US$60 billion is needed per year until 2022 to
Center in 2010 to facilitate the implementation meet infrastructure needs in ASEAN 4 ) and the
PPP programs and projects current private financing quantum (US$18 billion
2. PPP regulatory and contractual framework – worth of financing was arranged by the top 10 banks
State Enterprise Policy Office (SEPO) in Thailand in ASEAN between 2009-2013 5 ), we are surely
has set up comprehensive framework for PPPs looking at a huge gap. The private participation is very
3. Supporting Institutional framework – Indonesia low compared to the target of at least 50 percent of
3
has set up IIF 2 and IIGF infrastructure projects to be implemented as PPPs in
4. Pipeline of pilot projects – Philippines has the region. So the question is what is required for us
1
Source: UNESCAP Statistical Yearbook for Asia and the Pacific 2011
2
Indonesia Infrastructure Fund
3 Indonesia Infrastructure Guarantee Fund
4
World Economic Outlook, S&P, and KPMG Analysis
5 Infrastructure Journal and KPMG Analysis
Philippines
to make the ASEAN infrastructure PPP financing a Given the size of Philippine GDP (~US$250 billion+),
US$30 billion per annum market? if the government can target to divest assets worth 1
percent of the GDP per year, that not only means a
While the regulatory and institutional constraints are ready pipeline of US$2.5 billion per year of operating
well understood and are also being addressed infrastructure assets that could benefit from better
comprehensively through intervention by multilateral technology and management practices brought in by
agencies like the World Bank and the Asian the private sector, but also a source of capital for
Development Bank, perhaps we need further government to reinvest in new greenfield
innovation and out of the box thinking by the industry infrastructure projects.
stakeholders to realise the vision. Also some simple
course correction measures by the government and This will not only potentially increased the
tapping on the most underused source of public infrastructure spend in the country from current
capital may be a solution. levels (potentially by one percent point increasing
from 2.5 percent to 3.5 percent for Philippines) but
Monetization of government infrastructure assets also provide an opportunity to set up successful
One alternative worth considering is to bolster the precedence for infrastructure project developers and
ability of states to raise financing through financiers. This in turn also helps strengthen
monetization of the infrastructure assets and reinvest institutional capability at the public sector and
in greenfield infrastructure development. Privatization enhanced performance for infrastructure assets.
of government assets has been undertaken by
various countries in the region. For the ASEAN region of over 620 million people and
combined GDP of US$2.2 trillion, a one percent
The Philippines, for example, has carried out privatization target can generate US$22 billion of
privatization of assets across sectors – oil and gas revenue per year which can go a long way in meeting
(O&G), water, power, airports, etc. The aggregate the projected annual infrastructure investment
infrastructure spend in Philippines has been between requirement in ASEAN of US$60 billion. The funding
2.0 percent to 2.5 percent of the gross domestic raised thus could be potentially also be used to
product (GDP) over the last few years leading to a provide viability gap funding for infrastructure
strong infrastructure asset ownership. projects structured as PPPs. (See box in the next
page for the concept)
Infrastructure
Guide: Philippines
register and develop efficient response plans that focus impact on the project.
attention
Upfront on capital
items with higher priority.
contribution It is important
/ Viability Gap Funding to – Many infrastructure
 Acceptanceprojects– fail
proceeding as planned and
the commercial
identify all potential
viability test althoughrisksthe
that will require
economic follow-up
rationale for thebyproject
the may be very strong. accepting
This isthe outcome
mainly of a risk.
on account of
project
poorteam.
payment ability, underdeveloped tariff models, regulatory constraints  Finalizing and documenting
and political will. Until thethe time various
we risk
are able to graduate to full cost recovery models on infrastructure utility responses identified
service pricing, by each
a good optionresponsible
is for party. The
Stepgovernment to provide
2 – Quantitative upfront grant / low cost debt / zero-rated bondsplan
Analysis to defray
should the high tariff
clearly define expectations
the agreed upon response
For for making theanalysis,
quantitative project viable in the team
the project light ofassigns
lower traffic
a most forecasts. Indonesia has set
for a risk, the up a VGF facility
responsible andresults
party, this from both
could
likely costbevalue
a goodto precedence
each identifiedfor other ASEAN
risk. This countries
value to follow. The the
takes into challenge is, of course,
quantitative availabilityanalysis,
and qualitative of and a
financing with
consideration boththe state
the exchequer
probability andinpotential
the regionimpact
and the ofstrain the state budget.
budget and Role of multilaterals
timeframe for the(like
risk responses.
theADB, Worldoccurrence.
risk event Bank, etc.) could be effective,
Determining wherein,and
probability they could structure a framework and a time bound
roadmap
impact for moving
can result from towards
a varietycost reflective model
of exercises, for utility services
including: to make
Monitoring andthis more sustainable while
Control
state governments find avenues for raising funding.
 Interviews – gathering impact and probability data The final step of risk management is monitoring and
for a range of scenarios (e.g. optimistic, most likely, control. This process should be set up to track potential
and pessimistic). risks, oversee the implementation of risk plans, and
Governments
 Decisionsmust,Trees
however, carefullythe
– comparing evaluate assets
probability of most
risks attractive
evaluateto the
private investors, of
effectiveness and consider
risk management procedures.
regulatoryand oversight to ensure service affordability
rewards between various decisions. and consumer protection, since these assets
Monitoring and control should occur are primarily
throughout the project
public utilities.
ModelUnderstanding sovereign cash
simulations – conducting flowssimulation
a project would also help establish
lifecycle a practical
and help improve timeline
and guide for greenfield
the overall risk
development.
in order Learning from potential
to quantify the Philippines,
impactspower to theprivatization
project. has to be reflected
management process. so that
Thisthestepend customer also
should:
feels the benefits of privatization by way of improved performance of the utility and competitive tariffs. We also
need to see how to effectively use the proceeds for the developmentofEquip greenfield projects and
management rather thethan onlyteam to make
project
extinguishing
Response Planningthe debt obligations and leases. (Power sector privatization informed decisions regarding risk. largely
proceeds in the Philippines were
used to service debt and lease obligations.)
Response planning is the phase where the project team  Evaluate the effectiveness of risk response actions.
develops response actions and
Infrastructure andalternative options
Other Capital to
Outlay  Identify risk characteristics
PSALM: that Proceeds
Use of Privatization appear to have
reduce project risks. Project teams use response planning changed from what was documented in earlier
to200,000
decide ahead of time how they will address possible risk 3.0 %identification and
1 analysis stages.
Regular Debt Service
occurrences and how they will avoid, transfer, mitigate, or
millions
150,000 Lease Obligations

accept project risks. Response planning must take into Tools used for monitoring and control include:
Debt Prepayment
PHP (%)
2.0 %
consideration
100,000 available resources and potential  Project25Risk Audits 24
– a seriesOthers
of audits that examine
repercussions of the response plans. The goal of response the effectiveness of risk response strategies and
PERCENTAGE
50,000 1.0% project risk assessments. These audits can be used

planning is to align risks with an appropriate response
based on the severity of the risk along with cost, time, and to stimulate process improvement and make
feasibility considerations. Risk response planning includes: 0.0% recommendations regarding the risk management
procesAs. 50
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
 Assigning responsibility for identified risks to  Project Risk Report – a summary report or
appropriate project team members or stakeholders. dashboard that communicates the risk status for a
Source: Department of Budget and
It is imperative Management
that the assignment take into Source: Power
project. ThisSector Assets
tool can beandcustomized
Liabilities Management
to update
consideration
Capital Markets Solutionthe individual’s capability to address management on current project risks.
specificsource,
Other financing risk areas.
whichAssigning
has largely a risk to someone
remained untapped in Asian markets, is the local capital markets. The
nominal average savings rate in Asian countries isarea
who has little or no knowledge of a risk 37.5ispercent
not and Monitoring
is expectedandtocontrol
remainisconstant
essentialfor forthemaintaining
next 20 effective
years. Not much of this savings go into capital markets. The ASEAN market capitalization is at US$1.1 trillion – for
6 an effective risk planning approach. and efficient risk management. It is a barometer
 of
only half Developing
the region’s a response
GDP – in plan
local to addressbonds
currency the by end 2013. determining
7
Nearly 80how well of
percent your risk is
which management
from more plan is
developedidentified
Malaysia,risk. This process
Singapore should be
and Thailand. iterative
Such and
underutilized designed.combined
financing, If monitoring
withand
the control
high savingsreveals that certain
rate,
indicate ainclude
significantall stakeholders affected
source for further by the risk.capital.
infrastructure risks are not being mitigated or avoided as planned, then an
Common options for a response include: adjustment can be made to the response plan. Likewise, if
 Avoidance – modifying the project plan
A few initiatives are being undertaken in the region to channel more to avoid monitoring and control
of the savings reveals
into the thatmarkets.
capital an identified
The risk is
the potential condition or occurrence. unlikely to materialize, the
Credit Guarantee and Investment Facility (CGIF) is a commendable initiative to encourage corporate sector to raise plan can be adjusted to
 Transference – shifting the consequences and reprioritize the risk to a lower
local currency bonds in their capital markets with improved credit rating. The inaugural guarantee of Thai Baht and level.
Indonesian Rupiah responsibilities
bonds in 2013 associated
bodes wellwithfor
thethe
risk to a and we believe it can gain momentum in the years
concept
ahead. The success,third party
plus (often accomplished
the pipeline of guaranteeby contractual Benefits
offers this year, promptedof Risk
CGIF Management
contributors to raise the
guarantee capacity agreement).
to US$1.75 billion. 8 This paves the way to guaranteeingAlthough aproject
well-designed and executed
bonds, thereby helpingrisk management
support
 Mitigation
regional infrastructure – taking preventative action to
development. process can significantly reduce the risk of failure, the 
reduce the probability of a risk occurrence or Identify risk characteristics that appear to have changed
6
NBER Working Paper No. 17581 (The National Bureau of Economic Research)
7
Asia Bond Monitor June 2014, ADB
8 CGIF Progress Report 2013, ASEAN
59 2
| Infrastructure In-depth:
Philippines
2013 LCY Bond Market
800
Billions
600
US$(%)
400
PERCENTAGE
200
Indonesia Malaysia Philippines Singapore Thailand Vietnam
Government Corporate GDP
2013 LCY Bond Issuance
400
Billions
300
US$(%)
200
PERCENTAGE
100
Indonesia Malaysia Philippines Singapore Thailand Vietnam
Government Corporate
Source: Asian Bond Monitor
Others such as the ASEAN Infrastructure Fund (AIF) capital markets solution (bonds, infrastructure funds,
and Climate Investment Fund (CIF) also offer an etc.) in the short to medium term, that could make
alternative investment for country reserves and US$20 billion per annum available to infrastructure
pension funds. These funds have started to have an project financing in ASEAN.
impact on several countries – the Philippines, for
instance, is drawing US$250 million from CIF’s Clean Conclusion
Technology Fund for small, solar-powered vehicles, The above two sources of financing, viz.
industrial energy efficiency, and renewable energy. monetization of assets and the capital markets
solution, could cumulatively bring up to about US$ 40
These are good initial steps and clearly much needs billion per annum thereby significantly helping meet
to be done by the central banks and regulators of the target spend of US$60 billion per annum for
each country to help develop a thriving debt capital whole of ASEAN in the infrastructure space.
market solution that one day could match the
success achieve in Northern America and Europe.
Education and comfort relating to understanding of
the nature of risks in a capital market bond issuance
are critical for its success. If we can get even 25
percent of savings moving to infrastructure through
Sharad Somani
Partner and ASPAC Head for Power & Utilities
KPMG in Singapore
E: sharadsomani@kpmg.com.sg
Infrastructure
Guide: Philippines
Pr
Prooject
ject Risk
Risk
Manag
Management
ement

ReidTucker, Advisory Director, KPMG LLP (U.S.)
Reid Tucker, Advisory Director, KPMG LLP (U.S.)
Jonathan
Jonathan Jong,Jong, Associate
Associate Director,Director, KPMGPte.
KPMG Services Services Pte. Ltd.
Ltd. (Singapore) (Singapore)
Project
Project Risk
Risk Management
Management is frequently
is frequently overlooked
overlooked yetyet is one
is one of of
thethe more
more critical
critical elements
elements to to successful
project deliveries.
successful Generally,Generally,
project deliveries. deliveringdelivering
a project’s defined scope
a project’s definedonscope
time and within
on time budget
and withinare
characteristics
budget of projectofsuccess.
are characteristics Unfortunately,
project success. these success
Unfortunately, these factors
successare often are
factors notoften
achieved,
not especially
for largeespecially
achieved, complex projects
for large where
complex both external
projects influences
where and internal
both external project
influences andrequirements may change
internal project
significantlymay
requirements overchange
time. significantly over time.
Project
Project riskrisk management
management is aiscontinuous
a continuous process
process of of project teams
as tracking potentialmay express
change the view
orders, that “everything we do
and project
identifying, analyzing, prioritizing, and mitigating
identifying, analyzing, prioritizing, and mitigating risks risks that is risk management. ” While
teams may express the view that “everythingall of these activities
we do help to
threaten a project’s likelihood of success
that threaten a project’s likelihood of success in in terms of cost, is risk management.” While all of these activities helprisk, they
identify and manage discrete elements of project
schedule, quality, safety, and technical
terms of cost, schedule, quality, safety, and technical performance. do not fully
to identify describediscrete
and manage a comprehensive
elements approach
of projectto project
Organizations and owners often
performance. Organizations and owners often consider project risk risk, they do not fully describe a comprehensive risk
risk management. A comprehensive project
management activities as “nice to
consider project risk management activities as “nicehave” on a project rather management
approach to projectapproach should haveAthe following
risk management.
than as a core component of
to have” on a project rather than as a core project controls. Additionally, components, which should
comprehensive project risk management be scalableapproach
to the specific
there is some
component confusion
of project between
controls. organizations
Additionally, there is and projectshould project’s
have size and type:components, which should
the following
someteams as to what
confusion exactly
between constitutes and
organizations risk management
project be scalable to the specific project’s size and type:
activities.
teams as to what exactly constitutes risk 1. Strategy and Planning
management activities. 2. Risk Identification
1. Strategy and Planning
Defining Project Risk Management 3. Analysis
2. Risk (Quantitative & Qualitative)
Identification
The objective of project
Defining Project Risk Management risk management is to understand 4. Response Planning& Qualitative)
3. Analysis (Quantitative
project and program level risks,
The objective of project risk management is to minimize the likelihood of 5. Monitoring
4. Response Planning and Control
negative events,
understand and program
project and maximizelevel the risks,
likelihood of positive
minimize 5. Monitoring and Control
theevents on project
likelihood and program
of negative events, and outcomes.
maximize Project
the risk Strategy and Planning
management is a continuous process
likelihood of positive events on project and program that begins during Strategy and planning activities set the foundation for a risk
The power industry is one in which project risk management is
the planning phase and ends once
outcomes. Project risk management is a continuous the project is management program and ultimately determine whether
particularly ill-defined. Where a utility has both a regulated and
successfully commissioned and
process that begins during the planning phase andturned over to operations. an the initiative
unregulated is successful.
business Duringside
unit, the regulated theoften
strategy and
focuses
ends once the project is successfully commissioned its planning
risk managementphase, an organization
procedures around will
cost define
recovery. how
In risks are
Construction owners,
and turned over to operations. project teams, and contractors often addressed
contrast, and managed.
the unregulated Strategy
side typically and
has a more planning
traditional should
define and apply risk management activities differently on arisk take management approach.
into consideration:
project. Owners
Construction owners, may practice
project informal
teams, or ad hoc practices,
and contractors
often define and apply risk management activities as risk
such as stage gate approval, that they interpret Strategy and Corporate
Planningor enterprise wide risk management
management activities, contractors
differently on a project. Owners may practice may define risk Strategy and planning(including
guidelines activities tolerance levels for for
set the foundation risk)
management as tracking potential
informal or ad hoc practices, such as stage gate change orders, and a risk management program and ultimately,
approval, that they interpret as risk management determine whether the initiative is successful.
activities, contractors may define risk management During the strategy and planning phase, an
Philippines
organization will define how risks are addressed and
managed.organization
Strategy and willplanning
define how should
riskstake
areinto
addressed and process to solicit input from all project stakeholders
consideration:
managed. Strategy and planning should take into including those outside of the core project team.
consideration:  prject
Potential team membersto(planners,
contributors engineers,
risk identification include:
 Corporate or enterprise - wide risk management architects, contractors, etc.)
guidelines (includingortolerance
 Corporate enterprise levels forrisk
- wide risk)
 ris management
 project team team members
members (planners, engineers,
 Available management
resources (staffing, budgets)
guidelines (including tolerance  subject matter professionals

architects, contractors, (IT, etc.)
Safety, Legal, etc.)

 Preferredlevelsreporting and
communication protocols
for risk)  customers risk (internal and external)
management team members
 The organization’s strategic objectives
 Available resources (staffing, budgets)  end users
 subject matter professionals (IT, Safety, Legal,

 Preferred reporting and communication
 organization etc.)management and leadership
Strategy and planning
protocolsactivities include:  customers (internal and external)
1. Assigning
 The roles and responsibilities
organization’s strategicrelated to risk
objectives Successfully  capturing
end usersall project risks increases with
management activities. Identifying and defining frequent communication
 organization andmanagement
feedback among and project team
leadership
requirements for project stakeholders regarding risk members and stakeholders. These discussions should
management
Strategy andactivities.
planning activities include: attempt to identify inaccuracies,
Successfully capturing all inconsistencies, and
project risks increases
2. Establishing common
1. Assigning rolesrisk categories
and for identified
responsibilities related to assumptions regarding the project. The
with frequent communication and feedback resulting product
among of
risks. Categories can eitheractivities.
risk management be based Identifying
on common and these working sessions should be the initial
project team members and stakeholders. These list of identified
industry risks
defining or on the organization’s
requirements stakeholdersrisks.
risk categories
for project discussions should attempt to identify inaccuracies,
(e.g., construction,
regarding risk financial, operations,
management governance,
activities. inconsistencies, and assumptions regarding the
etc). 2. Establishing common risk categories for From theproject.
initial listThe
of identified risks, a risk
resulting product register
of these or log
working
3. Developing a risk matrix
identified risks. and assigning
Categories canrisk ratings
either be to can be populated to ensure that all risk items are
sessions should be the initial list of identified risks. analyzed,
identifiedbased
risks. on
Thecommon
risk matrix shouldrisks
industry define or onriskthe prioritized, and monitored. Risk registers should typically
ratings based on probability
organization’s and impact(e.g.,
risk categories by taking include theFromfollowing fields:
the initial list of identified risks, a risk register
into account the organization’s
construction, financial,risk tolerance.
operations, or log can be populated to ensure that all risk items
governance, etc.). 1. are
Risk Type prioritized, and monitored. Risk
analyzed,
Risk Identification
3. Developing a risk matrix and assigning risk 2. Description
registers should typically include the following fields:
Risk identification is theto
ratings identification of allThe
identified risks. possible risks
risk matrix 3. Cost Impact
that could eithershould
negatively
define or positively
risk ratingsaffect
based theonproject.
probability 4. Probability
1. Risk Type
It is important inand the impact
risk identification
by taking into process
accountto solicit
the 5. Risk Level2. Description
input from all project stakeholders
organization’s including those outside
risk tolerance. 6. Possible Responses
3. Cost Impact
of the core project team. Potential contributors to risk 7. Action Owner
4. Probability
identification
Risk include:
Identification 5. Risk Level
Risk identification is the identification of all possible 6. Possible Responses
risks that could either negatively or positively affect 7. Action Owner
the project. It is important in the risk identification
Infrastructure
Guide: Philippines
Analysis
register and develop efficient response plans that focus impact on the
feasibility considerations. Riskproject.
response planning
Theattention
analysison phase
itemsdetermines
with higherthe priority.
likelihood It is and
important to includes:  Acceptance – proceeding as planned and
impact
identifyof each
all potential
identified risksriskthat
andwillprioritizes
require follow-up
risks for by the accepting the outcome of a risk.
management
project team. attention. Successful risk analysis  Assigning
Finalizing responsibility
and documenting for identified risks risk
the various to
requires objective thinking and input from those most appropriate
responses project
identifiedteambymembers or
each responsible party. The
familiar
Step 2with– Quantitative
the area affected Analysis by the possible risk. stakeholders.
plan should It is imperative
clearly define the that the upon response
agreed
Analysis
For quantitative
is typicallyanalysis,
a two-step the approach:
project team 1) assigns a most assignment
for a risk, take into consideration
the responsible the from both
party, results
qualitative
likely costanalysis,
value toand each 2) identified
quantitative risk. analysis.
This value takes into individual’s capability
the quantitative and toqualitative
address specific analysis, risk
and a
consideration both the probability and potential impact of areas.
budget Assigning a risk to for
and timeframe someone
the riskwho has
responses.
Step
the1risk
– Qualitative
event occurrence.Analysis Determining probability and little or no knowledge of a risk area is not an
Forimpact
the qualitative
can resultanalysis,
from a variety the project
of exercises,
team assigns including: effective
Monitoring andrisk planning approach.
Control
a priority
 level
Interviews
(e.g. high,
– gathering
medium, impact
low) to andeach
probability
risk. data  Developing
The final step ofarisk response
management plan to is address
monitoring the and
The priority forlevel

a rangeshould
of scenarios
be aligned (e.g.
with optimistic,
the most likely, identified
control. risk. This
This process process
should be setshouldup to be
track potential
organization’s
and pessimistic).
risk management plan, risk tolerance risks,iterative
overseeand theinclude all stakeholders
implementation of risk affected
plans, and
level, and
 Decisions
other organizational
Trees – comparing objectives. the Theprobability
priority of risks by the
evaluate therisk. Common options
effectiveness for a response
of risk management procedures.

levels canand be rewards
used to rank between the risks
variouson the decisions.
risk include:and control should occur throughout the project
Monitoring
register and Model develop
simulations
efficient–responseconducting plans
a project
that simulation lifecycle Avoidance
 and – modifying
help improve and guidethe project
the overallplan risk
to
focus attention
in order ontoitems
quantify withpotential
higher priority.
impactsIttoisthe project. management avoidprocess.
the potential This condition
step should: or

important to identify all potential risks that will require occurrence.
follow-up by the project team.  Equip Transference

management – shifting
and thethe project
consequencesteam to make
Response Planning and responsibilities
informed decisions regarding associated risk.with the
Step
Response
2 – Quantitative
planning Analysis
is the phase where the project team risk to athe
 Evaluate third party (often of
effectiveness accomplished
risk response actions.
Fordevelops
quantitativeresponseanalysis,
actionsthe project
and alternative
team assigns options a to by contractual
 Identify agreement).
risk characteristics that appear to have
most
reduce
likelyproject
cost value
risks.toProject
each identified
teams use risk.
response
This planning  Mitigation
changed from – taking
what was preventative
documented action to
in earlier
value
to decide
takes into ahead consideration
of time howboth theythe willprobability
address possible risk reduce the and
identification probability
analysis ofstages.
a risk
andoccurrences
potential impact and how of thetheyrisk willevent
avoid, occurrence.
transfer, mitigate, or occurrence or impact on the project.
Determining
accept project probability
risks. Response
and impactplanning can result must from takea into Tools used Acceptance
for monitoring – proceeding
and control as include:
planned
and
variety
consideration
of exercises, available
including:
resources and potential  ProjectacceptingRisk the
Auditsoutcome
– a series of a of risk.
audits that examine

repercussions of the response plans. The goal of response  Finalizing and documenting
the effectiveness the various
of risk response risk
strategies and
planning is to align
 Interviews risks withimpact
– gathering an appropriate
and probabilityresponse
responses
project risk identified by each responsible
assessments. These audits can be used
baseddataon the for aseverity
range of ofscenarios
the risk along (e.g. with cost, time, and
optimistic,
party. The plan process
to stimulate should clearly
improvementdefine the and make
feasibility
mostconsiderations.
likely, and pessimistic). Risk response planning includes: agreed upon responseregarding
recommendations for a risk,the therisk management
 Decisions Trees – comparing the probability of responsible
procesAs.party, results from both the
 Assigning
risks and rewards responsibility
betweenfor identified
various risks to
decisions. quantitative
Project Risk andReport
qualitative analysis, report
– a summary and a or
 Modelappropriate project
simulations team members
– conducting or stakeholders.
a project budget and timeframe
dashboard for the riskthe
that communicates responses.
risk status for a
It is imperative
simulation in order that the assignment
to quantify potentialtake into
project. This tool can be customized to update
consideration
impacts the individual’s capability to address Monitoringmanagement
to the project. and Control
on current project risks.
specific risk areas. Assigning a risk to someone The final step of risk management is monitoring and
Quantitative whorisk analysis
has little is or
oneno of knowledge
the tools usedofbyautilities
risk area to is not control. This process
Monitoring and controlshould be set upfor
is essential to maintaining
track effective
justify contingency levels to the regulatory bodies.
an effective risk planning approach. potential risks, oversee
and efficient the implementation
risk management. of risk for
It is a barometer
 Developing a response plan to address the plans, and evaluate
determining howthe welleffectiveness
your risk management of risk plan is
Planningrisk. This process should be iterative and management
Responseidentified designed. If procedures.
monitoring Monitoring
and control and revealscontrol
that certain
Responseincludeplanning all is
stakeholders
the phase where affected thebyproject
the risk. should
risksoccur
are not throughout
being mitigatedthe project lifecycle
or avoided as and
planned, then an
team developsCommon options
response for a response
actions and alternativeinclude: help improve and
adjustment canguide
be made the overall risk management
to the response plan. Likewise, if
options to  reduceAvoidance
project–risks.modifying
Project theteams
project use plan to avoid process.
monitoringThis andstepcontrol
should:reveals that an identified risk is
response planning the potential
to decide condition
ahead ofortime occurrence.
how they unlikely to materialize, the plan can be adjusted to
will address Transference
possible – shifting the
risk occurrences and consequences
how they and  Equip management
reprioritize the risk to a lower and the project team to
level.
will avoid, transfer, responsibilities
mitigate, or associated
accept project with the risks.risk to a make informed decisions regarding risk.
Response planning third party
must(oftentake into accomplished
consideration by contractual  Evaluate
Benefits of RisktheManagement
effectiveness of risk response
available resources agreement).
and potential repercussions of the actions.
Although a well-designed and executed risk management
response plans. MitigationThe goal– of taking preventative
response planningaction is to to  Identify
process risk characteristics
can significantly reducethat the appear to
risk of failure, the 
align risks withreduce the probability
an appropriate response of a based
risk occurrence
on the or haverisk
Identify changed from what
characteristics that was documented
appear in
to have changed
severity of the risk along with cost, time, and earlier identification and analysis stages.
Philippines
Tools used for monitoring and control include: Benefits of Risk Management
Tools used for monitoring and control include: Although a well-designed and executed risk
 Project Risk Audits – a series of audits that Benefitsmanagement
of Risk Management
process can significantly reduce the
 Project Risk Auditsthe
examine – aeffectiveness
series of audits thatresponse
of risk examine Althoughrisk
a well-designed
of failure, the and
benefitexecuted risk management
of performing a
the effectiveness
strategiesofand
riskproject
responseriskstrategies
assessments.and process comprehensive
can significantlyriskreduce
analysis mayofbefailure,
the risk costlythe
and
project risk assessments.
These audits can beThese
used audits can be used
to stimulate benefit of performing for
burdensome a comprehensive
smaller projects risk analysis
with limitedmay be
to stimulate process
process improv
improv ement
ement andandmakemake costly and burdensome
complexity. for smaller
As noted earlier,projects with limited
risk management
recommendations regardingregarding
recommendations the risk management
the risk
complexity. As noted
processes earlier,
should berisk management
scalable to the sizeprocesses
and
procesAs.management process.
should be scalable to
complexity ofthe size and complexity
an organization’s program of or
an project. To
 Project Risk Report
Project Risk– Report
a summary report or
report or
– a summary organization’s
achieve program
this, anororganization
project. To achieve this, an defining
should consider
dashboard that communicates
dashboard the risk status
that communicates forstatus
the risk a organization should consider defining a baseline
a baseline set of procedures to apply to all setprojects
of
project. This
for atool can be
project. customized
This tool can be tocustomized
update to procedures to apply to all projects along with a more
along with a more rigorous set of procedures for high
managementupdateonmanagement
current project onrisks.
current project risks. rigorousvalue,
set of complex
procedures for high value, complex projects.
projects.
Monitoring and control

Monitoring andiscontrol
essential for maintaining
is essential effective
for maintaining The valueTheof value
risk management has traditionally
of risk management been a been
has traditionally
and efficient risk management.
effective and efficient riskIt ismanagement.
a barometer for It is a difficult concept
a difficulttoconcept
quantify.toMany organizations
quantify. and project
Many organizations
determining how well
barometer foryour risk management
determining how well plan
your isrisk teams understand the risks as they impact
and project teams understand the risks as their respective
they
designed.management
If monitoringplan andiscontrol
designed.reveals that certain
If monitoring and roles on impact
the project. However, without a risk
their respective roles on the project. management
risks are control
not being mitigated
reveals or avoided
that certain risksasare
planned,
not being then an process However,
for identifying,
withoutanalyzing, quantifying, process
a risk management and for
adjustment can be or
mitigated made to the
avoided asresponse
planned, plan. Likewise,
then an if
adjustment communicating
identifying, analyzing, quantifying, and the ability
project risks to all stakeholders,
monitoring canandbecontrol
made to reveals that an identified
the response risk is if
plan. Likewise, to effectively manage project
communicating risks
project risksis to
greatly diminished. the
all stakeholders,
unlikely to materialize,
monitoring the
and plan can
control be adjusted
reveals to
that an identified risk The twoability
case studies belowmanage
to effectively help demonstrate
project risks theisvalue
greatly
reprioritize
is the risk to amaterialize,
unlikely lower level.the plan can be adjusted to and benefit of a comprehensive risk management
diminished. The two case studies below help process.
reprioritize the risk to a lower level. demonstrate the value and benefit of a
comprehensive risk management process.
Infrastructure
Guide: Philippines
CaseIn both
Studythe 1 case studies, the risks were well-known to the integrating project lifecycle
risk management
and project intocontrol
their project
activities. By
project
Project teams and New
Description: could medical
have likely beenbuilding,
office avoided or the protocols
integrating
and controls.
risk management
Primary considerations
steps into the approval for an
mitigated
US$30+ if a risk management process would have been inorganization
million process, stage to establish
gates,an and effective
project plan reporting,
include: the importance
place. Having a risk management process would have of risk management is emphasized and it becomes a
Riskallowed the organizations
Description: In order toto commission
track, quantify, the plan and  Allottingelement
mandatory appropriateof the resources to perform
project control risk
environment.
building
communicate
at the completion
the risks to of individuals
construction, with thetheutilities
capability to management activities.
needhelptomitigate
be connected
or avoid to the
the risk.
public utility system (gas  Creatingadherence
Monitoring an environment to riskthat embraces procedures
management and
and electric). Throughout the project the team could promotes risk
An organization management
should and actively
perform regular monitoring and
notEmbedding
get a commitmentRisk Management
from the utility into Day-to-Day
company for Activities encourages
auditing of their andrisk pursues
management risk management
process. As at previously
whenEffective
they would
risk management
complete the is connection.
typically achievedThis riskwhen an all levelsthis
mentioned of the
can organization.
be accomplished through the use of a
was organization
never communicated
undertakesbeyond an active thecommitment
project teamto  Clearly
risk defining and
report/dashboard andtraining personnel
risk audits.
on risk
andintegrating
there wasrisk no analysis
management of theinto impact
theirforproject
a delay protocols
or management controls.
an and
alternative
controls. planPrimary
developed considerations
to address for thean risk.
organization to Risk Reporting – reporting should be evaluated by
establish an effective plan include: Developing

management a risk on management
a regular basis processto ensure risks are being
Risk Impact: The risk ultimately did occur and Theidentified,
first step tracked,
to integrating risk management
and accounted into planning.
for in project
resulted  inAllotting
the need appropriate
for temporary resources
generators,
to perform
an risk yourManagement
project activities is to
should bedetermine
diligent in who is bestrisk reports
reviewing
increase inmanagement
the contractor’s activities.
general conditions, and suited
andtoquestion
manage/controlreports that risk.appear
Should risk
stagnant. It is imperative
severalmonthsCreatingof delay
an environment
to the project thatcompletion.
embraces and management
for management be the to responsibility of a central
actively participate in risk management
promotes risk management and actively encouragesorganization to reinforce specializing
the importancein risk (such
of theas a project
risk management
Case Study and2 pursues risk management at all levels of the controls group) or should it be controlled by the
process.
organization.
Project Description: New bridge construction, project team? Items to consider when determining
US$600 Clearly defining and training personnel on risk
 million control
Riskof risk management
Audits – Organizations functions
shouldinclude:
self perform or procure
management controls. an independent audit of their risk management practices on
Risk Description: During the design and planning an Capacity
 annual of project team
or semi-annual basis- do they have the
(independent risk audits
stages
Developing
of the project,
a risk management
a decision was process
made to rely on time/resource
should to effectively
also be considered managethat
for projects theposerisk a
a geotechnical
The first stepreportto integrating
that was risk 30+management
years old andinto in a your process?
significant risk to an organizations objectives or financial
different
projectlocation
activitiesthanis tothedetermine
planned bridge who is best suited to  Expertise
stability). The-intent
who has of thetheaudit
mostshould
knowledge be to:and
foundations.
manage/controlThe engineers
risk. Should designing
risk management
the bridge be the experience in risk management?
understood
responsibility
this as
of a risk,
central however,
organization there specializing
was no in risk  Potential
 Validate conflicts of interest
compliance with –risk would there be process.
management
process
(such inasplace
a project
to capture
controls this
group)
risk and
or should
quantify it be
or controlled apotential
Reviewincentive
accuracy for andrisks not to be of data being
thoroughness
communicate
by the project theteam?
risk toItemsproject toleadership
consider when or to determining
the accurately
enteredreported by the project team; is an
into process.
teamcontrol
responsible
of risk management
for managingfunctions the construction
include: independent
 Identify any evaluation
processmore appropriate?
improvement opportunities.
phase of the project.  Identify any trends in overall program risk.
 Capacity of project team - do they have the Many energy companies, especially power & utility companies, set
Risk Impact: time/resource
The bedrock toineffectively
the actualmanage locationthe of the
risk up separate project management
Developing risk managementorganizations (PMOs) to manage
training
the unique risk of major capital programs. This assists the
bridge foundations
process? was substantially different than Training is the keystone to any risk management plan.
organization in aligning dedicated resources with the specific skill
the geotechnical
 Expertise report- who indicated.
has theThis most resulted
knowledge in a and sets team Without
structure a formal
to manage training effort, a riskprojects.
major construction management
complete experience
redesign of in therisk
foundations
management? and several approach will most likely not be embraced or followed. Not
monthsdelay Potential
on theconflicts
project.of The interest
financial– would
impacts there be a only should training occur at the inception of the policy, it
were greater potential
than US$30
incentive million.
for risks not to be accurately Once the ownership
should include:
of this process is determined,
reported by the project team; is an independent risk management activities are typically most
In both theevaluation
case studies, morethe appropriate?
risks were well-known effective (and adhered to)
On-boarding forwhen they are embedded
new hires.
to the project teams and could have likely been throughout the project
 Regular “brownlifecycle
bag”and project control
or informational
sessions to
avoided
Once or thetheownership
mitigatedofif this a riskprocess
managementis determined, risk activities. review
By integrating
any lessonsrisk management
learned, updates steps tointo
the policy, or
process
management
would have activities
been are in place.
typicallyHaving
mosta effective
risk (and the approval process,leading
identified stage practices.
gates and project

management
adhered to)processwhen they wouldarehaveembeddedallowedthroughout
the the reporting, the importance
Required refresher of risk management
sessions to maintain is
staff
organizations to track, quantify, plan and emphasized and it becomes a mandatory element of
communicate the risks to individuals with the the project control environment.
capability to help mitigate or avoid the risk.

Monitoring adherence to risk management
Embedding Risk Management into Day-to-Day procedures
Activities An organization should perform regular monitoring
Effective risk management is typically achieved when and auditing of their risk management process. As
an organization undertakes an active commitment to previously mentioned, this can be accomplished
Philippines
through the use of a risk report/dashboard and risk and procedures and to emphasize the
audits. organizations commitment to risk
management.
Risk Reporting – reporting should be evaluated by
management on a regular basis to ensure risks are Training is often a forgotten aspect of policy
being identified, tracked, and accounted for in project implementation; however, this is a particularly critical
planning. Management should be diligent in function to establish an effective risk management
reviewing risk reports and question reports that approach. Often overlooked, training is crucial for
appear stagnant. It is imperative for management to informing employees about the importance of risk
actively participate in risk management to reinforce management and its various elements.
the importance of the risk management process.
Conclusion
Risk Audits – Organizations should self perform or A well-defined risk management process can greatly
procure an independent audit of their risk increase project and program success. However, risk
management practices on an annual or semi-annual management has traditionally been overlooked and is
basis (independent risk audits should also be considered by many one of the more fuzzy areas of
considered for projects that pose a significant risk to project management. At a minimum, organizations
an organizations
through the objectives or financial
use of a risk report/dashboard stability).
and risk audits. The with significant capital expenditures should clearly
intent of the audit should be to: define their procedures and expectations for risk
For further
management, information,
communicate please contact:
its importance,
Risk Reporting – reporting should be evaluated by
management  onValidate compliance
a regular with risk
basis to ensure risksmanagement
are being adequately train its personnel, and monitor high-risk
process.
identified, tracked, and accounted for in project planning. For
projects for more information,
compliance you may
with risk management
 Identify any trends in overall program
Management  Review
should be accuracy
diligent inand thoroughness
reviewing of data
risk reports contact:
procedures.
risk.
being entered into process.
and question reports that appear stagnant. It is imperative
 Identify any process improvement
for management to actively participate in risk management Geno Armstrong
Developing risk management training
opportunities.
to reinforce the importance of the risk management For further
Principal,
Training the information,
keyystone to any
isAdvisor please
risk contact:
 Identify any trends in overall program risk.
process. KPMG LLP (U.S.)
management plan. Without a formal training
E: garmstrong@kpmg.com
effort,
Geno a Armstrong
risk management approach will most
Risk AuditsDeveloping risk management
– Organizations should selftraining
perform or procure likely not be
Principal, embraced or followed. Not only
Advisory
an independent audit of their risk to
Training is the keystone any risk management
management plan.
practices on should
Reid training
Tucker occur at the inception of the
Without a formal training effort, a risk management KPMG LLP (U.S.)
an annual or semi-annual basis (independent risk audits policy, it should

Director, Advisory include:
approach will most E: garmstrong@kpmg.com

should also be considered forlikely not be
projects embraced
that pose a or KPMG LLP (U.S.)
significant risk to an organizations objectivesoccur
followed. Not only should training at the
or financial E:Reid On-boarding for new hires.
reidtucker@kpmg.com
stability).inception  Tucker
The intentofofthe policy,
the audit itshould
shouldbe include:
to: Regular “brown bag” or informational
Director, Advisory
sessions to review any lessons
 On-boarding for new hires.
 Validate compliance with risk management
Jonathan LLP Jong
KPMGlearned, (U.S.)
Associate updates
Director to the policy, or
 Regular “brown bag” or informational E: reidtucker@kpmg.com
process.
sessions and
to review any lessons learned, KPMG Services Pte. Ltd. (Singapore)
 Review accuracy thoroughness of data being
updates to the policy, or identified leading E:Jonathan
jonathanjong@kpmg.com.sg
Jong
entered into process.
practices.
 Identify any process improvement opportunities. Associate Director
 Required refresher sessions to maintain staff KPMG Services Pte. Ltd. (Singapore)
awareness of the risk management policies E: jonathanjong@kpmg.com.sg
Infrastructure
Guide: Philippines
Appendix
Appendix A Annual target indicator matrix on accelerating infrastructure development, 2013-2016
Annual Plan targets (in %) Means of Agency

Indicators
2013 2014 2015 2016 verification responsible
Intermediate outcome A: Competitiveness enhanced and productivity increased in the industry, services and agriculture sectors
Strategy 1: Improve connectivity and efficiency among urban centers, regional growth hubs
Metro Manila 20.46 20.31 20.15 20.03 Actual survey data MMDA
Transfer time in MRT/LRT 9 9 5 5

decreased (in min) Actual Operation
DOTC
Platform to platform 8 8 4 4 date of MRT/LRT
Concourse to platform 10 10 5 5
Optimal capacity (train’s
standing with allowance to
consider passengers’ 4-8 4-8 4-8 4-7 Actual Operation DOTC, PNR,
comfort/space) in train data LRTA
systems achieved (per
sqm.)
PNR-Metro Commuter
(Optimal capacity = 6 7 6 6 6 Actual DOTC, PNR
passenger/sqm.
passengers per sqm.)
LRT 1
(Optimal capacity = 6 7-8 7-8 5-7 5-7 DOTC, LRTA
passengers per sqm.) Project status
LRT 2 report, operations-
(Optimal capacity = 4-5 4-5 4-5 4-5 4-5 related report, DOTC, LRTA
passengers per sqm.) accomplishment
MRT 3 report
(Optimal capacity = 6 8 8 8 6 DOTC
Annual / actual
Load transported via the survey / monitoring / DOTC, PPA,
Central RORO Spine 202 221 232 251 verification on port MARINA,
increased (in tons per ship- operation and DPWH and TRB
hour) performance
Davao 137 153 161 179
Cagayan de Oro 43 45 47 47 Monthly statistical PPA
reports
Batangas 22 23 24 25
Passengers transported Actual operation
via air increased per 46,340,236 49,334,076 53,153,098 56,084,528 data, DOTC report DOTC
annum
Coverage of cellular
mobile telephone service 99 100 100 100
with broadband coverage
increased (in % of total NTC annual report,
number of NTC monitoring / ICTO, NTC
cities/municipalities) evaluation of private
Cities and municipalities sector
with broadband coverage 60 70 80 100
increased (in % total
number of
cities/municipalities

Appendix B Revalidated results matrix (RM) on improving connectivity and efficiency among urban centers, regional growth hubs
Indicators Baseline (2010) End-of-Plan target (2016) Assumptions and risks
 Satisfactory traffic management system

in place by LGUs
Travel time via road in key 20.59 (2012)
20.03
 Implementation of other infra projects
corridors and key urban corridors
(e.g. communications, water system)

decreased (in min)
systematically coordinated for smooth

traffic
Transfer time in MRT/LRT 9 5
decreased  Contactless Automatic Fare Collection
Platform to platform 8 4 System to be implemented in 2015
Concourse to platform 10 5
Optimal capacity (train’s
standing capacity with
allowance to consider 4-8 4-7
passengers’ comfort/space) in
train systems achieved (per
sqm.)
PNR-Metro Commuter
(Optimal capacity = 6 6 6
LRT 1  Rolling stocks/materials are available and
(Optimal capacity = 6 6 5-7 sufficient
LRT 2
(Optimal capacity = 4-5 4 4-5
MRT 3
(Optimal capacity = 6 8 6
Load transported via the Central  Efficiency indicator affected by:
RORO Spine increased (in tons o Economic factors (e.g. demand
per ship-hour) 189 (2012) 251 and supply affecting cargo
throughput);
o Physical and operational
condition of ports
Davao 126 (2012) 179  Does not consider government policy on
Cagayan de Oro 42 (2012) 47 diversion from Manila port to Batangas
Batangas 21 (2012) 25 port
Passengers transported via air 37,960,765 56,084,528  Projects to be completed as scheduled
increased per annum
Coverage of cellular mobile  Enabling policies / regulations on
telephone service (CMTS) in increasing coverage to be issued by
95 100
cities and municipalities government (DOST-ICTO, NTC, etc.)
increased (in % of total number  There are services requiring broadband
of cities/municipalities) (e.g. e-Government)
 Return of investment is good/attractive
for private sector
Cities and municipalities with
broadband coverage increased
47 100
(in % of total number of
cities/municipalities)


Appendix C Intermediate outcome A: Competitiveness enhanced and productivity increased in the industry,
services and agriculture sectors
Annual Plan targets (in %) Means of Agency

Indicators
2013 2014 2015 2016 verification responsible
Strategy 2: Support agricultural production
Irrigation service coverage
increased (in % of total 67.44 69.01 70.91 73.80 NIA, DA, DAR
NIA / DA report,
potential irrigable area)
actual inventory
NIA 59.39 60.74 62.63 65.27 NIA
data
DA-BSWM and DA-RFUs 8.05 8.26 8.29 8.53 DA-BSWM, DA-
RFUs
Strategy 3: Pursue energy and water security
Power demand met (i.e.
ratio of dependable
capacity to total peak 106.52 103.86 108.06 104.39
demand with required
reserve is maintained
above 100%) (in %) Phil. Energy Plan
Luzon 113.07 109.28 110.37 107.86 2012-2030 Power DOE
Visayas 109.14 109.54 103.95 105.32 Outlook
Mindanao 97.35 92.78 109.86 100.00

Target energy self- 59.04 59.28 60.22 60.00
sufficiency (at 60%) met (in
% of total energy)
Water demand in water
critical areas met (in %
ratio of water supplied in 89 90 90 92
million liters per day [MLD]
to water demanded in
MWSS
MLD)
concessionaires,
MWSS Concession 119 117 116 113
LWUA, WDs,
Areas
DENR-RBCO and
Metro Cebu 43 46 49 52
NWRB
Bulacan 83 86 89 89
Cagayan de Oro City 109 115 119 121
Actual inventory
Davao City 89 87 79 86 data / report
Coverage of 24/7 water MWSS
supply (WS) services in concessionaires,
86.98 88.62 89.34 90.12
cities increased (in %) LWUA, WDs, LGUs
and NWRB
Level III WS service MWSS
98 99 99 100 concessionaires,
coverage increased (in %)
LWUA, WDs and
NWRB
Non-revenue water MWSS
decreased (in % total water 26 25 24 23 concessionaires,
volume produced) LWUA, WDs
Tourist Destination Areas
(TDAs) with improved
4 100 100 100 Actual inventory DPWH, DOT,
water system increased (in
data / report LWUA, WDs
% of TDAs identified as
waterless)

Appendix D Revalidated results matrix (RM) on pursuing energy and water security
Indicators Baseline (2010) End-of-Plan target (2016) Assumptions and risks

Power demand met (i.e. ratio  Projections based on 7.0% GDP
of dependable capacity to growth
total peak demand with 108.14 104.39  Actual commercial operation
required reserve is dependent on private sector decision
maintained above 100%) (in %)  Private sector investment in the
subsector increased
Luzon 113.42 107.86  Management of the service is
Visayas 103.29 105.32 efficient and effective.
Mindanao 107.70 100.00
 Energy savings targets under the
National Energy Efficiency and
Target energy self-sufficiency Conservation met
(at 60%) met (in % of total 58.31 60.00  RE committed projects implemented
energy) as scheduled
 Mandated biofuels blending
implemented as scheduled
Water demand in water  Scheduled projects are implemented
critical areas met (in % ratio without delay
of water supplied in million 116.06 (2011) 92  Sector investment increased and
liters per day [MLD] to water management for the water system
demanded in MLD) by LGU / private sector are
satisfactory.
122 (2011) 113  Deficit MWSS Concession Area by
MWSS Concession Areas
2017
Metro Cebu 38 (2011) 52
 Projections only for the Balagtas,
Bulacan 88 (2011) 89 Bocaue, Bulacan, Calumpit, Plaridel
and Malolos WDs
Cagayan de Oro City 109 (2011) 121
Davao City 86 (2011) 86
 Average of 559 WDs and 2 MWSS

Coverage of 24/7 water concessionaires
supply (WS) services in cities 77.59 90.12  Sector investment increased and
increased (in %) management for the water system
by LGU / private sector are
satisfactory.
Level III WS service coverage
82 100
increased (in %)
Non-revenue water concessionaires
decreased (in % of total 36 23  Management for the water system
water volume produced) by LGU / private sector are
satisfactory.
 Covers only 26 TDAs that are
Tourist Destination Areas identified as waterless areas
(TDAs) with improved water NA 100  Private sector investments in tourist
system increased (in % of areas increased and management are
TDAs identified as waterless) efficient and effective.

Appendix E Projects of Dream Plan (1)
Suburban/Urban Rail Projects

Length Cost
Project Status
(km) (PhP mil.)
Mega Manila North-South Commuter Railway (Malolos
Calamba, Elevated) 91.3 195,520 Proposed
Malolos-Tarlac & Calamba-Batangas 128.8 47,680 Proposed
Lines 1-3 Upgrade Existing Lines 47.2 62,040 Proposed
LRT 1 North (to Malabon) 2.7 9,960 Proposed
Committed/
South (to Dasmariñas)* 30.2 111,640
Proposed
Main Lines
LRT 2 Committed/
East (to Antipolo)* 13.2 61,640
Proposed
West (to MM North Harbor) 4.7 30,840 Proposed
MRT 3 Ext. (to Malabon & MoA) 9.4 68,600 Proposed
MRT-7 (Recto-Comm.Av.-Banaba) 26.1 128,360 Committed
N-S Subway (Dasmariñas East-San Jose
68.6 514,160 Proposed
Delmonte)
Total Primary (Incl. Upgrade) 202.1 987,240
Total Main 422.2 1,230,440
Ortigas - Angono 13.7 31,720 Proposed
Paco - Pateros 11.3 33,800 Proposed
Secondary
Marikina - Katipunan 16.8 31,480 Proposed

Lines
Alabang - Zapote 9.3 13,400 Proposed

Zapote - Cavite - Gen. Trias 20.6 25,560 Proposed
Total Secondary 71.1 135,960
Total Metro Rail 493.9 1,366,400
Road/Expressway Projects
Project Length Cost Status
(km) (PhP mil.)
C3 Missing Link (Sanjuan - Makati)* 5.9 24,000 Proposed
C5 Missing Link Committed/
6.9 680
Proposed
Pasig River Bridge (BGC - Ortigas)* 1.2 8,120 Proposed
Skyway-FTI-C5 Connector* 3.0 17,880 Committed
Other Interchanges/Flyovers 6.7 8,040 Committed
Road
Other Urban Roads 32.9 2,400 Committed

NCR (Secondary Roads Package) 208.4 145,670 Proposed
BRCL (Secondary Roads Package) 432.2 82,360 Proposed
Region III (Sec Roads - Approx.) 200.0 16,000 Proposed
Region IV-A (Sec Roads - Approx.) 400.0 32,000 Proposed
Road Total 1,297 337,240
SEG 9 & 10 / connection to R10* 8 8,600 Committed
NLEx-SLEx Connector* 13.3 18,800 Committed
Skyway Stage 3* 13.3 9,000 Committed
NAIA Expressway Phase 2* 7.1 15,000 Committed
Pasay - Makati - BGC 9.3 24,200 Proposed
Sta. Mesa - Pasig (Shaw Boulevard) 7.1 23,440 Proposed
Expressway
CALA Exp. (Bacoor - Sta. Rosa)* 47.2 30,200 Committed

Committed/
Other Expressways 388.3 221,840
Proposed
Expressways Upgrade 208.4 33,040 Proposed
Expressway Total 702 384,120
Roads & Expressway Total 1,999 721,360
Note: *Short term project

Source: Japan International Cooperation Agency Presentation on Roadmap for Transport Infrastructure Development
for Metro Manila and Its Surrounding Areas (Region III and Region IV-A) Summary of the Outputs September 2013

Appendix F Projects of Dream Plan (2)
A. Airports
Amount
Name of Project Status
(PhP million)
a. NAIA improvements - airside Committed
package*
1. NAIA 4,240
b. NAIA improvements - Committed
landside package*
a. Clark improvement - airside Committed
package*
6,800
2. Clark b. Clark improvement - landside Committed
package*
c. Clark Future Development 40,000 Proposed
3. New NAIA 140,500 Proposed
Airport Infrastructure Total 191,040 -
B. Ports
Amount
(PhP million)
1. Replacement of North Harbor 40,000 Proposed
2. Other regional ports 2,000 Proposed
3. Other Port Programs* 12,080 Proposed
Port Project Total 54,080 -
C. Traffic Management Projects

Amount
(PhP million)
1. Modernization of traffic signaling system* 5,000 Committed
2. ITS and other road safety interventions 2,800 Proposed
3. Pedestrian Facilities 2,000 Proposed
Traffic Management / Capacity Expansion Total 9,800 -
D. Road-based Public Transport

Amount
(PhP million)
1. ITS (3 Provincial Bus Terminals)* 6,320 Committed
2. 2-BRT Lines * 7,000 Proposed
3. Jeepney Fleet Modernization 30,000 Proposed
4. Urban Bus Modernization 25,000 Proposed
Road-based Public Transport Total 68,320
Notes:
*Short term project
Sub-total (A-D) PhP323 billion (=US$8.1 billion)
Total Investment Program for Transport: PhP2,411 billion (=US$60.3 billion)
Source: Japan International Cooperation Agency Presentation on Roadmap for Transport Infrastructure Development
for Metro Manila and Its Surrounding Areas (Region III and Region IV-A) Summary of the Outputs September 2013

Appendix G Revalidated results matrix (RM) on pursuing water security
Indicators Baseline (2010) End-of-Plan target Assumptions and risks

(2016)
 Scheduled projects are
Water demand in water implemented without delay
critical areas met (in % ratio  Sector investment increased and
of water supplied in million 116.06 (2011) 92
management for the water
liters per day [MLD] to system by LGU / private sector are
water demanded in MLD) satisfactory.
122 (2011) 113  Deficit MWSS Concession Area

MWSS Concession Areas
by 2017
Metro Cebu 38 (2011) 52
 Projections only for the Balagtas,
Bulacan 88 (2011) 89 Bocaue, Bulacan, Calumpit,
Plaridel and Malolos WDs
Cagayan de Oro City 109 (2011) 121
Davao City 86 (2011) 86
concessionaires
Coverage of 24/7 water
 Sector investment increased and
supply (WS) services in 77.59 90.12
management for the water
cities increased (in %)
system by LGU / private sector are
satisfactory.
Level III WS service 82 100

coverage increased (in %)
Non-revenue water 36 23 concessionaires
decreased (in % of total  Management for the water
water volume produced) system by LGU / private sector are
satisfactory.
 Covers only 26 TDAs that are
Tourist Destination Areas identified as waterless areas
(TDAs) with improved water NA 100  Private sector investments in
system increased (in % of tourist areas increased and
TDAs identified as management are efficient and
waterless) effective.
Appendix H Revalidated results matrix (RM) on pursuing energy
Indicators Baseline (2010) End-of-Plan target Assumptions and risks

(2016)
Power demand met (i.e.  Projections based on 7.0% GDP
ratio of dependable growth
capacity to total peak  Actual commercial operation
108.14 104.39
demand with required dependent on private sector
reserve is maintained decision
above 100%) (in %)  Private sector investment in the
Luzon 113.42 107.86 subsector increased
Visayas 103.29 105.32  Management of the service is
efficient and effective.
Mindanao 107.70 100.00
 Energy savings targets under the
Target energy self- National Energy Efficiency and
sufficiency (at 60%) met (in 58.31 60.00 Conservation met
% of total energy)  RE committed projects
 Mandated biofuels blending

Glossary
ABC Approved Budget for the Contract LCBI Local Capacity Building Institutions
ADB Asian Development Bank LGU local government unit
ADR alternative dispute resolution LLED Laguna Lakeshore Expressway Dike
AIF ASEAN Infrastructure Fund LRT Light Rail Transit
ASEAN Association of Southeast Asian Nations LRTA Light Rail Transit Authority
BBWSP Bulacan Bulk Water Supply Project LWUA Local Water Utilities Administration
BLT build-lease-transfer MDG Millennium Development Goal
BFAR Bureau of Fisheries and Aquatic Resources MERALCO Manila Electric Light and Railroad Company
BOP balance of payments MLD million liters per day
BOT build-operate-transfer MRT Metro Rail Transit
BPO Business Process Outsourcing MW megawatt
BRICs Brazil, Russia, India, China MWCI Manila Water Company, Inc.
BRLC Bulacan, Rizal, Cavite, Laguna MWSI Maynilad Water Services, Inc.
CAAP Civil Aviation Authority of the Philippines MWSS Metropolitan Waterworks and Sewerage System
CAVITEx Manila-Cavite Expressway m3 cubic meter
CALABARZON Cavite, Laguna, Batangas, Rizal, Quezon NAIA Ninoy Aquino International Airport
CBO community-based organizations NCR National Capital Region
CCA climate change adaptation NCWSP New Centennial Water Source - Kaliwa Dam
CCGT Combined Cycle Gas Turbine Project
CGIF Credit Guarantee and Investment Facility NEDA National Economic and Development Authority
CIF Climate Investment Fund NEDA-ICC National Economic and Development Authority –
CL contingent liabilities Investment Coordination Committee
CLB Calamba – Los Baños Toll Expressway NGA national government agencies
CLEx Central Luzon Expressway NGCP National Grid Corporation of the Philippines
CSC Civil Service Commission NGO non-government organization
CSO civil society organizations NIA National Irrigation Administration
DA Department of Agriculture NLEx North Luzon Expressway
DAP Development Academy of the Philippines NPC National Power Corporation
DBM Department of Budget and Management NSCB National Statistical Coordination Board
DEO District Engineering Office NSO National Statistics Office
DENR Department of Environment and Natural NTDP National Tourism Development Plan
Resources NWRB National Water Resources Board
DepEd Department of Education N-11 Next Eleven
DILG Department of Interior and Local Government ODA official development assistance
DOE Department of Energy OECD Organisation for Economic Co-operation and
DOF Department of Finance Development
DOT Department of Tourism O&G oil and gas
DOTC Department of Transportation and O&M Operation and Maintenance
Communications PAP projects and programs
DPWH Department of Public Works and Highways PCA Philippine Contractors Association
DTI Department of Trade and Industry PDMF Project Development and Management Facility
DU distribution utility PINE Philippines, Indonesia, Nigeria, Ethiopia
EGAT Electricity Generating Authority of Thailand PIP Public Investment Program
EPIRA Electric Power Industry Reform Act PPICS Peru, Philippines, Indonesia, Colombia, Sri Lanka
ERC Energy Regulatory Commission PPP public-private partnership
FAP foreign assisted project PSALM Power Sector Asset Liability Management
GCR Greater Capital Region Corporation
GDP gross domestic product RA Republic Act
GGG Global Growth Generators REID Foundation Research, Education and Institutional
GOCC government-owned and controlled corporations Development Foundation
GVW gross vehicle weight RORO Roll-On/Roll-Off
GWh gigawatt-hour RM Results Matrix
HSH High Standard Highways SCMB Subic-Clark-Manila-Batangas
IA implementing agency SCP Strategic Convergence Program
ICC-CC Investment Coordination SEPO State Enterprise Policy Office
Committee – Cabinet Committee SLEx South Luzon Expressway
ICC-TWG Investment Coordination Committee – SWS Social Weather Stations
Technical Working Group S&P Standard & Poor’s
ICT information and communications technology TEU twenty-foot equivalent unit
IEA International Energy Agency TOR Terms of Reference
IE Singapore International Enterprise Singapore TransCo National Transmission Corporation
IPP Investment Priority Plan VAT Value-Added Tax
IPPA independent power producer administrators VfM Value for Money
IRR Implementing Rules and Regulations VGF Viability Gap Financing
ITS Integrated Transport System WB World Bank
IWRM Integrated Water Resources Management WEF World Economic Forum
JICA Japan International Cooperation Agency WESM Wholesale Electricity Spot Market
JMP Joint Monitoring Programme WRM Water Resource Management
KWH kilowatt-hour WSP water service providers

About
About
About the
the
the Philippines
Philippines
Philippines
The Philippines officially became a republic in 1946.
 The The Philippines
 Philippines officially officially became a republic in 1946.
Benigno Aquino III is the currentbecame President a republic
of the in 1946.
The 1986 year 1986 wlandmark
as a landmark year in the country’s
Republic of the Philippines. His main platform is countr y’s
 The  year w as a y ear in the
eff orts effto
orts to become
become a self-goa self-governing,
verning, full-fledged
full-fledged
good governance and the elimination of corrupt
democratic
democratic countr country
y when when
President President FerdinandFerdinand
Marcos Marcos
practices in the government. Under his
w as was ousted
ousted from from
po wer power
and and President
President Corazon Corazon
administration, the overall financial strength of the
Aquino Aquino
assumed assumed theowing the presidency.
presidency .
government has improved, to a more efficient
 Former  FormerPresident PresidentGloria Gloria Macapagal-Arroyo’s
Macapagal-Arroyo’s
tax administration and responsible government
presidency
presidency (2001-201 (2001-2010) has0)made has made the economthe economyy the the
spending.
f ocus of her presidency
focus of her presidency. Economic growth in terms . Economic growth in terms
of of
 The current Aquino regime posted a GDP growth of
GDP GDP
averaged averaged 4.6 4.6 percent
percent during during
the the Arroyo
Arroyo
7.6 percent in 2010 and slowed down to 3.6 percent
administration from 01 200 1 up thetoend the end of 2003, to 5.5
in 2011.administration
It then grew byfrom 6.8 20 percent up in to 2012 andof 2003, to 5.5
percent percent
in 2006. in 2006.
2007 2007
saw sawcountry’s
the the country’s GDP GDP growgrow by by
exceeded the government’s expectations when the
7.3 7.3 percent
percent as as continuing
continuing fiscal fiscal
ref orms reforms
allowed allowed
the the
Philippine economy expanded to 7.2 percent in 2013.
government
government to make to make
headway headway in its in its development
development
The country still remains as one of the strongest
initiatives.country’
initiatives. The country’ s economic growth for 2009 is
economies in the The Asian regionswith economic
infrastructuregrowth for 2009 is
4.6
4.6 percent. percent.
development encouraged to continue in the next
 Benigno Benigno Aquino Aquino
III is theIII iscur
the current
rent PresidentPresidentof theof the
administration.
R epublicRepublic
of the ofPhilippines.
the Philippines. His His main
main platf platform
orm is good is good
 Different rating agencies have also consistently
govthe gov
ernance ernance and the elimination of corr upt practices in
upgraded creditand ratingsthe of elimination
the Philippines. of corrupt Fitch practices in
the the government.
government. Under Under
his his administration,
administration, the the overall
overall
affirmed the country’s long-term foreign and local
financial financial
strength strength
of theof the government has improved,
currency issuer default ratings atgo‘BBB-’
vernment and has ‘BBB,’ improved,
owing to a more efficient tax administration and  Average temperature: 27 degrees Celsius (81
respectively, in March 2014, followed by Standard &and
o wing to a more ef ficient tax administration
responsible
responsible go v government
ernment spending spending.. degrees Fahrenheit); Average Humidity: 78 percent
Poor’s stable outlook of BBB in May 2014. Another
 Year-round average temperature range: 23-32
vote of confidence was also seen from Moody’s
Languages
Languages degrees Celsius
positive outlook of Baa3 in September 2014. Population
Ov er 87 languages
 Over 87 languages and dialects belonging to the
 and dialects belonging to the Population
Malayo-Polynesian linguistic family Population  92.34  92.34
millionmillion (National
(National Statistics
Statistics Office, Office, May 2010
May 2010
Languages Malayo-Polynesian linguistic family
T hree principal languages:
 Three principal languages: Cebuano, Tagalog, and
 Cebuano, Tagalog, and  92.34 million estimate)
estimate)
(National Statistics Office, May 2010
 Over 87 languages and dialects belonging to the  Population growth rate of percent
1.81 percent per (2014
year (20
Ilocano. Ilocano.
 Filipino  Filipino
is the isofthe
ficial official
language. language. estimate) Population growth rate of 1.81 per year
Malayo-Polynesian linguistic family estimate)
 English English
is the islanguage
the language of of business
business and goand government.
vernment.  Population estimate)
growth rate of 1.81 percent per year
 Three principal languages: Cebuano, Tagalog, and  Literacy
GlobalEnglish,
GlobalEnglish, an independent
an independent researc research
h group, group,
ranked ranked (2014 estimate)  Literacy Rate:Rate: 97.5 percent
97.5 percent of totof total population
al population
Ilocano.
the Philippines number
the Philippines number 1 in the world in terms of 1 in the world in terms of  Literacy Rate: 97.5 percent of total population
 Filipino is the official language. Education
proficiency
proficiency in business
in business English English
for itsfor its 2012
2012 study.study. Education
 English is the language of business and  K-12: universal kindergarten, six years of elementa
Education  K-12: universal kindergarten, six years of elementary
government. GlobalEnglish, an independent education (Grades 1-6), four years of junior high sch
Geography
Geography  K-12: education
universal (Grades
kindergarten, 1
six-6), four
years years
of of junior high school
research group, ranked the Philippines number 1 in with additional two years for senior high school
L ocated
 Located in Southeast Asia
 in Southeast Asia elementary with additional
education two
(Grades years
1-6), for
four senior
years high
of sc hool
the world in terms of proficiency in business English (Grades
Area:  Area:
300,000 300,000 sq. km. sq.(117km.,1(117 ,187 square
87 square miles)miles) junior high (Grades
school 11 to 11
(Grades 12)to 12)
7-10) with additional two
for its 2012 study. Public Elementar
T hree major geographical
 Three major geographical areas: Luzon, Visayas,
 areas: Luzon, Visayas, years for  Public
senior Elementar
 high school y andyHigh
(Grades and
11 High
to 12)School
School education
education
Mindanao Public Elementary subsidized
subsidized and by the
High by the government
government
School education
GeographyMindanao

 Major  Major
citiescities
(2010(201 0 estimate):
estimate): CapitCapit (pop. (pop. subsidized
al - Manila
al - Manila by theEnglish
 English is partisof
government part
theofcurthe curriculum
riculum and isandtheismedium
the medium
of
 Located in Southeast Asia instruction for most subjects
11 .85 11 .85 million
million in the inmetropolit
the metropolitan an area) area) instruction for most subjects
 English is part of the curriculum and is the medium
 Area: 300,000 sq. km. (117,187 square miles)
 Other  Other
citiescities
- Cebu - Cebu
City (0.87City (0.87
million); million);
DavaoDavao City (1.45
City (1.45 of instruction for most subjects
 Three major geographical areas: Luzon, Visayas, Political
million) million) Political
Mindanao  Type: Republic
 Terrain:
 Terrain: ArchipelagoArchipelago composed composed of 7,107 of 7islands,
,107 islands,
65 65 Political  Type: Republic
 Major cities (2010 estimate): Capital - Manila (pop.  Independence:
percent percent
mount mount ainous,
ainous, with with narrow
narrow coastal lowlands coastal lowlands  Type:  Independence:
Republic 1946 1946
11.85 million in the metropolitan area) Current constitution: Ratified
 Independence: Current 1946 constitution: Ratified on 11on 11 February
February 1987 1987
 Other cities - Cebu City (0.87 million); Davao City  Branches: Executive; Legislative - Bicameral
Climate Climate  Branches:
 Current constitution: Executive;
Ratified on Legislative
11 February - 1987
Bicameral
(1.45 million) legislature; Judiciary
 Tropical,
 Tropical, sittingsitastride
ting astridea typhoona typhoon belt belt legislature;
 Branches: Executive; Judiciary
Legislative - Bicameral
 Terrain: Archipelago composed of 7,107 islands, 65  Administrative Subdivisions: 17 regions including
Three seasons: Rainy (J
 Three seasons: Rainy (June to October); Cool and Dr y
 une to October); Cool and Dry l egislature;
 Administrative
Judiciary Subdivisions: 17 regions including
percent mountainous, with narrow coastal lowlands Metro Manila
(November(November to Februar to Februar
y); Hot y);andHotDr and Dry (March-May)  Administrative
y (March-May) Metro Manila
Subdivisions: 17(National
(National CapitCapital
regions al
including Region),
Region), 80 province
80 provinces,
 Average temperature: 27 degrees Celsius (81 degrees 138 138
cities cities
Metro Manila (National Capital Region), 80
Climate  Average temperature: 27 degrees Celsius (81 degrees Suffrage: Universal, butcompulsor
not compulsory,
Fahrenheit);
Fahrenheit); Av erageAverageHumidit Humidity:
y: 78 78 percent
percent provinces,  Suffrage:
138 cities Universal, but not y, at ageat18age 18
 Tropical, sitting astride a typhoon belt
 Year-round
 Year-round av erage average
temperat temperat
ure ure range:
range: 23-32 23-32
degrees degrees Suffrage: Universal, but not compulsory, at age 18
 Three seasons: Rainy (June to October); Cool and Sources: National Statistics Office, CIA World Factbook
Celsius Celsius Sources: National Statistics Office, CIA World Factbook,
Dry (November to February); Hot and Dry Sources: National www.gov.ph
Statistics Office, CIA World Factbook, www.gov.ph,

www.gov.ph
(March-May) www.nscb.gov.ph
2 | Infrastruct
2 | Infrastruct ure Philippines
Guide:
Philippines
Direct
Directory
Dir oryGo
of
ectory ofvernment
of Government
Go Agencies
encies
Agencies
vernment Ag
Department of Agriculture Department of Transportation and

Elliptical Road, Diliman, Quezon City Communications
Department
Department of Transportation
of Transportation and and
Department Department
Tel. No.:of+63 2 928of
Agriculture Agriculture
8756 to 65 The Columbia Tower, Ortigas Avenue, Mandaluyong City
Elliptical
Website: Road, Diliman,
da.gov.ph
Quezon City Communications
Communications
Elliptical Road, Diliman, Quezon City Tel. No.: +63 2 727 7960
Tel. The ColumbiaTheTower,
Columbia Tower,
Ortigas Ortigas
Avenue, Avenue, Mandaluyong
Mandaluyong City City
Tel. No.: +63 2 No.: +63 2to928
928 8756 65 8756 to 65
Website: dotc.gov.ph
Website: da.gov.ph Tel.
Tel. No.: +63 2 No.: +63 2 727 7960
727 7960
Website: da.gov.ph
Department of Budget and Management Website: dotc.gov.ph
Website: dotc.gov.ph
General Solano St., San Miguel, Manila Department of Public Works and Highways
Department
Department
Tel. No.:of+63 2 490of
Budget Budget
and
1000 and Management
Management Bonifacio Drive, Port Area, Manila
General
Website: Solano St., San Miguel, Manila Department
Department of Publicof Public
Works Works
and and Highways
Highways
General Solano St.,dbm.gov.ph
San Miguel, Manila Tel. No.: +63 2 304 3000

Tel. Bonifacio
Bonifacio Drive, Drive, Port
Portdpwh.gov.ph
Area, ManilaArea, Manila
Tel. No.: +63 2 No.: +63 2 490 1000
490 1000 Website:

Website: dbm.gov.ph Tel. No.: +63
Tel. No.: +63 2 304 3000 2 304 3000
Website: Department
dbm.gov.ph of Environment and Natural Website: dpwh.gov.ph
Website: dpwh.gov.ph
Resources Energy Regulatory Commission
Department
Department
DENR Bldg.,
of Environment
of Environment
Visayas Avenue,and
Diliman,
and Natural
Natural
Quezon City Pacific Center Building, San Miguel Avenue
Resources Energy
Energy Regulatory Regulatory
Commission Commission
Resources
Tel. No.: +63 2 929 6626 / 988 3367 Ortigas Center, Pasig City
Pacific Center Building, San Miguel Avenue, Ortigas Center,
DENR Bldg., Visayas Avenue, Diliman, Quezon City Pacific Center Building, San Miguel Avenue, Ortigas Center,
Website:
DENR Bldg., Visayasdenr.gov.ph
Avenue, Diliman, Quezon City Tel. No.: +63 2 689 5372
Pasig City
Pasig City Website:
Tel.
Tel. No.: +63 2 No.: +63 2/ 929
929 6626 988 6626
3367 / 988 3367 erc.gov.ph
Tel.
Tel. No.: +63 2 No.: +63 2 689 5372
689 5372
Website: denr.gov.ph
Website: Department
denr.gov.ph of Education Website: erc.gov.ph erc.gov.ph
Website:
DepEd Complex, Meralco Avenue, Pasig City National Economic and Development
No.:of+63 2 633of
Education Education
NationalAuthority
Tel. 7208 / 633 7228 National Economic and Development
DepEd Complex,
Website:Meralco
DepEd Complex, Meralco
deped.gov.ph Avenue,
Avenue, Pasig City Pasig City
Economic and Development AuthorityAuthority
1122St.,
St.,JEscriva
Josemaria
osemariaEscriv aaDriv
Escriv Drive,
e,Ortigas
OrtigasCenter
Center,
Tel. No.: +63 2 633 7208 / 633 7228 12 St., Josemaria Drive, Ortigas Center, Pasig City Pasig City
Tel. No.: +63 2 633 7208 / 633 7228 Pasig
Tel. City+ 63 2 631 0945 to 56
No.:
Website: deped.gov.ph Tel. No.: + 63 2 631 0945 to 56
Website: deped.gov.ph
Department of Energy Tel. No.: + neda.gov.ph
Website: 63 2 631 0945 to 56
Website: neda.gov.ph
Energy Center, Rizal Drive, Bonifacio Global City Website: neda.gov.ph
Department
Department
Taguig of Energyof Energy
City National Power Corporation
Energy Center, Rizal Drive, Bonifacio
City,Global
TaguigCity,
National Power Corporation
City Taguig City
Tel.
Energy Center, No.: +63
Rizal 2 840
Drive, 1401 to 21
Bonifacio Global
Agham Road
National
Agham Power
cornerRoad corner
Quezon
Corporation
Quezon
Avenue, Avenue,
Diliman, Diliman,
Quezon Quezon City
City
Tel.
Website:
Tel. No.: +63 No.: +63 2
2 840doe.gov.ph 840
1401 to 21 1401 to 21 Agham Road corner Quezon
Tel. No.: + Tel.
63 2No.:
921 + 63
3541 2 921 3541 Avenue, Diliman
Website: doe.gov.ph
Website: doe.gov.ph Quezon City
Website:
Website: napocor.gov.phnapocor.gov.ph
Department of Interior and Local Tel. No.: + 63 2 921 3541
of Interior ofand
Interior
Localand Local Government Website:
Government napocor.gov.ph Office
Government
DILG-NAPOLCOM CENTER, EDSA cor. Quezon
NationalNational
Avenue,
StatisticsStatistics
Office
DILG-NAPOLCOM
DILG-NAPOLCOMCENTER, CENTER,
EDSA cor.EDSA
Quezon
cor.Avenue, Solicarel
Quezon AvenueSolicarel Building, Building,
Ramon Ramon Magsaysay
Magsaysay Boulevard, Boulevard,
Sta. Mesa, Sta. Mesa,
Quezon City Quezon City
Quezon City Manila
National
Manila Statistics Office
Tel. No.: +63Tel.
2 No.: +63 2/ 925
925+63
0330 925 0330
0331 / 925 0331 Solicarel
Tel.2No.:Building, Ramon Magsaysay Boulevard
Tel. No.: 2 925 0330 / 925 0331 Tel. No.: + 63 716 + 63 2/ 716
0807 713 0807
7074 / 713 7074
Website:
Website: Website:
dilg.gov.ph dilg.gov.ph Sta. Mesa,census.gov.ph
Website: Manila
dilg.gov.ph Website: census.gov.ph
Tel. No.: + 63 2 716 0807 / 713 7074
Department of Finance Website: census.gov.ph
Department of Finance
Department of Finance NationalNational Transmission
Transmission Corporation
Corporation
6/F DOF
6/F DOF Bldg., RoxasBldg.,
Blvd. Roxas Blvd.Ocampo
cor. Blvd.
Pablo cor. Pablo Ocampo St., Manila
6/F DOF Bldg., Roxas cor. Pablo St., Manila
Ocampo St., Power
Power Center, Center,
Quezon Quezon
Avenue Avenue
corner BIR corner BIR Road, Diliman,
Road, Diliman,
Tel. No.: +63Tel.
Manila
No.: +63 2 523
2 523 9911 to 14 9911 to 14
Quezon City
National
Quezon Transmission
City Corporation
Website: Tel.Website: dof.gov.ph
dof.gov.ph Power Center,
Tel.2No.: 63 Quezon Avenue corner BIR Road
No.: +63 2 523 9911 to 14 Tel. No.: + 63 902 +1500 2 902 1500
Website: dof.gov.ph Diliman,
Website: Quezon City
transco.ph
Website: transco.ph
of Tourism of Tourism Tel. No.: + 63 2 902 1500
DOT Bldg., DOT Bldg., T.M.
T.M. Kalaw St.,of Kalaw
Agrifina St., Agrifina Circle, Rizal
Circle, Rizal Park, Manila Park, Manila Website: transco.phPartnership Center
Public-Private
Department Tourism Public-Private Partnership Center
Tel. No.: +63Tel. No.: +63 2 523 8411
DOT2Bldg.,
523 8411
T.M. Kalaw St., Agrifina Circle, Rizal Park, NEDA sa QC, NEDA sa QC,
EDSA, EDSA,
Diliman, Diliman,
Quezon Quezon City
City
Website: tourism.gov.ph
Website: Manila
tourism.gov.ph / itsmorefuninthephilippines.com
/ itsmorefuninthephilippines.com Public-Private
Tel.2No.:
Tel. No.: + 63 990 +0721
63 2 990Partnership
0721 Center
Tel. No.: +63 2 523 8411 NEDA sa
Website: QC, EDSA,
ppp.gov.ph
Diliman, Quezon City
Website: ppp.gov.ph
Department
Department of Trade and Industry
Website: of
tourism.gov.phTrade/
and Industry Tel. No.: + 63 2 990 0721
361Industry
Trade and Industry
361 Tradeitsmorefuninthephilippines.com
and Building, Building,
Sen. Sen. Gil
Gil J. Puyat J. Puyat Avenue,
Avenue, Website: ppp.gov.ph
PowerAssetsSectorand Assets and Liabilities Management

Makati City
Power Sector Liabilities Management
Makati City Corporation
CorporationPower
7th FloorSector Assets and Liabilities
Tel. No.: +63Tel.
2 No.: +63 2 751 0384
751 0384
Department of Trade and Industry 7th Floor Bankmer Bankmer
Building Building
6756 Ayala 6756 Ayala
Avenue, Avenue,
Makati CityMakati City
Website: 361 Website: dti.gov.ph
dti.gov.ph Management Corporation
Trade and Industry Building, Sen. Gil J. Puyat Tel. No.: +
Tel. No.: + 63 2 893 8202 63 2 893 8202
Avenue, Makati City 7th Floor Bankmer
Website: Building 6756 Ayala Avenue
psalm.gov.ph
Website: psalm.gov.ph
Tel. No.: +63 2 751 0384 Makati City
Website: dti.gov.ph Tel. No.: + 63 2 893 8202
Website: psalm.gov.ph
Infrastructure In-depth:Guide:
Infrastructure Philippines | 76 | 3
Philippines
Infrastructure Guide: Philippines |3
KPMG
KPMG
KPMG
About KPMG
KPMG International is a global network of professional firms providing Audit,

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77
2 || Infrastructure
2 | Infrastruct Philippines
ure Guide:
Guide: Philippines
Philippines
Direct
Direct ory
ory
Directof
oryof
ParPtners
ofartners
Par and
and
tners Principals
Principals
and Principals
Roberto Roberto
Roberto
G. G. Manabat
G. Manabat
Manabat
Chairman Chairman
Chairman Ex&ecutive
& Chief
& Chief Chief Executive
Executive Officer
Officer
Officer
rgmanabat@kpmg.com
rgmanabat@kpmg
rgmanabat@kpmg.com .com
Emmanuel Emmanuel
Emmanuel P. Bonoan
P. Bonoan
P. Bonoan
Vice Vice Chairman
Chairman
Vice Chairman of&
& Head
& Head TaxHead
of Taxof Tax
ebonoan@kpmg.com
ebonoan@kpmg
ebonoan@kpmg.com .com
Sharon G.Sharon
Sharon G. Dayoan
G. Dayoan
Dayoan
Head HeadHead of Audit
of Audit
of Audit
sdayoan@kpmg.com
sdayoan@kpmg.com
sdayoan@kpmg.com
HenryHenryHenry D. Antonio
D. Antonio
D. Antonio
Head Head Head of Advisory
of Advisory
of Advisory
hantonio@kpmg.com
hantonio@kpmg
hantonio@kpmg.com .com
Emerald Emerald
Anne C. Anne
BagnesC. Bagnes ArthurArthur Z. Machacon
Z. Machacon
ebagnes@kpmg.com
ebagnes@kpmg Emerald .com Anne C. Bagnes amachacon@kpmg.com
Tireso Randy F. Lapidez
amachacon@kpmg.com
ebagnes@kpmg.com tlapidez@kpmg.com
CarmelCarmel
Lynne LynneM. Balde M. Balde TomasTomas
G. MahinayG. Mahinay
cbalde@kpmg.com
cbalde@kpmg.com Noel A. Baladiang tmahinay@kpmg.com
tmahinay@kpmg.comRicardo G. Manabat
nbaladiang@kpmg.com rmanabat@kpmg.com
Enrico Enrico
E. BaluyutE. Baluyut Ricardo Ricardo
G. ManabatG. Manabat
ebaluyut@kpmg.com
Carmel Lynne M. Balde
ebaluyut@kpmg.com rmanabat@kpmg.com
Virgilio L. Manguilimotan
rmanabat@kpmg.com
cbalde@kpmg.com vmanguilimotan@kpmg.com
Oliver Oliver
C. Bucao C. Bucao VirgilioVirgilio L. Manguilimotan
L. Manguilimotan
obucao@kpmg.com
obucao@kpmg.com Enrico E. Baluyut vmanguilimotan@kpmg.com
Maria Myla S. Maralit
vmanguilimotan@kpmg.com
ebaluyut@kpmg.com mmaralit@kpmg.com
Joan C. Joan
Cariño C. Cariño MariaS.
Maria Myla Myla S. Maralit
Maralit
jcarino@kpmg.com
jcarino@kpmg.com Oliver C. Bucao mmaralit@kpmg.com
mmaralit@kpmg.com Ador C. Mejia
obucao@kpmg.com acmejia@kpmg.com
Pacifico Pacifico
Castañeda Castañeda Ador C. Ador
Mejia C. Mejia
pcastaneda@kpmg.com
pcastaneda@kpmg.com Joan S. Cariño acmejia@kpmg.com
acmejia@kpmg.com John Molina
jcarino@kpmg.com johnmolina@kpmg.com
Alicia S.Alicia S. Columbres
Columbres John Molina
John Molina
acolumbres@kpmg.com
acolumbres@kpmg Pacifico.comCastañeda johnmolina@kpmg.com
Herminigildo G. Murakami
johnmolina@kpmg.com
pcastaneda@kpmg.com hmurakami@kpmg.com
ImeldaImelda
H. Corros H. Corros Herminigildo
Herminigildo G. Murakami
G. Murakami
icorros@kpmg.com
icorros@kpmg.com Alicia S. Columbres hmurakami@kpmg.com
hmurakami@kpmg.com Aline A. Novilla
acolumbres@kpmg.com anovilla@kpmg.com
Dindo Dindo
MarcoMarco M. Dioso M. Dioso WilfredoWilfredo
Z. Palad Z. Palad
ddioso@kpmg.com
ddioso@kpmg.com Imelda H. Corros wpalad@kpmg.com
wpalad@kpmg.com Wilfredo Z. Palad
icorros@kpmg.com wpalad@kpmg.com
Yoshiaki Yoshiaki
Endo Endo Ma. Carmela
Ma. Carmela M. PeraltaM. Peralta
yendo1@kpmg.com
yendo1@kpmg.comDindo Marco M. Dioso mperalta@kpmg.com
Ma. Carmela M. Peralta
mperalta@kpmg.com
ddioso@kpmg.com mperalta@kpmg.com
Jerome Jerome
Andrew Andrew H. Garcia
H. Garcia JimmyJimmy S. Quiñones
S. Quiñones
jhgarcia@kpmg.com
jhgarcia@kpmg.com Yoshiaki Endo jquinones@kpmg.com
jquinones@kpmg.com Kathleen L. Saga
yendo1@kpmg.com ksaga@kpmg.com
MichaelMichael
Arcatomy Arcatomy H. Guarin
H. Guarin Manuel Manuel P. Salvador
P. Salvador III III
mguarin@kpmg.com
Jerome Andrew H. Garcia
mguarin@kpmg.com msalvadoriii@kpmg.com
Manuel P. Salvador III
msalvadoriii@kpmg.com
jhgarcia@kpmg.com msalvadoriii@kpmg.com
DennisDennis
I. Ilan I. Ilan Ma. Georgina
Ma. Georgina J. Soberano
J. Soberano
dilan@kpmg.com
Michael
dilan@kpmg.com Arcatomy H. Guarin gjsoberano@kpmg.com
Ma. Georgina J. Soberano
gjsoberano@kpmg.com
mguarin@kpmg.com gjsoberano@kpmg.com
Kristine Kristine
S. ImperialS. Imperial Roberto Roberto
L. Tan L. Tan
kimperial@kpmg.com
kimperial@kpmg Dennis
.com I. Ilan rltan@kpmg.com
rltan@kpmg.com Darwin P. Virocel
dilan@kpmg.com dvirocel@kpmg.com
Jose P.Jose
Javier P. Javier
Jr. Jr. DarwinDarwin
P. VirocelP. Virocel
jpjavier@kpmg.com
jpjavier@kpmg.com Jose P. Javier, Jr. dvirocel@kpmg.com
dvirocel@kpmg.com
jpjavier@kpmg.com
Infrastructure
Infrastructure In-depth: Philippines
| 3 | 78
Infrastructure Guide:Guide: Philippines
Philippines |3
R.G. Manabat & Co.
Our Values
We lead by example
We work together
We respect the individual
We seek the facts and provide insight
We are open and honest in our communication
We committed to our communities
Above all, we act with integrity
EmmanuelP. PBonoan
Emmanuel . Bonoan
Infrastructure In-depth: Paul Patrick R. Afable
Editor-in-Chief
Philippines Henry D. Antonio Editor-in-Chief
Emmanuel P. Bonoan
Sharad Somani Sharon Smith
The Infrastructure Issue
Jerome Andrew H. Garcia
Henry D. Antonio Vaughn F. Montes,
Associate Editor PhD
2015 Investment Guide Michael Arcatomy H. Guarin Editorial Consultant
Growth and Opportunities
by KPMG in the
in the Philippines Ma. Pia A. Urgello
Ma.John
Cynthia C.
Molina Hernandez Sachin Gohel
Philippine Infrastructure Sector
Mary KarenArcatomy
Michael Quizon-Sakkam
H. Guarin Mariel D. Javier
Editorial Consultant
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Paul Patrick R. Afable Ma. Cristina Isabel L. Roxas
2014-2015 Edition Mariel D. Javier
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Emmanuel P. Bonoan Editorial Coordinators
Reid Tucker Ma. Cristina Isabel L. Roxas
Writers Editorial
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Writers Art Direction and Layout
John Ernest T. Tandoc
Art Direction and Layout

kpmg.com.ph
For more information, please contact:
R.G. Manabat & Co.
Roberto G. Manabat
Chairman & Chief Executive Officer
Emmanuel P. Bonoan
Vice Chairman & Head of Tax, Chief Operating Officer
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Manila - Head Office Subic Office

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Infrastructure

Philippine Economy and

Infrastructure Development Plan

Insights and Perspectives

2015 Investment Guide

R.G. Manabat agencies.

We hope that this guide will provide an overview of the

Developing Energy Addressing the Challenges

A Promising Economy; Taxation of Infrastructure

Paving the Way Through Funding of Infrastructure

Mr. Mr. Mr. Jonathan

fundamentals which have been forged over years Vietnam.Sri

persistent sound macro policies, ﬁscal consolidation,

its ubiquitous call centers.”

English-speaking shared services skills. 2013) 3

 The PINE economies: Philippines, Indonesia,

Nigeria and Ethiopia with a high potential of

Ranking country neighbors. The highest ranking is Singapore

Quality of overall infrastructure 6 113 of 113

Real life costs of infrastructure bottlenecks

other countries. task

participate up to 40 percent of the project company in T: +63 2 885 7000

most sectors, and up to 100 percent in power E: rgmanabat@kpmg.com

generation projects. For further information, please contact:

KPMG in the Philippines

T: +63 2 885 7000 ext. 200

The midterm update of the 2013-2016

“The overall strategy… is toInfrastructure

Preliminary and Detailed Engineering

Land Transportation/Railway (57(BOP)

of the DPWH that supports and coordinates

The midterm update introduces a spatial dimension to the ﬂood control,

provinces most affected by poverty either in terms of high

income sources, and infrastructure services. destinations

diversifying income sources, and infrastructure international

Convergence Strategies of the DPWH that supports Ivana Port in Batanes,

Source: Bangko Sentral ng Pilipinas presentation on Enhancing Resilience

Addressing the speciﬁc constraints faced by the poor

characteristics growth process as well frequent disasters

I – provinces with highest number of II – provinces with highest III –

more growth • Promote economic mobility of • Capacitate ofﬁcials and residents

Globally Competitive Effective and Stable Sustainable Human Vulnerabilities

Source: Philippine Development Plan 2011-2016

Source: Philippine Development Plan 2011-2016

Another salient observation is that the leadtransported

For the power sector, the target Forfor Strategy

In the water sector, the targets actually show

17 | Infrastructure In-depth: Philippines Philippines

government is committed to sustain the

This is to reduce the risks arising from being dependent

Electric Power Plant (AHEPP) Auxiliary Turbines 4 & 5 through PPP

 Uprating of Agus 6 Units 1 & 2

Others 11.3 10.8 27.6 27.9 51.4

Total (PhP) 2011 90.7 99.5

DPWH Accomplishment Report 2012.

evaluation) and in other areas of mutual interest.

 C-6 Expressway (Southeast, East and Opportunities for(DPWH)

North Section) the private sector

sector are in the PPP projects in the HSH of the DPWH:

 C-6 Expressway (Southeast, On-Going

Project NameProposed (Priority): 140.79

CALA Expressway (Cavite and Laguna

Metro Manila Expressway, C-6 58.09 TBD TBD

2DPWH Accomplishment Report 2012.

Short-term Program (2014-2016) = PhP520 billion 12,085