The Cargo Train Project proposed by MRail Inc. (MRail),

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Spencer Perkins
5 years ago
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INFRASTRUCTURE 71 P10-Bn Cargo Rail Line proposed The cargo project is the first unsolicited proposal submitted for consideration to the newly installed Rodrigo Duterte Administration.

(MERALCO), is seen as the solution to the long standing issue of congestion in Metro Manila seaports and the roads leading to and from the ports which are now often clogged with cargo trucks.

1 INFRASTRUCTURE 71 P10-Bn Cargo Rail Line proposed The cargo project is the first unsolicited proposal submitted for consideration to the newly installed Rodrigo Duterte Administration. Once approved, the railway line is expected to be completed within 2 years. The Cargo Train Project proposed by MRail Inc. (MRail), a subsidiary of Manila Electric Co. (MERALCO), is seen as the solution to the long standing issue of congestion in Metro Manila seaports and the roads leading to and from the ports which are now often clogged with cargo trucks. The proposal was first submitted to Aquino s administration but its evaluation and approval was delayed partly due to the previous administration s aversion to unsolicited project proposals and partly due to right of way (ROW) issues. In a bid to close more private-public-partnership (PPP) projects prior to stepping down, the Aquino administration finally gave approval on April 28, a few days away from the May 9 Presidential Election. With the election ban in place, the project was again given pause until a new government took office. With the newly installed Duterte Administration, talks between Philippine National Railways (PNR) and MRail have resumed and its approval is being fast-tracked. [We have support from] the new administration. We are just sorting out a few items which they want included in the project. We have indications that in the first 100 days[ all of these will be addressed] and then we can have a signing, shared MRail President and Chief Executive Officer Ferdinand Inacay in a media briefing. The multi-billion peso project (see Project Details of MRail's Cargo Train Project) is a revival of ICTSI s similar operations that carried freight to and from MICT to ICTSIowned LGICT in Calamba, Laguna. This cargo line service ran from December 1997 until it was suspended in At that time, ICTSI found that keeping the railway line operational was too expensive due to the deteriorating condition of the existing PNR tracks which prevented trains from running at a desired speed (it still took 4 hours for the cargo to travel endto-end thus reducing its economic benefits) and the cleaning of garbage thrown by squatters living near the tracks at the passing cargo trains were costing the company P2 million per year. But the growing issue of congestion in Manila ports which was further aggravated by an imposition of a truck ban on Manila The cargo railway project is seen as a solution to the growing issue of port congestion in Manila.

2 72 INFRASTRUCTURE project details of mrail's cargo train project The cargo train line is a 57-kilomer cargo rail system. A non-exclusive Track Usage Agreement (TUE) between the PNR and MRail was already signed in January 2015, which will ensure that there will be no interference in the PNR commuter service plying the Tutuban to Alabang route. MRail will build tracks inside the Manila International Container Terminal (MICT) inside the Manila port area to connect to the Tutuban Station in the existing PNR line. MRail will operate a freight train service on the existing PNR tracks that will run 24 hours daily, with a minimum of 8 round trips per day, with an average daily container transfer of 600 TEUs from the Laguna Gateway Inland Container Terminal (LGICT) to MICT, and vice versa. MRail plans to spend P900 million to acquire 3 cargo trains and P300 million to construct tracks to connect MICT to Tutuban Station of PNR. PNR meanwhile has set aside P300 million to build new tracks exclusive for the cargo train. The project will be undertaken in 3 phases: Phase 1, at a cost of P2.7 billion, will cover the cost of 8 locomotives, 120 flat wagons, and construction of depots and tracks inside the ports and will connect Manila Port to Calamba, Laguna; Phase 2 and Phase 3, will cost P7.3 billion and will connect the Manila Port to Clark and Subic. It will take 2 years to implement Phase 1 of the project. It will also take 24 months before the trains could be delivered. Hence, if the proponent starts in 1Q17, the freight rail service can be operational by Once the proposed cargo line is operational, it is expected to reduce the number of trucks on the road by at least 200 trucks per day. MRail, a subsidiary of Manila Electric Co. (MERALCO), has partnered with Enrique Razon, Jr. s International Container Terminal Services, Inc. (ICTSI) for the cargo rail project. City streets in 2014 had urged ICTSI to find a partner MRail and offer to the Philippine government the proposal to revive the cargo rail line in A study conducted by the government think-tank, Philippine Institute for Development Studies (PIDS), estimated that the Manila Port congestion was costing the country at least P44 billion annually. The 2015 PIDS study also identified the Manila Port to Laguna Corridor as the most viable option for the initial cargo railway line, with a recommendation to extend the line to Clark and Subic and build a seamless multi-modal transport in the Subic-Clark-Manila-Batangas Corridor connecting all 4 major seaports and trading routes. The implementation of a container rail service is among the priority projects declared by new Transportation Secretary Arthur Tugade, which he said he will approve within his first 100 days in office. Specifically, Secretary Tugade wants a 500 kilometer railway that would link Subic and Clark Freeport Zones to Metro Manila s seaports and airports. Over the longer term, Secretary Tugade shared that he wanted all cargo to move across the country via railway or roll-on/roll-off (RO-RO) shipping.

3 INFRASTRUCTURE 73 NLEX-SLEX Connector Road undergoes Swiss Challenge After a delay of 6 years, the P23.2 billion North Luzon Expressway (NLEX) South Luzon Expressway (SLEX) Connector Road project is now undergoing Swiss Challenge the next step for any unsolicited proposal submitted by the private sector to the government, and the final step prior to project award. Under the private-public-partnership (PPP) scheme in the Philippines, any unsolicited proposal to develop an infrastructure project will have to undergo Swiss Challenge. A Swiss Challenge is a globally accepted procurement procedure wherein an unsolicited bid for a project is open to other parties or competitors who will match or exceed the offer of the original proponent. After competitive bids are submitted, the original proponent is then given the opportunity to submit a counter-proposal matching or exceeding the competitors offer. As of writing, no comparative proposals were submitted to the Philippine government to counter the original proponent s, Metro Pacific Tollways Development Corporation (MPTDC), offer. With no other takers for the NLEX-SLEX connector road project, the award and signing of the project contract is expected to happen in the 4Q16. The multi-billion pesos project involves the construction, operation and maintenance of an 8-kilometer, 4-lane elevated expressway over the Philippine National Railway (PNR) Line between Circumferential Road 3 in Caloocan City and Metro Manila Skyway Stage 3 that will link NLEX and SLEX (see NLEX-SLEX Connector Road Project Map). The project will have at least 2 interchanges and 2 tolling plazas. MPTDC operates NLEX while San Miguel and Indonesian-based Citra Group operate SLEX. When MPTDC first submitted the project proposal in 2010, the initial cost of the entire project was at P18 billion. The years of delay and changes in the original project design had bloated the cost to P23.2 billion - of this amount P15.74 billion will be allocated for actual construction and P7.46 billion will allocated to right-of-way (ROW) acquisitions. MPTDC and its parent company, Metro Pacific Investment Corp. (MPIC) has, for the past years, expressed its frustration over the delays faced by the NLEX-SLEX connector project. When MPTDC first submitted the proposal in 2010, under the then Macapagal-Arroyo administration, they were given positive feedback and were told of a quick approval from the National Economic Development Authority (NEDA), but changes in leadership halted discussions. The succeeding administration under Nonoy Aquino was less accommodating to the MPIC group, and unsolicited proposals, in particular. The project went under review during the Aquinio nlex-slex connector road project map No one submitted a counter-proposal, as a default, MPTDC will be awarded the project.

74 INFRASTRUCTURE The project spent 2 years under review, and another 3 years waiting for the government to decide whether it has to go through Swiss Challenge.

agencies in-charge of implementing the project, were in disagreement about several of the project details and the appropriate project structure.

4 74 INFRASTRUCTURE The project spent 2 years under review, and another 3 years waiting for the government to decide whether it has to go through Swiss Challenge. administration and it took 2 years to complete mostly because the Department of Public Works and Highways (DPWH) and the Department of Transportation and Communications (DOTC), the 2 government agencies in-charge of implementing the project, were in disagreement about several of the project details and the appropriate project structure. When finally NEDA greenlighted the project in 2012, it was again halted because the government had to decide whether it will subject the project under Swiss Challenge. The project eventually found its way to the Department of Justice (DOJ) in 2015, which made a decision that the NLEX-SLEX Connector Road Project will have to go through Swiss Challenge as per the dictates of the private-publicpartnership (PPP) law governing unsolicited projects. NEDA gave its approval for the amended Swiss Challenge terms of the project in December It took another 6 months for the government to prepare all the papers to get the Swiss Challenge for the NLEX-SLEX Connector Road Project underway. With no other challenger to MPTDC s current proposal, the DPWH is looking to start preparations on the resolution that would award the NLEX-SLEX Connector Road Project to MPTDC, after which a contract with the original proponent is expected to be signed in November For their part, MPTDC shared that they will start drawing up the detailed engineering design already, a process that they expect to complete by the 1Q17. ROW acquisitions will also commence and is expected to be completed by 3Q17. Construction of the project will be finished by June The concession period granted to MPTDC will run for 35 years. The project is expected to decongest traffic in Metro Manila by providing trucks with an alternative route and give better access to Manila ports as well as the Ninoy Aquino International Airport (NAIA) and Clark International Airport. It will reduce the travel time from SLEX to NLEX to just 15 to 20 minutes from the current 1.5 to 2 hours, and those coming from Clark via NLEX heading to Laguna will see their travel time cut to 1 hour and 40 minutes from the current 3 hours.

5 INFRASTRUCTURE 75 STATUS OF BIG TICKET INFRASTRUCTURE PROJECTS IN THE PIPELINE AS OF JUNE 2016 PROJECT TITLE IMPLEMENTING AGENCY FUNDING SOURCE CIVIL WORKS TIMEFRAME PROJECT COST STATUS / ISSUES ROADS/BRIDGES Camarines Sur Expressway DPWH PPP TBD P2.25 billion On-going revision of project plan Laguna Lakeshore Expressway Dike NLEx-SLEx Connector Road Southeast Metro Manila Expressway (C6) DPWH PPP TBD P122.8 billion Failed Bidding DPWH PPP P23.2 billion DPWH PPP TBD RAILWAYS Undergoing a Swiss Chalenge DPWH finalizing agreements with TRB regarding interconnection for MMSS3 and NLEX. TRB issued Notice to Proceed of the Project on June 27 and received by CITI on June 28 Status of Final Engineering Design Drawings and Parcellary Plans: Section 1A: Approved by TRB; Section 1B: Submittal to TRB June 30 and under process for approval Section 2: For submittal to TRB for approval 1st week of July 2016 Section 3, 4, 5 & 6: Review by the Independent Consultant is 90% complete MRT-3 Rehabilitation DOTr PPP TBD TBD LRT Line 6 DOTr PPP TBD P65.1 billion Davao International Airport Upgrade AIRPORTS DOTr PPP TBD P40.6 billion UTILITIES Metro Pacific Investments Corp. Chairman Manuel Pangilinan said the company was open to reviving its proposal for the improvement of the MRT-3 with the new administration For Submission of PQ documents on 9 September 2016 DOTr currently reviewing the project Six firms identified as project prospects to prequalify and bid Submission of qualification documents postponed to August as requested by prospective bidders Davao Sasa Port Modernization 850-MW Sucat Thermal Power Plant DOTr, PPA PPP TBD P18.99 billion DOTr currently reviewing the project DOE PPP TBD TBD PSALM approved another auction Privatization of the decommissioned Sucat plant is scheduled in September 2016 Civil Registry System Information Technology Project Phase 2 OTHER PROJECTS PSA PPP TBD P1.6 billion Bidding process starts

6 76 INFRASTRUCTURE STATUS OF ON-GOING BIG TICKET INFRASTRUCTURE PROJECTS AS OF JUNE 2016 PROJECT TITLE IMPLEMENTING AGENCY FUNDING SOURCE CIVIL WORKS TIMEFRAME PROJECT COST STATUS / ISSUES ROADS/BRIDGES Metro Manila Skyway Stage 3 TRB PPP P37.43 billion Overall progress for all sections is calculated at % NLEx Harbor Link DPWH PPP SLEx Expressway Toll Road 4 TRB PPP Segment 8.2: Segment 10: (1st section) P 15.4 billion (Segments 8.2 and 10) P13.1 billion Segment 8.2: Detailed Engineering Design (DED) was completed and submitted to TRB for approval Segment 10: Project accomplishment rate is at 29% DPWH Legal Service recommended TRB to immediately execute the Draft Memorandum of Agreement between DPWH and TRB for DPWH to provide personnel and funding assistance for the acquisition of the ROW of the toll road project Section 1: Substantially completed TPLEx DPWH PPP P24.4 billion Mactan-Cebu International Airport Passenger Terminal Building LRT 1 Cavite Extension AIRPORTS Section 2: % completed (lots), % completed (improvements), 100 % completed (trees) Section 3: Construction is ongoing; Urdaneta City to Binalonan substantially completed DOTr PPP P17.5 billion Project accomplishment rate is at 23.25% RAILWAYS DOTr PPP P64.9 billion Ongoing soft renovation and upgrades of LRT Line 1 s existing system and other preconstruction activities ACRONYMS DOE Department of Energy DOTr Department of Transportation DPWH Department of Public Works and Highways LRT Light Rail Transit MMSS3 Metro Manila Skyway Stage 3 MRT Metro Rail Transit MW Megawatt NAIA Ninoy Aquino International Airport ROW Right of Way PPA Philippine Ports Authority PQ Pre-qualification PSALM Power Sector Assets and Liabilities Management Corp. SLEX South Luzon Expressway TBD To be determined TRB Toll Regulatory Board

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