Daang Hari-SLEX Link Road PIM

Republic of the Philippines
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
DAANG HARI-SLEX LINK ROAD

Preliminary Information Memorandum
ALABANG
MUNTINLUPA
N
BACOOR
Susana
Heights
NBP
SLEX
DAANG HARI –
SLEX LINK
DAANG HARI
ROAD
June 2011
DPWH – DAANG HARI-SLEX LINK ROAD: Preliminary Information Memorandum June 2011
Disclaimer
This Preliminary Information Memorandum (PIM) has been prepared by the Department of Public
Works and Highways (DPWH).
This PIM does not purport to be all-inclusive or to contain all of the information that a prospective
participant may consider material or desirable in making its decision to participate in the tender.
No representation or warranty, express or implied, is made, or responsibility of any kind is or will be

accepted by the DPWH, or the Government of the Philippines (GOP) or any of its agencies, with
respect to the accuracy and completeness of this preliminary information.
The DPWH may amend or replace any of the information contained in this booklet at any time,
without giving any prior notice or providing any reason.
In furnishing this PIM, the DPWH, or the Government of the Philippines (GOP) or any of its
agencies undertakes no obligation to provide recipients with access to any additional information, or
to update, or to correct any inaccuracies which may become apparent in this PIM or any other
information made available in connection with the Project prior to the actual tender. Additional
information shall be provided at appropriate times during the formal tender process.
No person has been authorized to give any information or make any representation not contained in
this PIM and, if given or made, any such information or representation may not be relied upon as
having been authorized by the DPWH, or the Government of the Philippines (GOP) or any of its
agencies.
THIS MEMORANDUM DOES NOT CONSTITUTE A SOLICITATION OF BIDS FOR ANY ASPECT
OF THE DAANG HARI – SLEX LINK PROJECT. SOLICITATIONS OF BIDS AND BIDDING
GUIDELINES WILL BE DISTRIBUTED AT A LATER DATE.
Page 2 of 24
ACRONYMS
ASDI Alabang-Sto. Tomas Development, Inc.

BOT Build-Operate-Transfer
BSP Bangko Sentral ng Pilipinas
BTO Build-Transfer-Operate
CALA Cavite-Laguna
DED Detailed Engineering Design
DENR Department of Environment and Natural Resources
DH Daang Hari
DOF Department of Finance
DPWH Department Public Works and Highways
GOP Government of the Philippines
JICA Japan International Cooperation Agency
ICC Investment Coordination Committee
IRR Implementing Rules and Regulations
ITB Instruction to Bidders
NBP National Bilibid Prison
NDC National Development Company
NEDA National Economic and Development Authority
ODA Overseas Development Assistance
PD Presidential Decree
PIM Preliminary Information Memorandum
PPP Public-Private Partnership
PMO-BOT Project Management Office – Built Operate Transfer
PNCC Philippine National Construction Corporation
RA Republic Act
ROP Republic of the Philippines
ROW Right-Of-Way
SBAC Special Bids and Awards Committee
SLEX South Luzon Expressway
TCA Toll Concession Agreement
TOC Toll Operation Certificate
TRB Toll Regulatory Board
UNITS
Km - kilometer
AADT - Average Annual Daily Traffic
Page 3 of 24
CONTENTS
Executive Summary .................................................................................................................... 6
Introduction ................................................................................................................................. 7
Historical Background ................................................................................................................. 9
Transaction Preparation Process ................................................................................................ 9
Project Description.................................................................................................................... 10
Construction Cost ..................................................................................................................... 11
Project Implementing Agency ................................................................................................... 12
The Philippine Toll Road System .............................................................................................. 12
Traffic Analysis ......................................................................................................................... 15
Procurement Process ............................................................................................................... 15
Legal Basis of Procurement .......................................................................................... 15
Nature of the Procurement Process .............................................................................. 15
Concession Structure................................................................................................................ 18
Legal Framework for Concession .................................................................................. 18
Project Structure ........................................................................................................... 19
Key Commercial Features of the Draft TCA .............................................................................. 19
Regulatory Framework.............................................................................................................. 21
National Economic and Development Authority ............................................................. 21
Toll Regulatory Board.................................................................................................... 22
Investment Framework ............................................................................................................. 22
Taxation ........................................................................................................................ 22
Foreign Exchange ......................................................................................................... 22
Foreign Ownership and Management ........................................................................... 23
Other Information to be Supplied .............................................................................................. 23
Indicative Timetable .................................................................................................................. 24
Page 4 of 24
Purpose of this memorandum
The purpose of this Preliminary Information Memorandum is to provide preliminary

information to potential investors on the proposed transaction, and to solicit comments and
feedback on key issues, bid process and timing for the selection of the winning bidder.
Finalizing the details of the Transaction and bid documents will be largely based on
investors’ feedback, and hence investor feedback is actively encouraged. In particular, the
DPWH is keen to hear investor’s thoughts on the following areas:
(i) Appetite and interest in participating in Transaction.

(ii) Risks and concerns associated with the Transaction.
(iii) Manner and timetable for the conduct of the competitive tender process.
Feedback may be sent by email to DPWH-BOT-PMO at the contact information provided

below:
Director Rebecca T. Garsuta [email protected] (632) 3043762
Information contained in this Memorandum
This Memorandum summarizes the major elements of the Daang Hari-SLEX Link Road,
including the current regulatory framework for toll roads, the service area, tariff structure,
the configuration of Metro Manila’s transport system, and government institutions that
would be involved in the implementation of the Project. It also summarizes possible
investment issues and the BOT Law procurement process.
Page 5 of 24
EXECUTIVE SUMMARY
The Investment Opportunity
 The Daang Hari-SLEX Link Road, sponsored by the Department of Public Works and
Highways (DPWH), is one of the priority projects of the Government of the Philippines
(GOP) under its Public-Private Partnership (PPP) Program launched by President Aquino in
November 2010.
 The Project is a strategic component of the Metro Manila Urban Expressway System that is
intended to provide a high-standard expressway that would facilitate the efficient flow of
existing and future traffic to and from Baccor, Cavite and South Luzon Expressway (SLEX).
 The Republic of the Philippines (ROP), represented by DPWH, will be the direct
counterparty in the Toll Concession Agreement (TCA) to be implemented under the
Philippine BOT Law (Republic Act 6957 as amended by RA 7718).
 The Project will be procured under a fully transparent and competitive process strictly
following the rules and procedures of the Philippine BOT Law and its Implementing Rules
and Regulations.
 Right-of-Way (ROW) required for the Project will be provided free and clear to the
Concessionaire by the pre-agreed timeline, which will be defined in the TCA.
 The complete requirements for the issuance of the Toll Operations Certificate (TOC) by the
Toll Regulatory Board (TRB) will be provided to bidders and incorporated in the TCA. Upon
compliance with these requirements, DPWH will ensure the issuance by the TRB of the
TOC by the pre-agreed timeline, which will be defined in the TCA.
 The Project has a toll rate structure that is affordable and competitive, with levels to be set
comparable with tolls charged in existing tollroads serving Metro Manila. A toll adjustment
formula will be prescribed in the TCA and its application over the concession period will be
guaranteed by the DPWH.
Page 6 of 24
INTRODUCTION
The Philippine government launched in November 2010 an aggressive program for Public-
Private Partnerships (PPP) in order to develop much needed infrastructure that would
support its objectives of sustained and inclusive economic growth.
The Daang Hari-SLEX Link Road is among the government’s priority PPP to be
implemented under the Philippine Build-Operate-Transfer Law (the BOT Law) through the
solicited mode.
The project is located in the Province of Cavite which is one of the most rapidly growing
areas around Metro Manila. Population growth, coupled with industrial and commercial
development, has brought about serious traffic congestion in the area.
The Cavite - Laguna (CALA) Transport Study has developed a transport strategy,
formulated a medium-term corollary transport investment program and identified priority
transport projects for funding and implementation for the CALA region. Among the
transport projects for CALA region, the East-West Road from Tanza to Muntinlupa was
identified as one of the priority road projects in the network. Moreover, it was envisioned as
the southern link component of the proposed C6 Expressway under the Metro Manila
Urban Expressway Network (MMUEN) Study.
As conceptualized in the CALA Transport Study, the Tanza - Muntinlupa Highway is a 30-
km road alignment that starts from the Laguna de Bay shorelines area of Muntinlupa and
will run through a westerly direction towards Tanza, Cavite. It is divided into four (4)
segments, as follows:
Segment Limits Length

(km)
DH1 SLEX - Laguna de Bay Coastal Road (Excluded 4.9
in the study)
DH2 SLEX – Existing Daang Hari 4.0
DH3 Daang Hari-Aguinaldo Highway 9.3
DH4 Aguinaldo-Naic-Tanza Road 11.8
The DH3 segment was constructed by the DPWH with a 4-lane divided highway starting
from the Alabang-Zapote Road (just beside Ayala Alabang Village in Las Piñas and
Muntinlupa City) connecting to Molino Road in Bacoor, Cavite and ends up to Aguinaldo
Highway at Imus, Cavite. It serves as an alternate route for motorists heading towards
Metro Manila and vice versa. However, the road narrows towards the side of Ayala
Alabang going to Commerce Avenue, causing extreme congestion in that section during
rush hours.
Page 7 of 24
Figure 1 – CALA Priority Road Projects Proposed in the

DPWH-JICA Feasibility Study
Alabang-Sto. Tomas Development Inc. (ASDI), a joint venture of National Development

Company (NDC) and Philippine National Construction Corporation (PNCC), had proposed
to undertake the financing, design, construction, operation and maintenance of the Daang
Hari-SLEX Link Road (technically referred to as DH2) under the joint venture scheme.
ASDI started the advance works starting from the junction of DH3 and Daang Reyna going
towards the New Bilibid Prison (NBP) Reservation.
The proposed road will also enhance the master plan for the redevelopment of the existing
prison compound. A scheme to redevelop the NBP and to relocate the prison site is
underway and the existing site is planned to be developed into a mixed commercial,
residential and institutional estate. With the proposed road, access to the area will be
significantly improved.
Page 8 of 24
HISTORICAL BACKGROUND OF THE PROJECT
The National Development Company (NDC), a government owned and controlled financial
institution created pursuant to PD No.1648 as amended, initiated the construction of the
Daang Hari Road through its subsidiary, the Alabang - Sto. Tomas Development
Incorporated (ASDI).
The Philippine National Construction Corporation (PNCC) formerly the Construction and
Development Corporation of the Philippines agreed to invest primary equity in ASDI and
cooperate in the development of the Project through the Joint Venture mode.
ASDI, with NDC and PNCC as primary shareholders, initially conducted the design,
finance, and construction of the Project. The Project was presented to the Toll Regulatory
Board on April 26, 2007. The Board required NDC/ASDI to seek a “no objection” from
DPWH on the proposed undertaking of the Project as a toll road. The DPWH issued the “no
objection” letter on 26 May 2008. The TRB Board declared the Project as a “Toll Road
Project” on July 30, 2008.
The NEDA issued a letter on August 11, 2008, informing that the Project is included in the
NEDA Board approved 2006 CIIP and the updated 2007 CIIP. ASDI started advanced
works of the Project in August 2009.
TRANSACTION PREPARATION PROCESS

DPWH has prepared and structured the legal, technical and economic aspects of the
Daang Hari-SLEX Link Road and now wishes to conduct a preliminary market test of the
Transaction opportunity with potential investors. The feedback from this preliminary briefing
and subsequent consultations with investors that may be conducted would provide useful
guide to the DPWH and its advisors in finalizing the terms of the Transaction and the
process/timetable for tender.
The Project has been endorsed to NEDA Board for approval. Once cleared, the Project
documents will be finalized and thereafter the tender process initiated (Tender Phase). The
Tender Phase will also include the opening of a data room for investors’ own due diligence;
pre-bid consultation of the transaction documents and a transparent bidding and award
process.
Page 9 of 24
PROJECT DESCRIPTION
The Daang Hari – SLEX Link Road Project involves the construction of a new 4-kilometer
4-lane toll road, from the junction of Daang Reyna and Daang Hari in Las Piñas/Bacoor,
Cavite to SLEX through the Susana Heights Interchange in Muntinlupa, traversing the New
Bilibid Prison (NBP) Reservation.
In consideration of traffic safety, the original proposal, which involves the construction of an
undercrossing, was revised. The new proposed link-road will now use the Susana Heights
Interchange as exit and entry from north and south of SLEX, thus maximizing traffic
volume, which includes traffic from the south and from the east (Muntinlupa area) going to
Daang Hari (around 20% increase in traffic). As a result, the proposed project includes the
construction of a new bridge/widening of the existing bridge crossing SLEX as well as the
expansion of the Susana Heights toll plaza.
The road project is divided into 2 Segments:
a. SEGMENT I
Starts at Junction Daang Hari-Daang Reyna, Elliptical Road or Rotunda (Roads 1 to

6) km 0+000 and will ends in Sta. 2 + 300.
The winning Concessionaire will be responsible for the financing and construction of
the remaining works at Segment I.
b. SEGMENT II
Starts at Sta. 2 + 300 and will end up at Susana Heights Interchange through a
roundabout.
The winning Concessionaire will be responsible for the Detailed Engineering Design
(DED) of Segment II, following the road configuration as provided by the DPWH.
Upon approval by the DPWH of the DED, the Concessionaire will finance and
construct Segment II.
SCOPE OF WORK
The project will involve the construction of the following:
 4-lane, 4-km at grade expressway

 2 rotundas (roundabout)
 Viaduct with a length of 235 meters
 2-lane bridge crossing SLEX, length – 60 meters
 Expansion of Susana Heights Toll Plaza
 Local roads and two (2) overpasses
 Toll Plaza
 Realignment of private road (Linden Wood) to connect at Roundabout
 Other structures (drainage, fence, noise barrier, lighting, traffic control systems,
emergency telephone system and traffic signs)
Page 10 of 24
FIGURE 1
CONSTRUCTION COST
The construction cost estimate was estimated based on the following factors:
a) Unit price of similar GOP and BOT projects implemented or tendered from 2010-
2011; and
b) Procedures and composition for the derivation of base construction cost, in similar
project were used.
The total project cost is approximately PhP 1.956 Billion inclusive of ROW acquisition
cost estimated at PhP 177 Million.
Page 11 of 24
PROJECT IMPLEMENTING AGENCY

The Project is being implemented by the DPWH, a department of the executive branch of
Government. It is the engineering and construction arm of the Government. DPWH is
primarily responsible for the planning, classification, design, construction, operation,
maintenance, and supervision of all public works and infrastructure facilities, particularly
national roads and highways.
THE PHILIPPINE TOLL ROAD SYSTEM

The Philippine High Standard Highway Master Plan is shown in Figure 2. The current toll
rates on operational toll roads in the Philippines are reported in Table 2.
The toll rate proposed for the Daang Hari-SLEX Link Road will be comparable with the
current SLEX toll per km and is therefore considered to be an acceptable rate.
Page 12 of 24
Figure 2 HIGH STANDARD HIGHWAY MASTER PLAN
Source: DPWH
Page 13 of 24
TABLE 1 High Standard Highway Master Plan – 200km Sphere of Metro Manila
Existing Length (Km)
Subic-Clark-Tarlac Expressway* 93.77
North Luzon Tollway* 82.62
C-5 Expressway (Segment 8.1) 2.34
Metro Manila Skyway, Stage 1* 9.30
SLEX (Magallanes-Alabang)* 13.43
Manila Cavite Toll Expressway* 6.75
South Luzon Tollway* 36.03
Manila-Cavite Toll Expressway (R-1 Extension)* 7.00
Metro Manila Skyway, Stage 2* 6.86
Southern Tagalog Arterial Road (Star)* 42.00
Total 300
Project Name Planned/On-Going Length (Km)
Tarlac-Pangasinan-La Union Toll Expressway 88.58
C-5 Expressway (Segment 8.2, 9 & 10) 19.92
Nlex-Slex Connector* 13.34
Total 122
Source: DPWH
*Toll Road
TABLE 2 Philippine Toll Road System Toll Rate (2011 Pesos per Km)
Class 1 Class 2 Class 3
Car, Heavy
Toll Road Light Remarks
Jeep, Truck,
Truck
Pick-up Trailer
Elevated Phase 1 6.84 13.68 20.53 Skyway/Buendia - Bicutan (9.50 km)
Metro Manila
Elevated Phase 2 11.92 23.84 35.76 Alabang - Bicutan (6.88 km)
Skyway (MMS)
At grade 7.85 15.70 23.56 Magallanes - Alabang (13.50 km)
North Luzon Expressway (NLEX) 2.38 5.92 7.08
South Luzon Expressway (SLEX) 3.02 6.04 9.10
Manila Cavite Toll Phase 1 3.33 6.82 9.85 R-1 Extension to Bacoor (6.6 km)
Expressway (MCTE) Phase 2 8.96 17.92 26.87 Bacoor Bay to Kawit (6.475 km)
Southern Tagalog Arterial Road (STAR) 1.43 2.86 4.26
Subic-Clark-Tarlac Expressway (SCTEX) 2.68 5.36 8.04
Source: TRB, 2011 May
Note: Skyway, Manila Cavite Expressway, part of NLEX are open systems
Page 14 of 24
TRAFFIC ANALYSIS
The traffic estimation was based on a network traffic model developed using the JICA
STRADA1 software, including all steps of the travel model calibration and demand
forecasting. The results of the traffic assignment for year 2013 are as follows:
VEHICLE CLASS VEHICLES PER DAY

Class 1 14,738
Class 2 2,898
Class 3 3,377
Total 21,013
PROCUREMENT PROCESS
LEGAL BASIS OF PROCUREMENT
The international competitive bidding for the Project (the Bidding) will be conducted in accordance
with the procurement rules and procedures set forth in the BOT Law (Republic Act No. 6957, as
amended by Republic Act No. 7718) and its Revised Implementing Rules and Regulations (April
2006 the Revised IRR).
NATURE OF THE PROCUREMENT PROCESS

The Bidding for the Project will be conducted in an open and transparent manner following the two-
envelope/two-stage system for soliciting bids under the Revised IRR. The selection process will be
administered by the BOT Pre-Qualification, Bids and Awards Committee (Special BAC) of the
DPWH.
Under the two-envelope/two-stage system, Bidders are first pre-qualified on the basis of legal,
technical and financial eligibility requirements set by the DPWH. Only those Bidders who pre-
qualify will be deemed eligible to participate in the next stage and formally submit their technical
and financial proposals to the Special BAC on the bid submission deadline. The pre-qualification
documents, the technical proposals and financial proposals will be evaluated based on their
completeness, adequacy and compliance with the prescribed evaluation criteria.
The general procedure for the Bidding will be as follows:
a. Bidders will be asked to submit their pre-qualification documents on or before the pre-
qualification submission deadline. The requirements for the preparation and submission of pre-
qualification documents will be fully explained in the Request for Qualification (RFQ) document
to be issued by the Special BAC.
1
JICA STRADA is a software tool for planning, managing, and analyzing of transportation systems and has been used for studies done
around the world such as in Manila (1999), Ho Chi Minh (2004), Jakarta (2003), Cairo (2002), Hanoi (2005) and Nairobi (2004). The
software provides a set of tools for traffic demand modeling.
Page 15 of 24
b. The envelope containing the Bidders’ pre-qualification documents will be opened immediately
after the lapse of the deadline and will be checked for completeness. The Special BAC will then
determine whether a Bidder is pre-qualified or eligible to participate in the next stage of the
Bidding. Only those Bidders who pre-qualify shall be allowed to submit their technical and
financial proposals. The Special BAC shall inform disqualified Bidders in writing of the reasons
for their disqualification from the Bidding.
c. Bidders who pre-qualify will be requested to submit to the Special BAC their technical
proposals and financial proposals in two (2) separately sealed envelopes on or before the bid
submission deadline. The requirements for the preparation and submission of technical
proposals and financial proposals will be fully explained in the Request for Proposals (RFP)
document to be issued by the Special BAC.
d. The Special BAC will first open the Bidders’ technical proposals after the lapse of the deadline
and evaluate the same according to the evaluation criteria prescribed in the RFP. Only those
Bidders whose technical proposals pass the technical evaluation criteria will have their financial
proposals opened and evaluated. Bidders who fail the technical evaluation will receive back
their financial proposals unopened together with a letter from the Special BAC stating the
reasons for their disqualification from the Bidding.
e. The financial proposals of technically compliant Bidders will be opened and evaluated by the
Special BAC on a subsequent date. Financial proposals shall contain the amount the Bidder
will pay the government for the right to take over the advance works undertaken by ASDI, and
undertake the Project according to the terms of the Toll Concession Agreement. The Bidder
who submits the highest such amount and passes the post-qualification process to be
conducted by the Special BAC will be selected as the Winning Bidder and will be awarded the
Toll Concession Agreement.
A more detailed description of the bidding process in provided in Table 4 below.
TABLE 4 Solicited Bidding Process under BOT Law
PROPOSED TIMELINE OF
BIDDER PROCESS FLOW
DPWH
Publishes invitation for pre-

qualification once a week for 3
consecutive weeks in 2
newspapers of general circulation
and in one local newspaper in
ADVERTISEMENT/
Secures Instructions to Bidders area where project will be
INVITATION TO PRE-QUALIFY
from DPWH implemented.
AND BID
The invitation may also be (1)
posted continuously in DPWH’s
website during the stated period
and (2) published in at least one
Page 16 of 24
BIDDER PROCESS FLOW
DPWH
international publication.
Issues official notices to project

proponents registered with them.
Prepares qualification documents

PREPARATION OF
within at least 45 days from last
QUALIFICATION DOCUMENTS
date of publication.
Submits qualification documents

to DPWH. Within 10 days after the deadline
for the submission of qualification
Disqualified bidders may, within documents, determines who
15 working days from receipt of among the bidders are pre-
notice of disqualification, appeal PRE-QUALIFICATION OF qualified and disqualified.
BIDDERS
to the Secretary of the DPWH.
Informs bidders whether or not
Bidder must file a non-refundable they pre-qualified within 10 days.
appeal fee amounting to no less
than 0.5% of the Project cost
Issues the draft Toll Concession

Agreement to pre-qualified
bidders.
Pre-qualified bidders prepare their Conducts pre-bid conference to

BID PROPOSAL PREPARATION
bids within at least 120 days. clarify any matters relating to the
bidding or the bid documents at
least 60-120 calendar days before
the deadline for bid submission.
Pre-qualified bidders submit their Evaluates technical proposal

Bid Proposal in 3 envelopes: within 8 days from bid submission
deadline.
st
1 envelope – Bid Letter, Bid
BID SUBMISSION
Security, and additional Evaluates financial proposals of
AND
documents bidders who meet technical
EVALUATION
criteria within 1 day from date of
nd
2 envelope – Technical proposal completion of evaluation of
technical proposals.
rd
3 envelope- Financial proposal
Special BAC submits to Secretary

of DPWH a recommendation of
award within 3 days after
APPROVAL OF CONTRACT completion of its financial
AWARD evaluation.
Secretary of DPWH approves

Special BAC’s recommendation
Page 17 of 24
BIDDER PROCESS FLOW
DPWH
for contract award within 1 day

from submission by Special BAC
of its recommendation.
Informs unsuccessful bidders of

the results of the bidding.
Within 1 day from submission by

Special BAC of recommendation
to award, Secretary of DPWH
signs and issues Notice of Award
to winning bidder, which must
indicate the required submissions
by winning bidder.
Winning bidder receives Notice of
Award and complies with all Within 7 days from receipt of the
ISSUANCE OF
conditions and requirements requirements for award, the
NOTICE OF AWARD
indicated therein within 30 days Secretary of DPWH determines
from receipt of Notice of Award. and notifies winning bidder of its
compliance with conditions in
Notice of Award.
If deadline is not met by winning

bidder, DPWH may confiscate bid
security.
Signs contract within 3 days from

receipt of winning bidder of the
Winning bidder signs contract advice from DPWH that winning
within 3 days from receipt of bidder has complied with all
advice from DPWH that it has EXECUTION OF CONTRACT conditions in Notice of Award.
complied with all conditions in
Notice of Award. Contract is effective upon signing
by DPWH, unless another date is
stipulated.
CONCESSION STRUCTURE
LEGAL FRAMEWORK FOR CONCESSION
The BOT Law provides the legal framework for government agencies to enter into PPP
contracts with qualified private sector proponents for the prosecution of government
infrastructure or development projects. In particular, the BOT Law and its Revised IRR
describe the requirements and procedures for the preparation, approval, tendering and
implementation of PPP/BOT projects.
Page 18 of 24
The Project will be a public utility. The Project provides flexibility for the Concessionaire to
both own the income stream and operate the Project, provided it satisfies the Filipino
nationality requirement under Art. XII, Section 11 of the Philippine Constitution, or to own
the income stream from the Project and appoint a Facility Operator to operate the Project.
Under the second option, only the Facility Operator needs to satisfy the Filipino nationality
requirement.
PROJECT STRUCTURE
The Project will be implemented as build-transfer-operate (BTO) contractual arrangement,
which is one of the PPP variants specifically authorized under the BOT Law. In a BTO
scheme, the private sector party or concessionaire will be required to construct the
infrastructure facility and assume construction-related risks arising from cost overruns,
delays and other performance risks connected to construction. Once the facility is
commissioned satisfactorily, title over the facility is transferred to the implementing agency,
but the private sector party operates the facility on behalf of the implementing agency
pursuant to the terms of the concession agreement. As a form of repayment for financing,
constructing, operating and maintaining the facility, the private sector party is authorized to
charge and collect tolls, fees and charges from the end users.
The principal terms and conditions governing the transaction are set out in the Toll
Concession Agreement (TCA), which provides for the obligations of the DPWH and the
Concessionaire in respect of the construction and operation of the facility, and other mutual
undertakings, covenants and conditions to be performed or fulfilled by each of the parties.
KEY COMMERCIAL FEATURES OF THE DRAFT TCA

The following are some of the key commercial features and terms that are contemplated under the
draft Toll Concession Agreement (TCA) being prepared for the Project:
 Grant of a 25-year O&M concession period plus a 16-month design and construction
period, reckoned from the delivery of the government of the Basic Right-Of-Way2, to the
Project Proponent to exclusively undertake the following:
o raise financing of the Project cost and achieve financial close within seven (7)
months from the signing of the TCA;
o design the Segment II works;
o construct works within 12 months from approval of the Detailed Engineering Design;
o operate and maintain the project, or if the Concessionaire is foreign-owned or
controlled, through its qualified Facility Operator to undertake the operation of the
Project to defined levels of performance standards;
o collect the authorized toll from users of the Daang Hari-SLEX Link Road which shall
be operated as an open system;
o assume the commercial risks for the profit or loss in the Project as a going business
concern; and
2
Refers to the land or land rights required for the Project based on the conceptual designed prepared by DPWH.
Page 19 of 24
o turn-over the Daang Hari-SLEX Link Road in good condition to DPWH at the end of
the concession period.
 DPWH obligations:
o procure and deliver in a timely manner the required Basic ROW;
o subject to Concessionaire compliance with pre-defined obligations, ensure the grant
of the Toll Operation Certificate (TOC) from the TRB
o assist the Concessionaire in securing necessary national government consents for
the Project; and
o ensure the application of the toll adjustment formula prescribed in the TCA and
provide compensation in the event of disallowances of authorized computed tolls.
 Other major commercial points include:

o The bid parameter will be the highest government payment.
o The selection of the Independent Consultant will be done by DPWH from a shortlist
of firms to be approved by the Concessionaire. The cost of the IC shall be borne
equally by DPWH and the Concessionaire.
o Opening tolls will be set by DPWH and approved by TRB. The approved toll rates
will be disclosed during the tender process.
o Periodic toll adjustments shall be made every two (2) years and based only on a
domestic inflationary index based on the following formula:
TRn= TRo [(CPIn/CPIo)]
where:
TRn = new Toll Rate as adjusted

TRo = old Toll Rate as of the last adjustment
CPIn = Consumer Price Index for month of the new review date
issued by the National Statistics Office
CPIo = Consumer Price Index for the month of the last review date
issued by the National Statistics Office
o A performance regime related to efficient flow of traffic, ride quality, safety, security
and cleanliness will be defined in the TCA and payment obligations will be imposed
on failure to meet Key Performance Indicators.
o Force majeure shall be a risk that will be shared by both the Concessionaire and
DPWH.
Below is the risk allocation matrix for the Project.
TABLE 5 Risk Allocation Matrix

Risk/Responsibility Allocation Remarks
Traffic Concessionaire No minimum traffic guarantee

Compensation provided for
Toll & Adjustment Implementation DPWH disallowance of adjustment based on
agreed formula
Project Financing Concessionaire Private financing
Page 20 of 24
Relief provided for domestic inflation

Inflation & Foreign Exchange Concessionaire
through Toll Adjust formula
Free and clear, delivered by pre-agreed
Basic ROW Acquisition & Delivery DPWH
timeline
Performance Security for Construction
Design/Construction Concessionaire
posted in favor of DPWH
KPIs set with corresponding penalties
for non-compliance, Performance
Operation/ Maintenance Concessionaire
Security for Operations posted in favor
of DPWH
Political Risks DPWH Limited events
Relief provided to Concessionaire on
O&M performance of obligations,
Concessionaire and
Force Majeure procedure and mechanism for
DPWH
addressing impact of FM events to be
provided in the TCA
At pre-agreed conditions, testing &
Turn-over at the end of Concession Concessionaire
acceptance regime included in TCA
REGULATORY FRAMEWORK
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY

The National Economic and Development Authority (NEDA) is the country’s independent economic
development and planning agency. The NEDA is primarily responsible for formulating the country’s
social and economic policies, plans and programs, including the formulation of annual and
medium-term public investment programs.
National projects implemented through the BOT Law and costing more than PhP300 million must
be submitted to the NEDA Board for approval upon the recommendation of the Investment
Coordination Committee3 (ICC).
The NEDA headed by the President as chairman of the NEDA Board, with the Secretary of Socio-
Economic Planning, concurrently NEDA Director-General, as vice-chairman. The other members of
the NEDA Board are the Executive Secretary and the (a) Secretary of Finance, (b) Secretary of
Trade and Industry, (c) Secretary of Agriculture, (d) Secretary of Environment and Natural
Resources, (e) Secretary of Budget and Management, (f) Secretary of Labor and Employment, and
(g) Secretary of Local Government.4
3
The ICC is composed of the Secretary of Finance, as chairman, the NEDA Director-General, as co-chairman, the Executive Secretary,
the Secretaries of Agriculture, Trade and Industry and of Budget and Management, and the Governor of the Bangko Sentral Ng
Pilipinas, as members.
4
Executive Order No. 230 (1994).
Page 21 of 24
TOLL REGULATORY BOARD

The Toll Regulatory Board (TRB) is a government agency created on 31 March 1977 by virtue of
Presidential Decree No. 1112 (PD 1112), otherwise known as the “Toll Operation Decree.” It is an
attached agency of the Department of Transportation and Communications.5
The TRB Board is composed of the Secretary of Transportation and Communications as

Chairman, and its members are the Secretaries of Public Works and Highways, the Department of
Finance, and the National Economic Development Authority, or their duly authorized
representatives with ranks not lower than Undersecretary.6 A representative from the public sector,
preferably a lawyer or an economist with adequate experience in public utilities regulation, also
serves on the Board.7
The TRB has the powers to –

a) grant authority to operate a toll facility and to issue the necessary Toll Operation Certificate;
b) issue, modify and promulgate the rates of toll that will be charged the direct users of toll
facilities; and
c) approve or disapprove petitions for toll increases.8
INVESTMENT FRAMEWORK
TAXATION
Non-resident foreign companies are taxed on all Philippine-sourced income at the rate of
35% of gross income. Income earned by foreign companies subject to this rate are
dividends, interest on loans, royalties and management fees. Gains realized from
disposition of shares of a Philippine corporation are subject to capital gains tax.
If the country of domicile of the foreign company has an existing tax treaty with the
Philippines, the appropriate treaty rate on such income applies. The rates under existing
tax treaties range from 10% to 25%. At present, the Philippines has tax treaties with
twenty-two countries, including the United States, Japan, France and the United Kingdom,
as well as with other European and Asian countries.
FOREIGN EXCHANGE
Foreign exchange may be bought and sold freely by foreign corporations operating in the
Philippines and may be brought into or sent out of the country with few restrictions.
Foreign investments and profits can also be repatriated in foreign exchange with minimal
control from the Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines).
Registration of foreign investments with the BSP requires proof of inward remittance of the
5
Executive Order No. 686 (2007).
6
Sec. 2, Executive Order No. 133 (2002)
7
Sec. 2, Executive Order No. 133 (2002)
8
Sec. 3, Presidential Decree No. 1112 and Sec. 4(b), Executive Order No. 686 (2007).
Page 22 of 24
foreign exchange used to fund the investment and has now become essentially an
automatic process after the necessary corporate registration has been completed by the
Philippine Securities and Exchange Commission. Should the banking system be also used
for the payment of royalties, the related royalty contract should be registered with the
Technology Transfer Registry of the Bureau of Patents, Trademarks, and Technology
Transfer.
FOREIGN OWNERSHIP AND MANAGEMENT

The Philippine Constitution and a number of Philippine laws operate to limit the extent to
which non-Philippine nationals may participate in the ownership and management of public
utilities, such as the Daang Hari–SLEX Link Road.
The Philippine Constitution, provides that no franchise, certificate or any other form of
authorization for the operation of a public utility shall be granted except to citizens of the
Philippines or to 60/40 companies. Furthermore, participation of foreign investors in the
governing body of any public utility enterprise is limited to their proportionate share in its
capital and all executive and managing officers of such corporation or association must be
citizens of the Philippines.
To ensure compliance with these nationality requirements, Commonwealth Act No. 108,
also known as the “Anti-Dummy Law,” provides that any person, corporation or association
with a right, franchise or privilege, the exercise or enjoyment of which is expressly reserved
by the Constitution or the laws to the citizens of the Philippines or to 60/40 companies, is
prohibited from permitting or allowing the use, exploitation or enjoyment of such right,
franchise or privilege by a non-qualified person or entity or in any manner permitting or
allowing any non-qualified person to intervene in the management, operation,
administration, or control thereof, whether as an officer, employee or laborer therein, with or
without remuneration, except technical personnel whose employment may be specifically
authorized by the Secretary of Justice. The Anti-Dummy Law, however, allows the election
of aliens as members of the board of directors or governing body of corporations in
proportion to their allowable participation in the capital of such entities and the employment
of foreigners in the capacity of technical consultants.
OTHER INFORMATION TO BE SUPPLIED

As part of the Bid Documents, a more comprehensive Information Memorandum will be provided
including other pertinent data and documents such as:
1. Project Implementation Program for Daang Hari-SLEX Link Road; and
2. Segment 1 approved Detailed Engineering Plans;
Page 23 of 24
INDICATIVE TIMETABLE
2011
June - Pre-qualification Conference
June - Publication of Invitation to Participate and Bid
August - Submission of Qualification Documents
August - Notice of Pre-qualification
August - Release of Draft Concession Agreement to Pre-qualified Bidders
August - Pre-bid Conference
November - Submission of Technical and Financial Proposals
2012
January - Issuance of Notice of Award
February - Signing of the TCA
June - Approval of the Detailed Engineering Design
June - Delivery of ROW
July - Start of Construction
2013
August - Start of Operations
Page 24 of 24

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Republic of the Philippines

DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS

DAANG HARI-SLEX LINK ROAD

No representation or warranty, express or implied, is made, or responsibility of any kind is or will be

ASDI Alabang-Sto. Tomas Development, Inc.

Purpose of this memorandum

The purpose of this Preliminary Information Memorandum is to provide preliminary

(i) Appetite and interest in participating in Transaction.

Feedback may be sent by email to DPWH-BOT-PMO at the contact information provided

Director Rebecca T. Garsuta [email protected] (632) 3043762

Information contained in this Memorandum

The Investment Opportunity

Segment Limits Length

Figure 1 – CALA Priority Road Projects Proposed in the

Alabang-Sto. Tomas Development Inc. (ASDI), a joint venture of National Development

HISTORICAL BACKGROUND OF THE PROJECT

TRANSACTION PREPARATION PROCESS

The road project is divided into 2 Segments:

Starts at Junction Daang Hari-Daang Reyna, Elliptical Road or Rotunda (Roads 1 to

The project will involve the construction of the following:

 4-lane, 4-km at grade expressway

PROJECT IMPLEMENTING AGENCY

THE PHILIPPINE TOLL ROAD SYSTEM

Figure 2 HIGH STANDARD HIGHWAY MASTER PLAN

VEHICLE CLASS VEHICLES PER DAY

LEGAL BASIS OF PROCUREMENT

NATURE OF THE PROCUREMENT PROCESS

The general procedure for the Bidding will be as follows:

A more detailed description of the bidding process in provided in Table 4 below.

TABLE 4 Solicited Bidding Process under BOT Law

Publishes invitation for pre-

Issues official notices to project

Prepares qualification documents

Submits qualification documents

Issues the draft Toll Concession

Pre-qualified bidders prepare their Conducts pre-bid conference to

Pre-qualified bidders submit their Evaluates technical proposal

Special BAC submits to Secretary

Secretary of DPWH approves

for contract award within 1 day

Informs unsuccessful bidders of

Within 1 day from submission by

If deadline is not met by winning

Signs contract within 3 days from

KEY COMMERCIAL FEATURES OF THE DRAFT TCA

 Other major commercial points include:

TRn= TRo [(CPIn/CPIo)]

TRn = new Toll Rate as adjusted

Below is the risk allocation matrix for the Project.

TABLE 5 Risk Allocation Matrix

Traffic Concessionaire No minimum traffic guarantee

Relief provided for domestic inflation

NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY

TOLL REGULATORY BOARD

The TRB Board is composed of the Secretary of Transportation and Communications as

The TRB has the powers to –

FOREIGN OWNERSHIP AND MANAGEMENT

OTHER INFORMATION TO BE SUPPLIED

1. Project Implementation Program for Daang Hari-SLEX Link Road; and