The FINANCIAL — The Asian Development Bank (ADB) and the Development Bank of the Philippines (DBP) are to help the Government of the Philippines prepare its largest public-private partnership (PPP) project to date to turn the South Line of the country’s North-South Railway into a dynamic commuter and long-haul service.
“The North-South Railway is the backbone of transport in the Philippines and swifter links between the southern provinces and the capital city will mean more people can reap the rewards of the country’s strong economic growth,” said Ryuichi Kaga, Head of ADB’s Office of Public-Private Partnership. “As a major part of the ASEAN transport web, the project will also help connect the Philippines better to the rest of the region.”
The project is considered one of 15 key projects for ASEAN connectivity, according to ADB.
The agreement signed by ADB and DBP to provide joint advice to the Department of Transportation and Communications on the PPP structure and bidding process, marks ADB’s first transaction advisory service in the Philippines and its first in the transport sector.
The $3.8 billion project will build or upgrade 653 kilometers of rail lines from Manila through Legaspi City down to Matnog in the far south of the main island of Luzon, and to Batangas in southwest Luzon. Commuter rail operations will be upgraded for the 56 kilometers from Manila to Calamba. The line is intended to connect seamlessly with existing and planned light railway and metro rail transit lines in Metro Manila.
The PPP project will also improve long-haul and commuter stations, repair bridges, and modernize signaling and fare collection systems. In addition to designing and building the railway, the winners of the PPP concession will also operate and maintain the South Line for 30 years.
Many Asian governments have been actively looking to use PPPs to bring private sector financing and operations into much-needed infrastructure projects but have struggled to structure transactions in a way that attracts private companies. The Philippine government’s PPP Center has been working hard to overcome that and has identified 56 potential PPPs with nine of them—valued at nearly $3 billion, or 1% of gross domestic product—already awarded.
ADB has long supported PPPs and on 1 September 2014 it formally established the Office of Public-Private Partnership to provide independent transaction advice on specific deals and develop broader PPP knowledge in the region.
Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.
Discussion about this post