Clark Airport PPP Project

Project 601849

Terms of Reference: International Legal Consultant

The Government of the Philippines (“GoP”) is looking to invite private sector participation for the
development and operations of airports in the Greater Capital Region (“GCR”).

In particular, the Bases Conversion and Development Authority (BCDA) wishes to put to tender a project for
the expansion, modernization, and operation of the Clark International Airport under a long-term concession
agreement. Clark Airport is currently operated by the Clark International Airport Corporation (CIAC), under
the strategic oversight of the Department of Transportation (DOTr), and regulated by the Civil Aviation
Authority of the Philippines (CAAP), an agency also attached to the DOTr. An Executive Order is pending
with the Office of the President of the Philippines to transfer ownership and control of Clark Airport to
BCDA, which owns the property on which Clark Airport is situated.

Clark Airport serves both international and domestic flights. Its expansion is intended to accommodate the
growth in its organic catchment area and part of the air traffic flying to the Greater Capital Region (Metro
Manila, Central Luzon, Cavite, Laguna, Batangas, Rizal, and Quezon) and could position Clark Airport as:

1. The dual airport partner to the Ninoy Aquino International Airport (NAIA),
2. The country’s future premiere gateway replacing NAIA,
3. A growing domestic regional airport,
4. A low-cost carrier hub for the Philippines, or
5. A combination of the two or more of the above.

BCDA intends to select the winning bidder through an open and competitive public bidding.

Meanwhile, the Department of Transportation (“DOTr”) is also considering options for the enhancement
and/or replacement of NAIA. The implementation of this project is expected to be done in parallel with the
development of Clark Airport.

To this end, BCDA and DOTr have retained IFC to advise on the overall strategy for the airports in GCR and
specifically on the structuring and tender of the Clark Airport PPP Project.

Implementation Arrangements

IFC is the lead advisor for this project and will undertake the financial and fiscal due diligence and structuring
in-house.

IFC is already in the process of hiring international legal and technical consultants to provide the necessary
inputs for the overall GCR airports strategy study. IFC is putting together a separate team for the tender of the
Clark Airport PPP to continue with the Clark-specific due diligence, structuring, and bidding. While the overall
GCR and Clark-specific work are to be done in parallel, the findings of the overall strategy study will inform the
structuring of the Clark Airport PPP project.

For this project, IFC will be hiring an international technical firm, an international legal firm, and a local legal
firm. This Terms of Reference is for the International Legal Consultant specifically for the Clark Airport PPP.

The International Legal Consultant will report to the IFC Task Team Leader. In delivering its assigned tasks,
the Consultant will be expected to work with and coordinate with the other consultants. All deliverables shall
be formally reviewed and approved by the IFC Task Team Leader, after receiving comments from the Client.
Specific and more detailed tasks are explained below.
It should be noted that the advisory process is “open” by nature and that is the responsibility of the Legal
Consultants to be proactive and identify and execute any additional tasks that would be required in order to
ensure the success of the Project. The Legal Consultants are therefore expected to respond in a timely and
thorough manner for any complementary analysis that the IFC may request in order to complete its mandate
and provide comprehensive support on all legal, institutional and regulatory aspects of the Project. The Legal
Consultants will also be responsible for identifying information necessary to ensure the successful execution of
the mandate.

Scope of Work

Phase 1: Due Diligence and Structuring

 Part 1: Kick-off Presentation – Preliminary Legal Review
 Part 2: Inception Report – Legal Due Diligence
 Part 3: Transaction Structure Report

Phase 2: Tender Implementation (The work for the following streams are to be done in parallel.)
 Stream 1: Invitation and Pre-qualification: Information Memorandum, Bid Conference, Pre-
qualification Documents, Pre-qualification Evaluation
 Stream 2: Bid Process: Request for Proposals, Bidders Conference, Bid Evaluation
 Stream 3: PPP Contract

Immediately after mobilization, the Legal Consultants shall assist IFC and contribute to building a strategy for
the Transaction and provide an Action Plan for carrying forward the PPP process. This Action Plan should
include due diligence lists, data requirements, suggestions for timelines, and the key legal and transactional
information and analysis that will have to be studied and resolved prior to tender. This should be provided
within 1 week from commencement of the project.

Part 1: Kick-off Presentation – Preliminary Legal Review

1. Review the findings in Aeroport de Paris Ingenierie’s (ADPI) feasibility study, the preliminary results of
the overall GCR airports strategy study that IFC is undertaking, the relevant regulations (charters of the
involved agencies, the Build-Operate-Transfer Law of the Philippines, and other PPP Center of the
Philippines circulars and issuances), and recent airport PPP contracts in the Philippines, and present
preliminary findings on any potential legal or structuring issues moving forward.
2. Analyze international practices and identify problems and potential solutions in the Clark Airport
context. Present case studies of previous airport concession transactions with commentaries on the
structuring, roles of involved parties, and implementation issues.
3. Present the main trends in the transport/airport industry. From a legal perspective, identify the trends to
follow and to be anticipated, the main issues worldwide related to the model of private sector
participation in the airport sector. Refer to solutions used elsewhere in the world in similar situations.
Specifically, determine any international legal impediments that would suppress traffic to Clark Airport or
increase costs or any options that could be taken advantage of to improve traffic or reduce costs.

Deliverables
Preliminary Legal Review Report no later than [3] weeks from mobilization, to be presented during the Kick-
off Meeting. The purpose of the document is to enable the Client and IFC to develop an early view on the legal
and institutional issues which may take time to address.

The Kick-off Meeting: The primary purpose of the Kick-off Meeting is to clarify the objectives and expectation on the roles of
IFC (and its consultants) and of the Client(s). In this meeting, IFC will present the Action Plan, which would include inputs from
the Legal Consultants. From this discussion, the work program and timelines will be finalized. IFC and its consultants will also
present their preliminary findings, largely based on experiences in other transactions, and to flag any key issues which have already
surfaced to provide the Client sufficient time to understand and the project’s challenges and to implement solutions. This is also an
opportunity for IFC and its consultants to learn of any new developments and clarify the instructions of the Client.

Part 2: Inception Report – Legal Due Diligence

1. Detailed findings form the review of the Aeroport de Paris Ingenierie’s (ADPI) feasibility study, the
refined results of the overall GCR airports strategy study that IFC is undertaking, the relevant regulations
(charters of the involved agencies, the Build-Operate-Transfer Law of the Philippines, and other PPP
Center of the Philippines circulars and issuances), and recent airport PPP contracts in the Philippines, and
other new documents submitted according to the Aciton Plan.

2. Regulatory framework of the sector: Analyze the regulatory framework related to the transport sector in
the Philippines, including the Civil Aviation Act and other laws and regulations affecting air transport and
the airport sector, to identify any gaps or policies which would present challenges to PPP implementation
and/or private sector involvement. The regulatory review will also include regional and international
agreements related to transport and commerce which may have an impact on air transport;

3. Analyze and identify fiscal regimes and other regulations that will be applicable to an investor, a
construction company or an airport operator in the Philippines. Identify fiscal agreements (tax and custom
treaties) between the Philippines and other countries that could have an impact on the price for users,
construction companies or revenues of investors in a PPP transaction.

4. Advise, based on the above, on the legal basis of the transaction, including the selection of a suitable
bidder for the development of Project; and

5. If required, prepare and hold educational sessions, covering legal and related concepts.

Deliverables

 Draft Inception Report -- Legal Due Diligence Report, which is to be provided no later than [6] weeks
from mobilization and which will be revised into the Final Transaction Legal Due Diligence Report no
later than [8] weeks from mobilization. This should include relevant findings from the above, refinements
from the feedback from the Kick-off Presentation, and proposed approaches for the legal issues and
constraints in implementing the project.

Part 3: Transaction Structuring

1. Assist IFC and Government during their exchanges with potential investors on the proposed structuring
and provide support and recommendation to address issues raised. Assistance could take form or
drawing questionnaire, participating in meetings and/or providing any supportive documentation that
IFC may require.
2. From a legal perspective, analyze and advise on the initial concept and risk allocation for the Project, and
provide recommendation on the selection of the PSP structure and revenue sources.
3. Undertake benchmarks with other similar airport restructuring around the world (and in particular in
countries similar to the Philippines), analyze and provide recommendations on the optimal division of
responsibility between private investor and BCDA/CIAC and any other party to the PPP. The analysis
on division of responsibilities (to be undertaken in collaboration with the Technical Consultant) should
also include but not be limited to: operations, mobilization of financing, ownership, human resources,
negotiation of agreements, guarantees, etc.
4. Provide recommendations on structure of the bid and bidding criteria as well as a term sheet on other
key structuring elements such as type of PPP contract and related contractual documents as well as their
content (key clauses to obtain a balances Transaction) including obligations, term, guarantees, etc.

Deliverables
 Contribute to the Transaction Structure Report (“TSR”) prepared by IFC for Government review
and approval: The Legal Consultants will be required to draft, review and comment on the relevant
sections that deal with legal issues as they pertain to international laws.
 Legal opinions and findings, as required, to conclude Transaction structuring.
  Construct a Preliminary Term Sheet for the proposed transaction summarizing the key contractual
features. This will be submitted to the Philippine Cabinet as part of the approvals process. This
should be provided no later than [10] weeks from mobilization.

Part 4: – Tender Implementation

1. Following discussion on the draft Term Sheet and the feedback from the government approvals process,
prepare the initial draft project agreements – Concession Agreement and other Bid Documents,
including the technical and commercial documents with relevant inputs from IFC and the Technical
Consultant, and assist in presenting and advising BCDA on those agreements.
2. Assist in the legal aspects of the marketing effort to potential investors, including the legal inputs for the
preparation of the Information Memorandum, etc.
3. Assist in the pre-qualification of potential bidders, including the pre-qualification criteria, preparing the
legal content of the Request for Pre-Qualifications (RFPQ)/Invitation to Prospective Bidders (ITPB)
and the preparation of the legal content of the pre-qualification report.
4. Assist in the qualification of potential bidders, including the qualification criteria, preparing the legal
content of the Request for Qualifications (RFQ)/Invitation to Bidders (ITB) and the preparation of the
legal content of the qualification report.
5. Assist, as required by IFC and BCDA, in the preparation of the Request for Proposals (RFP), including
the design of the bid evaluation criteria and the process for bid evaluation, and review the final RFP for
completeness. Includes participation in bid conference and negotiations with bidders,
6. Assist in negotiating the contractual agreements and revise the contractual documents, if necessary, in
accordance with negotiations.
7. Assist in advising BCDA on the final terms of the contractual agreements, and prepare the final versions
of the documents to be included in the RFP.
8. Coordinate with the Transaction team throughout the Transaction, and provide any other legal
assistance, as necessary.
9. Assist in the Closing of the Transaction: assistance in finalizing the concession agreement, including all
annexes and attachments.

Deliverables
 Draft Information Memorandum in the [4 th] month after mobilization.
 Draft RFPQ/ITPB in the [4th] month after mobilization.
 Draft RFQ/ITB in the [5th] month after mobilization.
 Draft RFP and Concession Agreement in the [6th] month after mobilization.
 Final Concession Agreement in the [10th] month after mobilization.

Other
1. Overall, the advisory mandate (up to award of the transaction) is expected to be completed in 10-15
months’ time, inclusive of the period for Government decisions and for bidders to provide feedback on
interim transaction documents drafts.
2. The Consultant are expected to assist IFC in explaining the output to the Clients and joining the relevant
meetings. The Consultant should plan 5 trips to Manila with an average stay of 5 days per trip.
3. We expect at least 3 revisions of each of the Tender Documents. Deliverables will be considered final
only after IFC deems them satisfactory.

Available Studies
1. Feasibility Study for Clark Airport undertaken by BCDA with the assistance of Aeroport de Paris
Ingenierie, completed in 2015.
2. Feasibility Study for NAIA undertaken by Ernst and Young, completed in 2015.
3. An airport masterplan completed by the Japan International Cooperation Agency.
Required Experiences and Skills
The Consultant should be an international firm demonstrated expertise with PPP and infrastructure project
development experience in airport and infrastructure transaction across multiple markets especially in Asia and
other developing market.

Confidentiality Statement
All data and information received from IFC for the purpose of this assignment are to be treated confidentially
and are only to be used in connection with the execution of these Terms of Reference. All intellectual property
rights arising from the execution of these Terms of Reference are assigned to IFC. The contents of written
materials obtained and used in this assignment may not be disclosed to any third parties without the expressed
advance written authorization of the IFC.