NLEX-SLEX Connector

Background
The project involves the construction and operation and maintenance (O&M) of an
8 km. 4-lane elevated expressway over the Philippine National Railway (PNR)
right of way. It starts from C3 Road in Caloocan through Manila crossing Espana
towards PUP, Sta. Mesa connecting Metro Manila Skyway Stage 3 (MMSS3).
Once completed, the NLEX-SLEX Connector road is expected to decongest traffic
in Metro Manila by providing an alternative to C-5 Road, Efipanio de los Santos
Avenue (EDSA), and other major thoroughfares, and cut the travel time between
NLEX and SLEX to 15-20 minutes which today takes more than an hour.

PROJECT COST: PhP 23.20 Billion

PROJECT PROPONENT: Manila North Tollways Corporation

STATUS: Ground Breaking for Section 2 was held last December 14, 2021. Pre-
construction activities by the Contractor are ongoing.

Construction works update: 57.93% overall completion as of August 25, 2022.

• 79.66% complete for Section 1 of the Caloocan and Manila Area only.
• 10.87% complete for Section 2 Manila Area.

Source:
● NLEx-SLEx Connector Road Project | PPP Center. (n.d.). Retrieved October 7,
2022, from https://ppp.gov.ph/ppp_projects/nlex-slex-connector-road/
 Direct Benefits
● Benefit at least 35,000 motorist/ vehicles per day.
● Expected to decongest traffic in Metro Manila, as well as address the existing congestion problem
in the Port of Manila.
● Provide an alternative route to Circumferential Road 5, Epifanio de los Santos Avenue, and other
major thoroughfares.
● Reduce travel time from Clark to Calamba from approximately from 3 hours to 1 hours and 40
minutes.
● Reduce transit time between the NLEX AND SLEX from 2 hours to just 20 minutes.

Source:
● Lupad, P. (2022, February 26). NLEX-SLEX Connector Road Project Latest Update as of February 2022. Project LUPAD Photo and Video Services. Retrieved October 7, 2022, from
https://www.projectlupad.com/nlex-slex-connector-road-project-latest-update-as-of-february-2022/
● INVITATION TO SUBMIT COMPARATIVE PROPOSALS FOR THE NORTH LUZON EXPRESSWAY-SOUTH LUZON EXPRESSWAY (NLEx-SLEx) CONNECTOR ROAD
PROJECT. (n.d.). https://ppp.gov.ph/wp-content/uploads/2016/04/NLEXSLEX-Invitation-for-Comaparative-Proposals.pdf
Indirect Benefits
● The expressway will help reduce pollution in Metro Manila.
● Provide greater comfort and safety to the motorist.
● Large savings in travel time, fuel, and vehicle maintenance costs for motorist.
● The project will provide 6,000 direct jobs and additional 10,000 indirect jobs during construction.
● Decentralization of Metro Manila. The public may be encourage to reside outside metro manila. Property
and other business may increase near the point of entries of the expressway because of the faster travel time.
● Stimulate economic development in Manila, Caloocan, Malabon, and Navotas, as well as their surrounding
areas.
● Operation cost for businesses may lessen due to this improvement.
● Business operations efficiency due to the shorter travel time may significantly increase.
● Increase in taxes remitted to the government.
Source:
● PNoy approves Citra’s NLEX-SLEX Connector Road project | PPP Center. (n.d.). Retrieved October 7, 2022, from
https://ppp.gov.ph/in_the_news/pnoy-approves-citras-nlex-slex-connector-road-project/
Implementation Challenge
One challenge this project experienced is the difficulty in acquiring the right-of-way required for the original
alignment — specifically at Section 2B from Pandacan to Sta. Mesa. The acquisition of right-of-way for
major infrastructure projects is typically handled by the government. But SMC is also allocating funds to
hasten the buyout of land along the road’s alignment.

According to SMC President, Ramon Ang, right-of-way acquisition is a perennial cause of delay for big-
ticket infrastructure projects. He emphasized that it was also the “single biggest constraint” for the Skyway
Stage 3.

Source:
● Lamentillo, Anna Mae. (2020). Right-of-way reforms critical in Skyway Stage 3 completion. Manila Bulletin.
https://mb.com.ph/2020/10/24/right-of-way-reforms-critical-in-skyway-stage-3-completion/
● Camus, Miguel. (2021). SMC says right-of-way issues delaying road linking Skyway 3 to NLEX. Inquirer.
https://business.inquirer.net/316593/smc-says-right-of-way-issues-delaying-road-linking-skyway-3-to-nlex#i
xzz7h0cWMhD8
Financials
Project Cost
PhP 23.20 Billion

PPP Structure
Build-Operate-Transfer (BOT)

Cooperation Period
37 Years (2020 - 2057)

Private Proponent
Manila North Tollways Corporation

Source:
● (2011). Preparatory Survey on PPP Project for Development of a connector road in Manila. Japan
International Cooperation Agency. https://openjicareport.jica.go.jp/pdf/12041638.pdf
Cash Flows

(in Mil. Peso)

Source:
● (2011). Preparatory Survey on PPP Project for Development of a connector road in Manila. Japan International Cooperation
Agency. https://openjicareport.jica.go.jp/pdf/12041638.pdf
Net Present Value vs. Discount Rate

At the Required
Rate of 15%,
NPV is at 10,830.

IRR is 29.1%
Justification
The benefit of government projects focus on the value it
provides to the lives of its people instead of the monetary
return. In the case of the NLEX-SLEX Connector, it
Criteria Value Justification improves the lives of the people by reducing the travel time
and enhances traffic flow of transportation and logistics.
Required Rate
EIRR 29.10% The assumption is that these in turn would result to an
(15%) < IRR
increase in taxes that are remitted to the government.
NPV 10,830 NPV > 0
This differs from for-profit projects as it focuses on the
monetary returns to its principal.