Presentation on theme: "Comprehensive and Integrated Infrastructure Program"— Presentation transcript:
1Comprehensive and Integrated Infrastructure Program Philippines Development ForumCebu City, PhilippinesMarch 8, 2007Good morning!I am pleased to make this presentation on behalf of Socio-Economic Planning Secretary Romulo L. Neri who unfortunately cannot join us today.
2Promoting Global Competitiveness and Exports to Create Jobs To strengthen and sustain our global competitiveness and create10 million jobs, we will focus on five strategic measures:Make food plentiful at reasonable prices to make our labor cost globally competitive.Reduce cost of electricity to make cost of running our machines and our manufacturing processes regionally competitive.Modernize physical infrastructure and logistics system at least cost to ensure efficient movement of goods and people.Mobilize and disseminate knowledge to upgrade our technologies and increase our people’s productivity.Reduce red tape in all government agencies to reduce transaction costs.Secretary Teves and Secretary Andaya have discussed fiscal reforms and prospects for These reforms led to lower interest rates, stock market upsurge and stronger peso, which then created greater fiscal space in terms of having more revenues, among others. To make the impact felt by the real economy and the common people, there is need to spend on education, health, SME support, S &T, agribusiness and upland development, and infrastructure.The President in her 2006 State of the Nation Address mentioned modernizing physical infrastructure and logistics system at least cost to ensure efficient movement of goods and people as one of the strategic measures to strengthen and sustain our global competitiveness and create jobs.This presentation will provide an update on the Comprehensive and Integrated Infrastructure Program (CIIP) , an overview of ten priority projects as well as some necessary microeconomic reforms in the infrastructure sector.
3CIIP Investment Requirement by Financing Source Total investments = PhP 1,983.9 billionPrivate SectorPhP663.2 B33.4%Other SourcesPhP86.7B4.4%National GovernmentPhP848.5 B42.8%LGUsPhP44.4 B2.2%GFIsPhP3.7B0.2%GOCCsPhP337.3 B17%The Comprehensive and Integrated Infrastructure Program (CIIP) is a subset of the Medium-Term Public Investment Program (MTPIP). It is a list of priority infrastructure projects formulated by the Committee on Infrastructure (INFRACOM) in consultation with the implementing agencies. In this document, the projects’ outputs and outcomes are identified, as well as the responsible implementing agencies, investment requirements, financing sources/strategies, implementation period, and the status of preparations.The total investment requirement of CIIP from 2006 and beyond 2010 amounts to PhP 1,983.9 billion. In financing this required investment, the government seeks to tap the private sector as its partner in development. About PhP billion (33.4%) of the total estimated investment is expected to come from the private sector. This would focus on projects with acceptable return on investments that are attractive for the private sector to undertake. On the other hand, the government will focus more on projects with high socio-economic impact. As such, around PhP billion (42.8%) will be sourced from the General Appropriations Act (GAA) of the National Government (NG), PhP 341 billion (17.2%) from the Government Owned and Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), PhP 44.4 billion (2.2%) from the Local Government Units (LGUs), and PhP 86.7 billion (4.4%) from other sources [i.e., Official Development Assistance (ODA) Grants, Universal Charge for Missionary Electrification, and Energy Regulation 1-94].
4National Government Total Budget Requirement (CIIP vs National Government Total Budget Requirement (CIIP vs. DBM Proposed Budget )-100200300400500600700800900Total CIIP( )Budget( )(PhP Billion)`TotalP848.5Req’t. 20062010P429.7. beyond 2010P418.8Spilloverimplementationof some projectsbeyond 2010 canbe accelerated.Total 20062010 =P605SurplusP175.3Of the total PhP billion requirement from NG/GAA, PhP billion will be disbursed within the period and the balance of PhP billion beyond Considering the proposed Budget Strategy of DBM for the infrastructure sector for the period 2006 to 2010 with an estimated allocation of about PhP billion, the PhP billion NG requirement of CIIP can easily be accommodated.There will be an annual budget surplus for infrastructure, wherein by year-end 2010 the accumulated surplus will reach PhP billion. With surplus funds available, additional projects can actually be accommodated and/or implementation of CIIP projects accelerated on or before 2010.The following slides will present the GoP’s Selected Priority Infrastructure Projects where financing from bilateral and multilateral agencies, and the private sector is being explored.-
5Criteria for Selection (List of Selected Priority Infrastructure Projects)Must be in the Comprehensive and Integrated Infrastructure Program (CIIP)/SONAReady-to-Go Projectsc) Reasonable Rate of Returnd) No Major Issuese) High Socio-economic impactThe criteria for selection are as follows:Must be in the Comprehensive and Integrated Infrastructure Program (CIIP)/SONA (excluding ongoing projects & those proposed with firmed-up/concluded ODA or private financing).Ready-to-Go Projects – Projects endorsed by the Investment Coordination Committee (ICC)-Technical Board (TB)/Cabinet Committee (CC) or approved by the NEDA Board, but indicative financing are not yet concluded).c) Reasonable Rate of Return – Particularly for private sector undertaking or PPP.In peso cash flows – ICC approval ranges from 17% to 21% for IRR on equityIn dollar cash flows –ICC approval ranges from 9% to 13% for IRR on equityd) No Major Issues that could hinder the implementation of the project (e.g., legal issues, ROW).e) High Socio-economic impact – critical/high impact projects with EIRR greater than 15% hurdle rate.
61. BICOL EMERGENCY POWER RESTORATION PROJECT (Facilities damaged by typhoon Reming)Description:Component 1: Installation of temporary230 KV by-pass sections & repair of 887wooden & steel poles.Component 2: Replacement of 116 toppledsteel towers & repair of other damages tosubstation facilities & equipment.Implementing Agency: TRANSCOTotal Project Cost: PhP 1,115 MillionFinancing Mode: LoanImplementation Period: ImmediateRemarks: Approved in principle by ICC-CC on 13 December 2006due to emergency nature.Location:Bicol RegionFinancing: The second component of the project is proposed for WB retroactive financing. TransCo has already undertaken the first component of the project using its Internal Cash Generation (ICG).This project will fully restore power in Bicol.
7(Junction Irawan-Narra-Abo-Abo Section-Bataraza-Rio Tuba Section) 2. PALAWAN SOUTH ROAD(Junction Irawan-Narra-Abo-Abo Section-Bataraza-Rio Tuba Section)Description: Rehabilitation/improvementof the km road, which serves asthe main trunkline of the SouthernMunicipalities of Palawan.Implementing Agency: DPWHTotal Project Cost: PhP 3, MillionFinancing Mode: LoanImplementation Period:Remarks: Endorsed by ICC-TB on 5 December 2006 for ICC-CC approval.EIRR = %; 15% = PhP BillionLocation:Financing: Loan- Proposed for JBIC funding ( for yen loan financing)
8Construction of main bridge, approach viaducts, & approach Project Location3. PANGUIL BAY BRIDGEDescription:Construction of main bridge,approach viaducts, & approachroads that provide directtransport link between CentralMindanao & Northern Mindanao.Implementing Agency: DPWHTotal Project Cost: PhP 2, MillionFinancing Mode: GOP/PPPImplementation Period:Remarks: Project approved by the ICC on 18 January 2007.MisamisOccidentalTangubTubodLanao DelNorteFinancing: GOP to provide Php900 million equityThis will ensure an effective road network and facilitate the delivery of socio-economic service in Mindanao.
94. BINAN-SUCAT 230 KV T/L PROJECT Description: Installation of an additional14 kms of 230 kV line at Biñan & Sucatsubstations to increase the power transfercapacity of the existing Biñan-Sucat line.Implementing Agency: TRANSCOTotal Project Cost: PhP MillionFinancing Mode: Loan or PPPImplementation Period:Remarks: Approved by the ICC – CC on 15 February 2007.FIRR = 28.23%; FNPV = PhP 5.62 B at WACC = 11.67%EIRR = 63.54%; ENPV = PhP B at SDR = 15%Location:Sucat,Paranaque& Binan, LagunaFinancing: Loan-Calyon Corporate and Investment Bank Loan Facility (French Commercial Loan) or PPP-There is possibility that the loan can be picked up by the concessionaire, after successful privatization of TransCo.Without the project, in the event that the Binan-Sucat circuit trips, overloading of the remaining lines will occur during maximum dispatch of generators in the South of Luzon.
105. LINE 1 NORTH EXTENSION PROJECT Description: Construction of a 5.4-kmelevated line seamlessly fromMonumento Station of Line 1to North Avenue Station of Line 3.Implementing Agency: LRTATotal Project Cost: PhP 6,209 MillionFinancing Mode: BTImplementation Period:Line 1 North Extension(Monumento-North EDSA)Proposed for Construction:Existing Light Rail Network:MRT 3(North EDSA-Taft)LRT Line 1(Monumento-Baclaran)NCRLRT 1 North ExtensionFinancing: Civil works are proposed for Build-Transfer (BT) while operation and maintenance will be part of the entire Line 1 operations which is also for private sector participation.
116. NORTHRAIL-SOUTHRAIL LINKAGE PROJECT (Alabang to Calamba, 27.1 kms) Phase IIDescription: Rehabilitation of theExisting km into a doubletrack railway & the acquisition offive (5) new 3-car train sets.Implementing Agency: DOTC / PNRTotal Project Cost: PhP 4,520.93MillionFinancing Mode: LoanImplementation Period:Remarks: Approved by ICC on13 December 2006.EIRR = 18.39%;15% = PhP MFinancing: Loan-Proposed for Korean financing.This aims to develop a fast, safe, comfortable and reliable commuter train service to the South of Manila. This is part of the solution to the Metro Manila traffic problems. It will also encourage the dispersal of Metro Manila population to Southern Luzon.
127. LRT LINE 6 (Line 1 South Extension) NCRProposed for Construction:Existing Light Rail Network:LRT Line 1(Monumento-Baclaran)Line 1 South Extension/Line 6(Baclaran-Bacoor)7. LRT LINE 6 (Line 1 South Extension)Description: Extension of the existingLRT Line 1 from Baclaran station to thecities of Parañaque, Las Piñas, &Adjoining municipalities of Bacoor,Imus, & Dasmariñas in the Caviteprovince.Implementation Agency: LRTATotal Project Cost: PhP 35,474.4 MillionFinancing Mode: Loan/GOP/BOTImplementation Period:Remarks: Approved by ICC-CC on 13 December 2006 & NG budgetary requirements is being discussed.EIRR: 20% (high VOT assumption), 16% (low VOT assumption)LRT Line 6Financing: Loan- Civil works component is proposed for ODA funding-WB.Note: VOT refers to value of time
138. AGNO RIVER INTEGRATED IRRIGATION PROJECT Description: Rehabilitation of AgnoRiver Irrigation System (ARIS) &Ambayaoan-Dipalo River IrrigationSystem (ADRIS) with a total of34,450 has. service areas inPangasinan, Region I. Riceproduction is projected to increaseby 120,000 metric tons per yearbenefiting around 28,000 farm families.Implementing Agency:National Irrigation Administration (NIA)Total Project Cost: PhP 7, MillionFinancing Mode: LoanImplementation Period:Remarks: Already approved by the NEDA Board.Location:Pangasinan, Region I(service area)Prospective Financing: Loan-JBIC under 26th Yen Loan Package
149. NORTH LUZON EXPRESSWAY EXTENSION PROJECT (NLEEP-I)Description: Construction of an 84.5 km road;12 interchanges & toll collection facilities; &2 major bridges crossing Agno & Bued Riverstotaling 2.85km, to support socio-economicactivities in Regions I, III, CAR & Metro Manila,& help decongest traffic at McArthur Highway.Implementing Agency: DPWHTotal Project Cost: PhP 19,350 MillionFinancing Mode: GOP/BOTImplementation Period:Remarks: Revised proposal is being prepared with scaled-down cost of ROW requirements & proposed implementation arrangement thereof.
15Improvement/rehabilitation of the existing 10. QUIRINO HIGHWAYDescription:Improvement/rehabilitation of the existingkm road, of which km isProposed for improvement to PCCP &application of Asphalt Concrete (AC)overlay, & the remaining km PCCpavement in good condition for applicationof AC only.Implementing Agency: DPWHTotal Project Cost: PhP 1, MillionFinancing Mode: LoanImplementation Period:Remarks: ICC-TB endorsed the project on 5 December 2006 for ICC-CC approval.EIRR = %; 15% = PhP MillionRegion 5Camarines NorteCamarines SurFinancing: Loan-Proposed for Korean financing.
16Micro-Economic Reforms Transportation(Air and water services, including port services)TelecommunicationsPowerWe just presented the CIIP and the priority infrastructure projects, which are the hard infrastructure. These are not sufficient, we need to complement these with the soft infrastructure, the policy infrastructure, which is in the realm of microeconomic reforms.The biggest problem areas in microeconomic reforms are in the transportation, telecommunications and power sector services.Putting soft infrastructure in said services mean, for example, liberalizing the airlines and shipping in the nautical highway. However, it has been reported that the agencies regulating said important services sectors are prone to regulatory capture, for example, PPA, MARINA, ERC, NTC, CAB.There is need to reform these agencies if we want to be competitive. It is hard to be competitive with costs of services still very high. The actions of said agencies will have an investment effect, competitive effect and an effect on the total economy.CAB- Investment Effect: Hotels, resorts, and other related businessesCompetitiveness Effect: Cost of Air TransportTotal Economy: Tourists Arrivals, Employment Generation, 1 million additional tourists means 1 million new jobsPPA- Investment Effect: May discourage investment by competitorsCompetitiveness Effect: Cost of Cargo Handling, Turnaround TimeTotal Economy: Logistics Efficiency, Export CostMARINA-Investment Effect: Investment in ShippingCompetitiveness Effect: Cost of Sea TransportTotal Economy: Logistics Efficiency, Inter-island TradingNTC Investment Effect: Investment in Telecommunication Facilities, Call Centers, BPOsCompetitiveness Effect: Cost of Telecommunications (reduced because of VOIP, but further reduction possible)Total Economy: Business transaction costs and efficiencyERC- Investment Effect: High cost may discourage investments in machineryCompetitiveness Effect: Cost of electricityTotal Economy: Labor productivity, Wages/workers’ income, Household/consumer welfare
17Cost of Business POWER: 10-25 % of costs LOGISTICS: 25-30% of costs TELECOMMUNICATIONS: % of costsSecretary Neri estimates that power can approximately be 10 to 25 % of your costs; logistics, 25 to 30 %, including warehousing, shipping, handling and so forth, and marketing. Telecommunications is about 5 %.On the whole, the costs affected by actions of said agencies ranges from 40 to 60 %.Secretary Neri is encouraging the business sector to help government in undertaking microeconomic reforms as these are the most difficult reforms to do and yet have significant impact on the cost of doing business.
18ADB on Improving Philippine Competitiveness InfrastructureRanks behind Malaysia and Thailand in ICT indicesPower cost in RP highest compared with Thailand, China and SingaporeComparative Indices and RatesCountryICT Indices (2005)Commercial Electricity Rates (2005)US cents/KWhWEF-NetworkReadinessEIU-IBMe-ReadinessPhilippinesThailandChinaSingapore703450251441184.108.40.206.6This and the following slide shows the Philippines’ ranking compared to our neighbors in terms of ICT indices, electricity rates, time and cost to export.With micro-economic reforms, the cost of doing business in the country can be reduced and make us more competitive.This is an opportune time to segue into the next presentation.Source: NSCB and WESM, Senate
19ADB on Improving Philippine Competitiveness LogisticsRelative quick export time and customs clearance but highest cost to export among ASEAN and ChinaTrading Across BordersCountryTime forexports (days)Cost to export (US$ per container)Average days for customs clearance (air)PhilippinesThailandChinaSingapore182461,336848335382452Source: World Bank
20End of Presentation http://www.neda.gov.ph For more information on the CIIP, please visit the neda website at
21CIIP Investment Requirement by Sector Total investments = PhP 1,983.9 billionTransportationPhP952 B48%Support toARCsPhP18.1 B0.9%Social Infrastructure177.8 B9%Communications33.1 B1.7%Water Resources346.9 B17.5%Power andElectrification456 B23%In terms of sectoral allocation covering 2006 and beyond 2010, PhP 952 billion (48%) is allocated for transportation, PhP 456 billion (23%) for power, energy, and electrification, PhP billion (17.5%) for water resources, PhP 33.1 billion (1.7%) for communications/digital infrastructure projects under the Cyber Corridor, PhP billion (9%) for social infrastructure, and PhP 18.1 billion (0.9%) for cross-sectoral projects in support to ARCs.hide
22NG Investment Allocation of PhP429.7 B for 2006-2010 (by Super Region) With only the PhP billion budget requirement from the National Government for the period 2006 to 2010, allocation by Super Region reflects the following: North Luzon Agribusiness 15%; Luzon Urban Beltway 43%; Central Philippines 21%; Agribusiness Mindanao 18%; and Cyber Corridor 3%. While government investments in the Luzon Urban Beltway is the largest at 43%, it nonetheless contributes about 50% of the total GDP or an investment to GDP ratio of 0.86, that is, the Luzon Urban Beltway gets PhP 0.86 in infrastructure investments for every PhP 1.00 it contributes to the economy.hide(2006 to 2010)
23Civil Aeronautics Board (CAB) Investment Effect:Hotels, resorts, and other related businessesCompetitiveness Effect:Cost of Air TransportTotal Economy:Tourists ArrivalsEmployment Generation1 million additional tourists means 1 million new jobs
24Philippine Ports Authority (PPA) Investment Effect:May discourage investment by competitorsCompetitiveness Effect:Cost of Cargo HandlingTurnaround TimeTotal Economy:Logistics EfficiencyExport Cost
25Maritime Industry Authority (MARINA) Investment Effect:Investment in ShippingCompetitiveness Effect:Cost of Sea TransportTotal Economy:Logistics EfficiencyInter-island Trading
26National Telecommunications Commission (NTC) Investment Effect:Investment in Telecommunication FacilitiesCall Centers, BPOsCompetitiveness Effect:Cost of Telecommunications (reduced because of VOIP, but further reduction possible)Total Economy:Business transaction costs and efficiency
27Energy Regulatory Commission (ERC)/EPIRA Legislation Investment Effect:High cost may discourage investments in machineryCompetitiveness Effect:Cost of electricityTotal Economy:Labor productivityWages/workers’ incomeHousehold/consumer welfare
28Agencies Prone to Regulatory Capture Civil Aeronautics Board (CAB)Philippine Ports Authority (PPA)Maritime Industry Authority (MARINA)National Telecommunications Commission (NTC)Energy Regulatory Commission (ERC)CAB Investment Effect: Hotels, resorts, and other related businessesCompetitiveness Effect: Cost of Air TransportTotal Economy: Tourists Arrivals, Employment Generation, 1 million additional tourists means 1 million new jobsPPA Investment Effect: May discourage investment by competitorsCompetitiveness Effect: Cost of Cargo Handling, Turnaround TimeTotal Economy: Logistics Efficiency, Export CostMARINA-Investment Effect: Investment in ShippingCompetitiveness Effect: Cost of Sea TransportTotal Economy: Logistics Efficiency, Inter-island TradingNTC Investment Effect: Investment in Telecommunication Facilities, Call Centers, BPOsCompetitiveness Effect: Cost of Telecommunications (reduced because of VOIP, but further reduction possible)Total Economy: Business transaction costs and efficiencyERC- Investment Effect: High cost may discourage investments in machineryCompetitiveness Effect: Cost of electricityTotal Economy: Labor productivity, Wages/workers’ income, Household/consumer welfare