DOTr to privatize ops, maintenance of Metro Manila Subway, North-South railway

In line with the Marcos administration’s initiative to boost public-private partnerships (PPP), the Department of Transportation (DOTr) is intending to privatize the operations and maintenance (O&M) of two big-ticket railway projects.

At a ceremony in Mandaluyong City on Thursday, the DOTr and Manila-based multilateral lender Asian Development Bank (ADB) signed transaction service advisory agreements for the eventual turnover of the Metro Manila Subway (MMSP) and North-South Commuter Railway (NSCR) projects’ O&M to private operators under a competitive selection process.

Both parties also signed a similar deal for the modernization and capacity expansion of the Ninoy Aquino International Airport (NAIA), which the government also intends to privatize

“The three transaction advisory agreements we sign today will allow us to fast-track the completion of our ongoing big-ticket rail projects and the much-needed improvement in our country’s main airport,” Transportation Secretary Jaime Bautista said in his remarks during the signing ceremony.

Under the agreements, the ADB will provide transaction advisory to support the DOTr in the selection of qualified and experienced private sector operators for MMSP and NSCR.

“By extending ADB’S advisory services on the Metro Manila Subway project and North-South Commuter Railway, we can fine-tune the selection process for the most qualified and experienced private sector operators of these rail projects once completed,” Bautista said.

The scope of the ADB’s advisory support in the selection of private sector operators for both MMSP and NSCR includes the following:

•     Prepare and conduct market consultations
•     Detailed technical due diligence
•     Detailed commercial and legal due diligence
•     Financial due diligence
•     Tender documents preparation
•     Support for internal approval
•     Assist in discussion with key stakeholders, as needed
•     Tender support
•     Commercial close support
•     Support for financial close
•     Capacity building and project management support

The ADB’s advisory support, through its Office of Public-Private Partnership, for the selection of MMSP and NSCR private sector operators will last until December 2024.

The P488.5-billion MMSP is a 33.1-kilometer underground metro rail system that will traverse Metro Manila from Valenzuela City to Parañaque City with a connection to NAIA Terminal 3 and will interoperate with NSCR from Bicutan to Calamba.

The project is financed by the Japan International Cooperation Agency (JICA).

The MMSP will have 17 stations along its alignment and a 30.37 hectare depot located in Valenzuela City.

Meanwhile, the P873.62-billion NSCR project is an approximately 147-kilometer commuter railway that runs from Clark, Pampanga to Calamba, Laguna.

It will have 35 stations along its alignment and three depots located in Clark, Valenzuela, and Calamba.

Construction of the NSCR is currently underway and will be completed in phases beginning in 2026 with full turnover and completion by 2029.

NAIA modernization

The ADB’s advisory support for the NAIA’s expansion and modernization includes the following:

•     Detailed technical, financial, commercial, and legal due diligence
•     Conduct of updated traffic study
•     Conduct of Market Sounding
•     Support in preparation of submission for NEDA Board Approval
•     Preparation of bidding and tender documents
•     Preparation of MPSS (Minimum Performance Specifications and Standards) and KPIs (Key Performance Indicators)
•     Support in bidding / tender process
•     Preparation and Finalization of Concession Agreement
•     Support in signing of Concession Agreement
•     Support for Financial Close
•     Capacity Building
•     Development of Contract Implementation and Monitoring Capabilities

The term under the advisory service agreement shall continue for 36 months or until the date of signing by the winning bidder for the privatization of the airport’s O&M.

The DOTr chief earlier said the Transportation department is working with the ADB on the preparation of the terms of reference for NAIA's privatization.

“We have to get creative after realizing our projects face limited fiscal space allocation. Thus, our decision to turn to our ever-supportive private sector and financial institution partners,” Bautista said.

The Transportation chief reiterated that only the operations and maintenance of railway projects and the NAIA will be privatized and that the assets will remain with the government.

“Ownership will always remain with the government,” he said.

Bautista said the ADB will help the DOTr find the “right group” that will handle the O&M of the big-ticket projects.—AOL, GMA Integrated News